GST Registration in case of Renting of Immovable properties:

GST Registration in case of Renting of Immovable properties:

By CA. Keshav R Garg

1.     Let us first understand that the place of registration is decided by the term place of business as defined by section 2(85) of the CGST Act 2017. As per the definition of “Place of Business” it is a place from where the business is carried on and/or where a warehouse or any other place for storage of goods is located and/or books of accounts are maintained and/or the business through agent is carried on. It nowhere considers “place of supply” for determining the Place of business for the purpose of GST Registration. Hence, place of supply has no impact as far as GST Registration is concerned.

2.     As per section 22 of the CGST Act 2017, a person is liable to take registration from the place he makes a taxable supply. There is a distinction in place of supply and place from one makes taxable supplies. Place of supply is derived to conclude the state where the tax would be allocated. Since GST is a consumption based tax, decision on state for allocation of tax is important. But this does not mandate the person to take registration at place of supply. If this would have been the case, every trader who is supplying goods in various states would be required to take registration in all those states. Since the movement in these cases terminate in state of buyer and hence place of supply as per section 10 of IGST Act 2017 comes at recipient state. Applying the same analogy on the service sector, it can be derived that place of supply has no significance as far as the registration is concerned.

3.      Second issue which is creating confusion, is the definition of fixed establishment as per section 2(50). This section gets life only when clause (a) of Section 2(71) – Location of supplier is defeated. Where the person has already taken registration at a place of business, the clause (b) which makes Fixed establishment as location of supplier will not get invoked. Hence if the person had taken registration at its place of business in Delhi, there arises no question of registration in Mumbai or registration of fixed establishment per se.

4.     As far as the section 12(3) of the IGST Act is concerned, it is only establishing place of supply for renting of immovable property which is Mumbai in our case. But as discussed in Para 2, it has no relevance as far as the registration is concerned. It is merely defining the place of supply for deriving the point of consumption for the purposes of settlement of tax distribution amongst government.  

5.     Also as per the FAQ released by the Government it has been made clear that registration shall be taken at usual address and not where the property is situated. Immovable property per se do not form any fixed establishment. The gist of FAQ is as follows:

Conclusion:

The person registered in Delhi can raise invoice in respect of rent of immovable property situated in Mumbai. Since Location of supplier is Delhi and Place of supply is Mumbai, transaction becomes inter-state chargeable to IGST.

Keshav R Garg

(B.Com, FCA, CS, ISA(ICAI), Partner)

M No: 519348

Author: Bharat's GST Ready Reckoner

            A Handbook on GST

Member: Indirect Tax Committee of CII, 

Founder: MyGst.MyTax Foundation

Adviser: Industries Association of Chandigarh

Adviser: Chambers of Chandigarh Industries

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