The Rajasthan AAR considers whether ‘demised premises’ are includible in ‘residential dwelling’.
The Rajasthan Authority of Advance Ruling (AAR) has ruled that ‘demised premises’ are not covered in ‘residential dwelling’ for the purposes of notification 05/2022, as the same was being used for commercial use
The applicant sought ruling as to whether the Demised premises will be covered in definition of residential dwelling for the purpose of notification No.05/2022-CentralTax (Rate) dated 13/07/2022.
The applicant is engaged in Providing Professional service of Chartered Accountant and currently Senior Partner in B D Jain & Co. Chartered Accountants. Applicant is currently unregistered under GST Act 2017. Applicant is owner of the demised premises.
The applicant has entered into lease agreement with a company incorporated in India (Lessee) which expression shall unless repugnant to the context or meaning thereof, mean to include its successors and permitted assigns) which is inter alia engaged in the business of providing comprehensive, independent fund accounting, reporting, and analytics solutions to fund administrators providing administration services to hedge fund industry.
Land use of property is residential. Lease deed issued by Jaipur development Authority(JDA), Jaipur in the respect of the Demised premises in Residential.
As per Lease Agreement the Demised Premises shall be used solely for commercial purposes by the Lessee i.e. for establishing the branch/office of the Lessee. Construction of property is done for use as commercial purposes only.
The Authority Bench observed that the property in question has been leased/rented for commercial use. So even if the use of said property has not been changed by JDA but since the so called residential dwellings does not remain as such as it being used for commercial purpose.
The said supply of service i.e. renting for commercial use is covered under 997212 and taxable @ 18% and the Applicant i.e. lessor is supposed to pay GST as mentioned above on forward charge basis. The lessee is not required to pay GST under RCM basis in terms of Notification No.05/2022-Central Tax (Rate) dated 13.07.2022 effective from 18.07.2022.
It was also observed by the bench of Central Tax Member Umesh Kumar Garg and State Tax Member Mahesh Kumar Gowla that, as per prior rulings in M/s Aluri Krishna Prasad and M/s Lakshmi Tulasi Quality Fuels, that the transaction was of commercial nature and hence ruled that the demised premises will not be covered in the definition of residential dwelling in term of Notification No.05/2022-CentralTax (Rate) dated 13/07/2022 as it is being used for commercial use.
It was thus ruled that, “‘demised premises’ are not covered in ‘residential dwelling’ for the purposes of notification 05/2022, as the same was being used for commercial use.”
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