SGST Advance Ruling Authority

GST – Karnataka AAR - Leasing of residential units – “Renting of Immovable Property” or “Accommodation services” - Classification of leasing of property for use as residence along with basic amenities at a fixed monthly rental – HELD – the applicant takes a residential dwelling, having 3 or 4 BHK accommodation on lease /rent and gives the each bed room to an individual on lease / rent with a common kitchen for all the occupants - the applicant is not leasing/renting a residential dwelling on the whole but is leasing/renting the individual bed rooms to the occupants and hence the applicant’s service does not qualify to be a “Renting of Immovable Property” service as the property leased or rented is not a residential dwelling, but amounts to provision of accommodation as “Rooming House” - the services of the applicant squarely get covered under SAC 996311 as accommodation services and not under renting of residential dwelling – since the services provided by the applicant are covered under accommodation services under SAC 996311, the exemption under Sl. No. 12 of Notification 12/2017-Central Tax (Rate) dated 28.06.2017 which provides exemption to services by way of renting of residential accommodations for use as residence, is not applicable to the applicant’s transaction - Eligibility to exemption under Sl. No. 14 of Notification 12/2017-Central Tax (Rate) dated 28.06.2017 - the applicant is entitled for exemption under Sl. No. 14 of Notification 12/2017-Central Tax (Rate) dated 28.06.2017, subject to fulfillment of condition that the value of supply is less than or equal to one thousand rupees per day or equivalent - Whether the activity of leasing of residential units for further residential leasing would qualify for exemption under entry No. 12 of Notification 12/2017-Central Tax (Rate) dated 28.06.2017 which provides exemption to the activity of leasing for use as residence – HELD - In the transaction between the applicant & business entity, the renting of residential dwelling is not for use as residence by the business entity but in the course or furtherance of the business of the said entity and hence the exemption under entry No. 12 of Notification 12/2017-Central Tax (Rate) dated 28.06.2017 is not applicable to the impugned transaction. On the other hand in the transaction between the business entity and the tenant, the service amount to renting/leasing of rooming house which falls under accommodation services that get covered under SAC 996311 and hence the exemption under entry No. 12 of Notification 12/2017-Central Tax (Rate) dated 28.06.2017 would not be applicable to the said transaction

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