Page 30 - GSTL_13th August 2020_Vol 39_Part 2

J38 GST LAW TIMES [ Vol. 39
terms between lessor and lessee, it can be said that lease of commercial property
is required to be examined in the light of the definition of ‘continuous supply’
under the GST law. In term of Section 2(33) of CGST Act, continuous supply of
services means a supply of services which is provided, or agreed to be provided,
continuously or on recurrent basis, under a contract, for a period exceeding three
months with periodic payment obligations and includes supply of such services
as the Government may, subject to such conditions, as it may, by notification,
specify. This definition nowhere specifies that contract of continuous supply of
services cannot become partially void due to impossibility of performance. Thus,
even continuous supply of service can be partially void.
As per Section 9 of CGST Act, GST is payable on supplies of goods or
services or both. Value will be as per Section 15 of CGST Act. The value of a sup-
ply of goods or services or both shall be the transaction value, that is the price
actually paid or payable for the said supply of goods or services or both where
the supplier and the recipient of the supply are not related and the price is the
sole consideration for the supply as laid down under Section 15(1) of CGST.
Thus, it can be inferred that GST is payable only when there is ‘supply’. If there is
no ‘supply’, value is obviously nil and consequently, the question of GST liability
does not arise at all.
Furthermore, it is important to refer Section 15 of CGST Act that defines
the “value of supply”. It says the value of a supply of goods or services or both
shall be the transaction value, which is the price actually paid or payable for the
said supply of goods or services or both. In this particular issue, the value actual-
ly payable or even paid is nil, by mutual agreement of supplier and recipient of
supply. Therefore, lessee or lessor, as the case may be, cannot be held liable to
pay GST, since the price actually paid or payable is nil. Although, it is reported
that in some States landlords are advised that even if the rent for the property is
waived through mutually agreed terms by the lessee and lessor, the transaction
being a continuous supply under functional annual lease agreement, applicable
GST liability is required to be discharged.
However, it can be concluded from the aforesaid discussion that GST
will not be payable in case of waiver in continuous contracts of lease but the re-
quirement to amend or restructure the existing agreement may be deliberated
upon for the sake of certainty and clarity in the event of any looming challenge
posed by the department in the future. Thus, wherever it is possible, it is better to
make a necessary amendment in the written agreement by an addendum as mu-
tually agreed to corroborate the waiver of rent for such period as may be agreed
to.
In conclusion, it is important to highlight that the issue of rent on com-
mercial property amid such colossal crisis has been a matter of grave concern
and needs urgent attention in order to tide over the existing economic distress. It
is needless to point out that the dual issues of applicability of rent and liability of
GST on such rent during lockdown will surely invite disputes in the days to
come. Therefore, it is high time that C.B.I. & C. should intervene to bring in the
required certainty and clarity to the trade.
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