The applicant Metropolitan Transport Corporation [Chennai] Limited is a Government of Tamil Nadu carrying out the business of providing passenger transportation services. According to Goods and Services Tax Laws, this primary business activity of the applicant falls under the exempted category.
The applicant submitted a copy of challan dated 12-02-2024 evidencing payment of application fees of Rs.5,OOO/- each under sub-rule (1) of Rule 104 of CGST Rules 2017 and SGST Rules 2017. The online application form for advance ruling dated 12-02-2024 was physically received on 22-02-2024 as mandated under Rule 107A.
The applicant articulated that they had entered into a lease agreement with the Government of Tamil Nadu on 20th March 2007 represented by the Regional Transport Officer (RTO) Chennai, for the rental of premises owned by the applicant. The applicant had submitted details regarding the same property.
The applicant submitted that both parties had agreed to revise the rent every three years based on governmental orders, Due to certain unresolved negotiations rent revisions of certain years. During the fiscal year 2023-24 both the parties mutually agreed to revise the rent, thus settling on a 15% increase every year and the revision was retrospectively calculated from September I, 2005.
RTO, Chennai will pay the differential amount of Rs. 1,60, 42,203/ to the applicant upon submission of Supplementary Invoices, based on the agreement.The applicant said that the tenant having agreed on the revised rent rates contended that GST is not applicable to the enhanced rent. The tenant asserted that the enhanced rent rates pertains to a period when Service tax was applicable, therefore is exempt from GST.
Due to this ambiguity the applicant was unable to collect revised rent and raise invoice. On 24th December 2023 the tenant expressed his willingness to remit the revised rental value inclusive of GST contingent upon the provision of successive revised rental value inclusive of GST, contingent upon the provision of successive Advance Ruling orders affirming Metropolitan Transport Corporation’s stance that such rents are taxable under GST.
The division bench of D.Jayapriya and A. Valli observed that the applicant had rented out the premises owned by them to RTO, Chennai as per the lease agreement. As per the agreement there exists no ambiguity regarding the applicability of GST on the differential rent amount due to upward revision of rent from 01/07/2017 to 31/08/2022.
The question before the bench was whether the collection of increased rents for the renting of immovable property services provided by the applicant during the period 01.09.2005 to 30.06.2017 should be considered as the term supply and whether the same is demandable to GST or not.
According to section 142 Miscellaneous transitional provisions in case of upward price revision if a registered person issues a supplementary invoice or debit notice within 30 days from date of revision and if such revision shall be treated as supply under GST Act and is therefore taxable.
Applying the same in this case the increased rents during the period 01/07/2017 to 31/08/2022 shall be treated as supply under GST and the increased rent amount of Rs.1,60, 42,203 as submitted by the applicant from 01.09.2005 to 31.08.2022 shall also be liable to Goods and Services Tax.
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