Order Date: 31 May 2022

Facts:

• The Applicant, M/s Kasturi & Sons Ltd, proposes to let out on leave and license basis a premises to M/s. LIC for residential purpose of their staff members. 
• The applicant has sought on the applicability of Sl. No. 12 of the Notification No. 12/2017-CT (Rate) on the said transaction. As per said Notification, applicant contends that exemption is provided to the nature of the property and its usage and not by the status of recipient. Also, there is a specific restriction for usage for commercial purpose at Clause 4.1 of the proposed Leave and License agreement itself.

Issues: 

• Whether Property let out for residential purposes will be exempt from the GST ambit even though it is let out to a Corporate Entity?

Order:

• The authorities observed that the entry Sr. No,12 does not mention as to whom the said services to be supplied. The exemption given in Sr. No. 12 is qua the supply of service and not qua the recipient of the supply. To reiterate, it is not the nature of the property but the nature of the end use that will determine whether it is a commercial rent or residential rent.
• The authorities referred to a similar case, M/s Borbheta Estate Pvt Ltd. - 2019- VIL-181-AAR wherein GST was exempted on lease rental received on the property given for residential purpose to a corporate entity.
• Hence the authorities held that Applicant is eligible for exemption from payment of GST on the monthly license fee to be received on the proposed letting out on Leave and License basis of their residential building.