Page 214 - GSTL_21st May 2020_Vol 36_Part 3

460 GST LAW TIMES [ Vol. 36
7.1 At the outset, we would like to state that the provisions of both the
CGST Act and the KGST Act are the same except for certain provisions. There-
fore, unless a mention is specifically made to such dissimilar provisions, a refer-
ence to the CGST Act would also mean a reference to the same provisions under
the KGST Act.
7.2 The copy of the lease deed entered between the lessors, of which the
applicant is one of the them and the Dtwelve Spaces Private Limited (hereinafter
called as “Company”) shows that the lessors (totally five in number) have collec-
tively leased out their premises to the Company by way of a single agreement.
Each of the lessor has owns a part of the property and they have pooled up their
properties and then leased it to the Company. Further, the agreement is a single
agreement and the description of the leased premises also shows that the proper-
ty consists of “42 room along with the 2400 sq.ft. of terrace area” on the execution
date. The terms and conditions for the transaction is common and the agreement
is for the entire property. Further, para 7.1 of the agreement shows very clearly
that the consideration for the contract is settled at Rs. xxx per month. The consid-
eration payable is paid to the bank accounts at a fixed percentage of that monthly
rent. This clearly shows that the contract is for the entire property and the lessors
have pooled their individual properties into a single one and then given the same
as a single piece, and even the sharing of the rent is only an apportionment of the
common income.
7.3 The para 12 of the agreement also proves that the entire property is
let out as the lessee has taken the total property from the lessors and has the right
to sub-lease to any third party. All the terms and conditions are applicable to the
total property and the lessee deals with the total property only.
7.4 In view of the above, it is clear that the applicant is not providing
the service in individual capacity to the lessee, but as a part of the group of les-
sors. The applicant has not provided any details of registration or constitution of
the group, whether they have entered into a partnership or association etc. and
hence the taxability of the transaction needs to be examined in this background.
8. Regarding the nature of the transaction, it is seen from the agreement
that lessors are providing the service of leasing/renting of the immovable prop-
erty for a consideration. The reasons are as under :
(a) The lessor, of which the applicant is a part, is providing the right to
use the immovable property without transfer of the ownership of
the immovable property. For this transaction, they are collecting an
amount which is the consideration for such transfer of right to use
the property. This is in the course or furtherance of business and
hence as per Section 7(1) of the CGST Act, 2017, the transaction be-
tween the lessor and the Company would constitute a “supply”.
Further, this would be a supply of service as per Section 7(1A) of the
CGST Act, 2017 read with the Entry No. 2(b) of the Second Schedule
to the CGST Act, 2017, which reads as under :
“(b) any lease or letting out of the building including a commer-
cial, industrial or residential complex for business or commerce, ei-
ther wholly or partly, is a supply of services.”
(b) Hence the lessor, of which the applicant is a part, is providing ser-
vices of leasing of a building for business or commerce to the Com-
pany. The applicant is not individually providing this service, but
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