Under Reverse Charge Mechanism (RCM), the Odisha Authority of Advance Ruling (AAR) held that GST should be levied on renting the residential premises on rent as a guest house.
Case Fact
- As a guest house, the petitioner has given the premises on rent in New Delhi, Odisha, and Jajpur.
- For the employees who visit their offices, the petitioner furnishes them with food and accommodation.
- The owner is enrolled with one of the apartments while the other owner does not get enrolled.
- The owner uses the houses for the purpose of rent, he furnishes the service of rent for both houses to guests.
Petitioner Opinion
- In the Goods and Services Taxes (GST) or the former service tax act, the term residential dwelling does not get described.
- But the education guide of the department elaborated on the phrase residential dwelling on 20th June 2012 as any residential accommodation which does not comprise a hotel, inn, motel, guest house, camp-site, houseboat, lodge, or other places for a temporary stay.
An advance ruling has been filed by the petitioner on whether the rented residences would be utilised as a guest house through the registered person who comes within the GST beneath the Forward Charge Mechanism (FCM) or RCM.
The AAR Ruled
- The kind of rented properties seems to be the residential properties that have been utilised for commercial purposes.
- GST shall be subject to be levied from 18th July 2022 for the residential property that has been given on rent to the registered individual.
- Under Reverse Charge Mechanism (RCM) the liability to file the 18% GST shall be on the tenant when he would be the registered individual under GST.
- The nature, purpose, and kind of the residential dwelling do not secure a condition in the RCM notification.
- Thus a GST shall get imposed on renting a residential dwelling to the registered individual beneath RCM, irrespective of its nature of utilization.
| Name of Applicant | M/s. Indian Metals and Ferro Alloys Ltd |
| GSTIN | 21AAACI4818F1Z2 |
| Date of Filing Form GST ARA-01 | 03.11.2022 |
| Present for the Applicant | R K Sahoo, Sr General Manager, A K Sahoo, Manager |
| Date of Personal Hearing | 29.11.2022 |
| Odisha AAR | Read Order |
