In re Indian Metals and Ferro Alloys Limited (GST AAR Odisha)
Q. Whether Service Received by a registered person by way of renting of residential premises used as guest house of the registered person is subject to GST under Forward Charge Mechanism (FCM) or Reverse Charge Mechanism.
Ans:- Now, evaluating the question with reference to the fact of the case wherein the Applicant (registered person) has received the service by way of taking residential premises on rent for use as its guest house, it is observed that the said service received by the Applicant (registered person) is subject to GST under Reverse Charge Mechanism in view of the notification No. 05/2022- Central Tax (Rate) dated 13.07.2022.
FULL TEXT OF THE ORDER OF AUTHORITY FOR ADVANCE RULING, ODISHA
Subject: M/s. Indian Metals and Ferro Alloys Limited (herein after referred to as the ‘Applicant’) having principal place of business at IMFA Building, Bomikhal, Rasulgarh, Bhubaneswar-751010 , Odisha, a registered company bearing GSTIN 21AAACI4818F1Z2 has filed an application for advance ruling under Section 97 of CGST Act, 2017 and Section 97 of the OGST Act, 2017 in FORM GST ARA-01 discharging the fee of Rs. 5,000/- each under the CGST Act and the SGST Act.
1.0 The Applicant has sought for an advance ruling in respect of the following question.
1. Whether Service Received by a registered person by way of renting of residential premises used as guest house of the registered person is subject to GST under Forward Charge Mechanism (FCM) or Reverse Charge Mechanism (RCM)?
1.1 At the outset, we would like to make it clear that the provisions of both the CGST Act and the OGST Act are the same except for certain provisions. Therefore, unless a mention is specifically made to such dissimilar provisions, a reference to the CGST Act would also mean a reference to the same provision under the OGST Act.
2.0 Submission of the Applicant
2.1 The Applicant bearing GSTIN-21AAACI4818F1Z2, is having its principal place of business at IMFA Building, Bomikhal, Rasulgarh, Bhubaneswar-751010 and 3 other additional places of business at (1) Therubali, Dist-Rayagada, Odisha-765018, (2) Kapeleswar, Choudwar, Cuttack, Odisha, 754071 (3) Kaliapani, Sukinda, Jajpur 750047, all in the state of Odisha. While the Applicant has its manufacturing unit at Therubali and at Choudwar, it has captive mines at Sukinda. As stated the Applicant has taken on rent certain premises at New Delhi and Jajpur in Odisha, as guest house. The guest houses are used to provide food and accommodation for the employees of the company who visit New Delhi for official purpose and also for the employees who visit mining office at Jajpur. While one of the apartments is taken on rent from a registered person, other is taken from unregistered person. In both the cases the houses taken on rent for guest house purpose are in the residential area and used by the Applicant Company for guest house of its employees.
2.2 The Applicant has stated that the term “Residential Dwelling” is not defined anywhere in GST Act or in the earlier Service Tax regime. However , Central Board of Indirect Taxes and Customs in its education guide dated 20.06.2012 has explained the phrase “residential dwelling” in clause 4.13.1 by interpreting the term in normal trade parlance as any residential accommodation, but does not include hotel, motel, inn, guest house, camp – site, lodge, houseboat, or like places meant for temporary stay.
2.3 It has been submitted that on normal course of business, the Applicant has taken a house on rent for use as its guest house at New-Delhi. As the term guest house is not covered within the ambit of residential dwelling as provided in education guide, the service provider at New-Delhi used claim GST on its invoice under forward charge mechanism which is paid by the Applicant. Notification No. 04/2022- Central Tax (Rate) dated 13.07.2022, amended the clause 12 of the Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017 & thereby restricted the applicability of exemptions to a registered person. As per the said amendment, while any residential dwelling used as residence by a non-registered person is exempted from levy of GST, the said service received by a registered person is chargeable under GST.
2.4 The Applicant has submitted that Notification No. 05/2022- Central Tax (Rate) dated 13.07.2022, brought an amendment to Notification No. 13/2017- Central Tax (Rate) dated 28.06.2017 by inserting a serial number 5AA which read as follows:-
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