Renting immovable property to SEZ unit by SEZ Authority liable to GST under RCM: AAR
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- By Chetan Kulasri
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- Last Updated on 30 March, 2022
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Case Details: Authority for Advance Rulings, Maharashtra Portescap India (P.) Ltd., In re - [2022] 136 taxmann.com 215 (AAR - MAHARASHTRA)
Judiciary and Counsel Details
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- Rajiv Magoo and T.R. Ramnani, Member
Facts of the Case
The applicant, a SEZ Unit, was situated in Maharashtra and was engaged in the manufacture of customized motors. It filed an application for advance ruling to determine whether tax is to be paid under reverse charge mechanism (RCM) on procurement of renting of immovable property service from SEZ Authority.
AAR Held
The Authority for advance ruling observed that Notification No. 10/2017- Integrated tax (Rate) dated 28-6-2017, has notified specified categories of goods and services where tax shall be paid by the recipient on reverse charge basis. This notification clearly states that in case of supply of services by any local authority, by way of renting of immovable property, to a person registered under the CGST Act, 2017, the person receiving the said service and registered under the CGST Act, 2017 has to discharge GST on the transaction. In the instant case, the applicant was receiving renting of immovable property services from Special Economic Zone Authority (Local Authority) and the applicant was registered under the CGST Act, 2017. Hence the applicant must discharge tax liability under RCM.
Case Review
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- GMR Aerospace Engineering Ltd. v. Union of India [2019] 111 taxmann.com 103 (AP & Telangana) (para 6.12);
- Damodar J. Malpani v. Collector of Central Excise 2002 taxmann.com 359 (SC) (para 6.12);
- Ralli Engineer Ltd. v. Union of India 2004 (95) ECC 415 (Guj.) (para 6.12);
- Steel Authority of India v. Collector of Customs 2000 taxmann.com 924 (SC) (para 6.12);
- Darshan Boardlam Ltd. v. Union of India 2013 (287) ELT 401 (Guj.) (para 6.12);
- Interglobe Aviation Ltd. v. Union of India [2021] 129 taxmann.com 21/87 GST 641 (Delhi) (paras 6.18 & 6.19) and
- CCE v. Narendrakumar & Co. [Appeal No. E/2878/06 & E/99/07, dated 24-6-2008] (para 6.20) distinguished.
List of Cases Referred to
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- GMR Aerospace Engineering Ltd. v. Union of India [2019] 111 taxmann.com 103 (AP & Telangana) (para 2.17)
- Portescap India (P.) Ltd., In re [2020] 117 taxmann.com 590/82 GST 142 (AAR – Maharashtra) (para 2.21)
- Metlife Global Operations Support Center (P.) Ltd. v. CST [Final Order No. 51652 of 2020, dated 22-12-2020] (para 3.17)
- Darshan Boardlam Ltd. v. Union of India 2013 (287) ELT 401 (Guj.) (para 4.14)
- Interglobe Aviation Ltd. v. Union of India [2021] 129 taxmann.com 21/87 GST 641 (Delhi) (para 4.15)
- Damodar J. Malpani v. Collector of Central Excise 2002 taxmann.com 359 (SC) (para 4.15)
- Ralli Engineer Ltd. v. Union of India 2004 (95) ECC 415 (Guj.) (para 4.15)
- Steel Authority of India v. Collector of Customs 2000 taxmann.com 924 (SC) (para 4.15)
- CCE v. Narendrakumar & Co. [Appeal No. E/2878/06 & E/99/07, dated 24-6-2008] (para 4.16).
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CA | CS | CMA
Notification No. 10/2017- Integrated Tax (Rate).
6- Services supplied by the Central
Government, State Government,
Union territory or local authority to
a business entity excluding, –
(1) renting of immovable property,
and
By Central
Government,
State
Government,
Union territory
or local
authority
to Any business entity located in the
taxable territory..
Now 1 thing is that notification excludes service of renting of immovable property and business entity should be in taxable territory, but SEZ unit located in SEZ is deemed Foreign territory….How This AAA is order sez unit to discharge IGST liability under RCM. ?This AAA ruling seems baseless…and against IGST ACT.
Now 1 thing is that notification clearly excludes service of renting of immovable property and business entity should be in taxable territory, but SEZ unit located in SEZ is deemed Foreign territory….How This AAA is ordering Sez unit (which is in foreign territory) to discharge IGST liability under RCM…as Renting of Immovable property services is excluded by Notification 10/2017 ? This AAA ruling seems baseless more over Illegal….…and against IGST ACT. Please correct me if i am wrong.
Hi Sir, Please also check Notification No. 03/2018 , Integrated Tax (Rates), which is an extention of notification No. 10/2017 mentioned above. It specifically covered this transaction and RCM shall apply.
Please reply if i am wrong.