[Opinion] Navigating the GST Registration Maze for Leasing Co-working Office Spaces in Different States

Praveen Kashyap & Sarthak Mittal – [2023] 150 taxmann.com 494 (Article)

Introduction

The emergence of the COVID-19 pandemic ushered a new era of work, where working from home (WFH) became a prevailing norm. As the world gradually returned to a state of normalcy, there emerged an increased desire for traditional office spaces, as employees sought a more conventional work environment.

Typically, service sector organizations concentrate their business operations and get them registered under GST in the State of operations. However, when it comes to leasing co-working office spaces in different States (most common among to provide infrastructure to employees under WFH), separate GST registration is generally not pursued as these offices function as support units for the primary office and no invoicing is done from such offices.

In this article, the authors delve into the requirements for obtaining GST registration for co-working spaces leased by companies in various States, despite no invoicing taking place at these locations.

Requirement of GST registration – Multiple perspectives

Under GST, the taxable event is the supply of goods or services. Any person engaging in a transaction that meets the criteria of supply must obtain registration for every location from where such supply is made, subject to threshold limits. To determine the registration requirement for leased co-working office spaces in a different State than the primary office, an analysis is necessary to evaluate transaction of supply of goods/services at these premises.

For a transaction to be subject to GST, it must align with the scope of supply as provided in section 7 of CGST Act 2017. This inclusive scope covers transactions such as –

• Sale, transfer, barter, exchange, licence, rental, lease or disposal made or agreed to be made for a consideration by a person in the course or furtherance of business;
• Import of services for a consideration whether or not in the course or furtherance of business; and
• Activities specified in schedule I, made or agreed to be made without consideration.

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