GST Update On Registration Requirements In Case Of Immovable Property

In the advent of GST, there are a number of issues which are ambiguous and needs clarity. One such issue is pertaining to immovable properties of a person who is registered at one State but his properties are located at different states. Suppose a person is registered at Rajasthan and having the immovable properties situated in Gujarat and Maharashtra. Under such scenario whether the person is required to get himself registered at all such states or he can pay the IGST from his Rajasthan office where he is already registered. This issued is being analyzed in today's update.

According to section 22 of CGST Act, 2017; "Every supplier shall be liable to be registered under this Act in the State or Union territory, other than special category States, from where he makes a taxable supply of goods or services or both, if his aggregate turnover in a financial year exceeds twenty lakh rupees".

Thus, the supplier will be liable to be registered in the state from where he makes a taxable supply. Further, the place from where the supplier is making taxable supply shall be determined according to the definition given in section 2(71) of the CGST Act, 2017. This definition reads as follows:-

"(71) “location of the supplier of services” means,—
(a) where a supply is made from a place of business for which the registration has been obtained, the location of such place of business;
(b) where a supply is made from a place other than the place of business for which registration has been obtained (a fixed establishment elsewhere), the location of such fixed establishment;
(c) where a supply is made from more than one establishment, whether the place of business or fixed establishment, the location of the establishment most directly concerned with the provisions of the supply; and
(d) in absence of such places, the location of the usual place of residence of the supplier;"

The above definition clarifies that location of supplier will be determined as follows:-
• If the supplier is registered, the registered premise will be termed as location of supplier.
• If supply is made from a person other than registered place of business, the location shall be the fixed establishment.

The term fixed establishment is defined in section 2(50) of CGST Act, 2017 which reads as follow:-

"(50) “fixed establishment” means a place (other than the registered place of business) which is characterised by a sufficient degree of permanence and suitable structure in terms of human and technical resources to supply services, or to receive and use services for its own needs;"

Thus, the term fixed establishment is the place which has sufficient degree of permanence and suitable structure in terms of human and technical resources to supply services or to receive and use services for its own needs.

Whether an immovable property situated at a place can be said to be the fixed establishment as defined hereabove, is the matter of litigation. One set of experts is of view that merely having an immovable property cannot be said to be a fixed establishment as it does not have any human and technical resources to supply or receive and use services for its own needs. However, there is also divergent view according to which having an immovable property at a place itself confines to the a sufficient degree of permanence. Accordingly, it will be considered as the fixed establishment of a person and he will be required to get himself registered at the place where the immovable property is situated.

In our view, "the place which is characterised by a sufficient degree of permanence and suitable structure in terms of human and technical resources to supply services, or to receive and use services for its own needs;" suggests that there are two conditions :-
• The place should be characterized by a sufficient degree of permanence and suitable structure.
• The permanence should be in terms of human and technical resources to supply services or to receive and use services.

Therefore, merely because there is an immovable property, it cannot be said that there is sufficient degree of permanence and suitable structure in terms of human and technical resources to supply and receive services. Thus, there should also be some sort of human and technical resources besides having an immovable property. Since there is no human and technical resources, in our view, it cannot be termed as fixed establishment. Accordingly, in our view there is no requirement to get himself registered at all the places where the immovable property is situated and payment of IGST will suffice.

However, this analogy is not acceptable to many people as the GST is the consumption based tax and the revenue in GST accrues to State where the supply is consumed. This principle is not satisfied by the interpretation taken above. Thus, department will also not accept the view taken above. Accordingly, majority of the people are getting themselves registered at all such places where the immovable property is situated and paying the CGST & SGST at the respective states.

You can follow us at www.capradeepjain.com

or at our facebook page athttps://www.facebook.com/GSTTODAYBYPRADEEPJAIN/

Comments

GST Update On Registration Requirements In Case Of Immovable Property

Post a Comment

Query