AAR: Leasing of Property for Residential Purposes Having basic amenities covered under GST

AAR: Leasing of Property for Residential Purposes Having basic amenities covered under GST

The Authority of Advance Ruling (AAR), Karnataka bench in the case titled M/s Bishops Weed Food Crafts Pvt. Ltd. (Applicant) v. The Commissioner of Indirect Taxes (Respondent) held that the leasing of property for use as residence along with basic amenities, covered under accommodation services under the Goods & Services Tax (GST).

The coram of AAR comprising of Dr M.P Ravi Prasad and Mashood Ur Rehman Farooqui held that leasing of property for use as residence along with basic amenities is covered under accommodation services, and hence would qualify as composite supply under Section 2(30) of the Central Goods & Services Act (CGST)/ Karnataka Goods and Services Tax Act, 2017 (KGST Act).

The applicant has been engaged in the business of the provision of services by way of leasing residential units for use as residence to Tenants. It approached the Advance Ruling Authority with the following issues to be answered by it.

Issue before the AAR

- Whether leasing of property for use as residence along with basic amenities would qualify a composite supply under Section 2(30) of the Karnataka Goods and Services Tax Act, 2017?

- Whether leasing of property for residential subletting would be covered under the exemption for residential dwelling via notification 12/2017 (Rate) dated 28 June 2017?

The AAR while dealing with the aforesaid issues stated that "Renting of property by Applicant is not covered under entry 12 of Notification 12/2017-Central Tax (Rate) dated 28 June 2017, as their services are covered under accommodation services falling under SAC 996311."

It further held that the exemption under entry 14 of Notification 12/2017-Central Tax (Rate) dated 28 June 2017 is available to the transaction of the applicant.

The Authority noted that leasing of property for residential subletting would not be covered under the exemption for residential dwelling under entry 12 Notification 12/2017-Central Tax (Rate) as the two are different and individual transactions.