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No GST & TDS Applicable On Renting Of Immovable Property To Social Justice Department: AAAR

Mariya Paliwala
12 April 2022 11:51 AM GMT
No GST & TDS Applicable On Renting Of Immovable Property To Social Justice Department: AAAR
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The Maharashtra Appellate Authority of Advance Ruling, consisting of members Asok Kumar Mehta and Rajiv Kumar Mital, has ruled that the renting of immovable property to the social justice department is exempt from GST and TDS.The appellant, Shital Tukaram Borade, is unregistered and is in the business of providing the services of renting out immovable property situated in Nashik, and is...

The Maharashtra Appellate Authority of Advance Ruling, consisting of members Asok Kumar Mehta and Rajiv Kumar Mital, has ruled that the renting of immovable property to the social justice department is exempt from GST and TDS.

The appellant, Shital Tukaram Borade, is unregistered and is in the business of providing the services of renting out immovable property situated in Nashik, and is in receipt of rental income.

The property was let out to the Social Welfare Department (Samaj Kalyan Vibhag), Nashik Division, Maharashtra Government.

The appellant has sought an advance ruling on the issue of whether the services provided to the Special Assistance Department for the residential accommodation of underprivileged girls are exempt from GST.

Yet another issue raised was whether TDS provisions would be applicable in cases where the supply of services is exempt. If the appellant is not registered under the GST and provides services to the Special Assistance Department, then whether the TDS notification issued under section 51 of the CGST Act, 2017 would be applicable for the deduction of TDS remains unclear.

The AAR has held that the services provided by the appellant to the Social Welfare Department are not exempt from GST and TDS provisions will be applicable.

Aggrieved by the Advance Ruling Order passed by the AAR, the Appellant has filed an appeal on the grounds that GST TDS is not applicable when payment is made to an unregistered person as stated under section 51 of the CGST Act, 2017.

The appellant has submitted that the FAQ, by the Law Committee, GST Council, has clarified in the Standard Operating Procedure (SOP) dated September 28, 2018 that no TDS is required to be deducted "where the payment is made to an unregistered dealer". Given the aforesaid, the appellant submitted that GST TDS is not applicable when payment is made to an unregistered person as stated under section 51 of the CGST Act, and hence TDS on the same may not be deducted.

The Appellant has let out his property to the Social Justice and Special Assistance Department, Government of Maharashtra, who is using the same property to provide residential accommodation to underprivileged girls belonging to Scheduled Tribes.

The AAAR, while setting aside the AAR's order, held that pure services of renting out immovable properties, provided by the Appellant to the State Government, will definitely be construed as an activity in relation to the function entrusted to a Panchayat under article 243G of the Constitution, or in relation to the function entrusted to a municipality under article 243W of the Constitution, and thereby, be rightly eligible for exemption from GST.

The AAAR said that once the transaction has been held to be exempt from the levy of GST, there is no question of the application of the TDS provisions made under Section 51 of the CGST Act, 2017.

Applicant's name: Shital Tukaram Borade

Dated: 01.04.2022

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