Renting immovable property to SEZ unit by SEZ Authority liable to GST under RCM: AAR

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SEZ supply; Renting of immovable property; GST Reverse charge mechanism

Case Details: Authority for Advance Rulings, Maharashtra Portescap India (P.) Ltd., In re - [2022] 136 taxmann.com 215 (AAR - MAHARASHTRA)

Judiciary and Counsel Details

    • 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

List of Cases Referred to

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3 thoughts on “Renting immovable property to SEZ unit by SEZ Authority liable to GST under RCM: AAR”

  1. 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.

    Reply

  2. 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.

    Reply

    1. 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.

      Reply

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