TMI Blog2020 (9) TMI 354X X X X Extracts X X X X X X X X Extracts X X X X ..... de treating it as a home. We find that the Appellant has constructed the building with the intention of providing hostel accommodation which is more akin to sociable accommodation rather than what is commonly understood as residential accommodation. It is concluded that the impugned property cannot be termed as residential dwelling . Once the impugned property is not a residential dwelling, the exemption under Sl.No 13 of Notification No 09/2017-IT (Rate) dt 28.06.2017 will not apply to the renting/leasing of such property. Time Limitation - HELD THAT:- In this case, the application was filed manually on 6th December 2019 and the ruling should have been pronounced on or before 5th March 2020. No doubt the ruling given by the Authority has been passed after the time period stipulated under the statute. However, that does not render the ruling null and void or unsustainable. An order which is passed without jurisdiction can be held to be null and void and unsustainable. However, an order suffering from illegality or irregularity of procedure cannot be termed in executable - In this case, the Authority was well within its jurisdiction to pass a ruling on the subject matter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d absolutely by Mrs. M. C. Nagarathna, Mr. T. V. Ambarish, Mr. T. V. Nagaraj Mr. T.V. Anjan respectively. 3. The Appellant along with the other four owners have jointly entered into a Lease Deed Agreement with the Lessee on 21 June 2019 in terms of which the above said multi-storied property is leased out for a period of 9 years to the lessee for a consideration of ₹ 5,40,000/- per month. The monthly rent is paid to the respective accounts of the lessors in an agreed percentage. The Lessee has obtained the said property on lease for the purpose of sub-leases/sub-licences such residential premises to individuals (including students) for the purpose of long-stay accommodation. 4. The Appellant approached the Authority for Advance Ruling (AAR) seeking a ruling on the following questions: 1. Whether exemption prescribed under entry number 13 of notification no. 9/2017-integrated tax (rate) dated. 28th June, 2017 can be sought and the lessors (here Ambrish Vasudeva and 4 others) need not charge GST while issuing the invoice for the lease service to M/s. DTwelve Spaces Pvt ltd. 2. Whether the lease service falls under the Exemption prescribed and can be described ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Lessee is residential in nature and must be covered under the term Residential dwelling ; that definition of residential dwelling has not been given under GST law. However, under erstwhile Service tax law, residential dwelling was defined in Para 4.13.1 of Taxation of Services: An Education Guide dated 20 June 2012 ( Education Guide ) which was issued by CBIC containing clarification on many aspects. Relevant extract is re-produced as below - 4.13.1 What is a residential dwelling ? The phrase residential dwelling has not been defined in the Act. It has therefore to be interpreted in terms of the normal trade parlance as per which it is any residential accommodation, but does not include hotel, motel, inn, guest house, camp-site, lodge, house boat, or like places meant for temporary stay. 6.5. It is provided in Education Guide that in normal trade parlance, residential dwelling means any residential accommodation and is different from hotel, motel, inn, guest house, etc. which are meant for temporary stays. It can be deduced from this meaning that any residential accommodation which is used for long term stays can be referred to as residential dwell ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ht from BBMP. Accordingly, it can be concluded without any iota of doubt that the Lessee is using such property for running Paying Guest Accommodation for ladies. 6.9. They also relied on the Explanatory Notes to the Scheme of Classification of Services released by CBIC wherein, a clear demarcation has been given between services provided by hotel, inn, guest house, etc. for short term accommodation and that provided by hostels or paying guests for long term accommodation. They submitted that, it can be seen that services of accommodation provided by hotel, inn, guest house or similar establishments for short term stay have been kept in SAC 996311 whereas services provided by paying guest accommodation for longer stays including semi - permanent residence are covered under SAC 99632. They submitted that when legislators have themselves created a demarcation between services provided by hotels, inn, guest house or like and those provided by paying guests/hostels, findings of Ld. AAR Karnataka in Order dated 23 March 2020 = 2020 (4) TMI 692 - AUTHORITY FOR ADVANCE RULING KARNATAKA that the services provided by the Lessee is in nature of that provided by hotels, motels, inn, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted Tax (Rate) dated 28 June 2017, i.e. such property must be used as a residence; the ultimate usage of the property rented out by Appellant in the hands of Lessee must be seen. They relied on the definition of residence as given by the Hon ble Supreme Court of India in the matter of Bhagwan Dass and Ors. v. Kamal Abrol and Ors., cited in MANU/SC/0391/2005 wherein it was held as follows: 12. From the aforesaid analysis it is apparent that the word residence is generally understood as referring to a person in connection with the place where he lives, and may be defined as one who resides in a place or one who dwells in a place for a considerable period of time as distinguished from one who merely works in a certain locality or comes casually for a visit and the place of work or the place of casual visit are different from the place of residence . There are two classifications of the meaning of the word residence . First is in the form of permanent and temporary residence and the second classification is based on de facto and de jure residence . . .. 10. The court has further said in paragraph 13 that it is plain in the context of clause (ii) of Section 19 of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... actually or personally resides. 6.12. In view of above meaning of residence as laid down by the Supreme Court, they contended that it can be concluded that - o Residence generally means where person resides for a considerable period of time; o It is an act or fact of abiding or dwelling in a place for some time; o It means a place where a person permanently resides and not a place where he casually visits or go for short visits; o There are two classifications of residence, i.e. permanent or temporary and de jure or de facto , meaning of which has to be defined based on the statute and context in which it is used and it cannot be read in isolation; and, o De facto residence refers to the place where a person actually resides whereas de jure residence refers to a place which is legal residence of that person. De jure residence may not be the actual place of residence of such person and may exists only on records. Actual residence will be determined as a place where person usually lives. Accordingly, to sum up, they submitted that what is important is the person must actually stay at that place and that too for a considerable amount of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... commodation is being given by Lessee to any student/individual is for 3 months, the student s data residing in such property, from the very beginning, was submitted by the Appellant. Accordingly, they submitted that if a person is staying at a place minimum 03 months, it can be sufficiently called as long-term accommodation or permanency as against the accommodation provided by the hotels, inn, guest house, etc. where people (travellers, tourists, etc.) stay only for few days maximum. 6.15. The Appellant also relied on the Agreement between the Lessee and the student dated 01 July 2019, wherein it can be seen that the property has been repeatedly mentioned as residential premises and the student has been mentioned as resident thereof. The purpose of entering into such agreement is to sub-lease a unit in the property of Appellant. Further, the term of agreement for which student can stay is 11 months and the monthly occupancy rent is ₹ 10,944/-. They submitted that the Agreement dated 01 July 2019 is just like any other rent agreement entered with families for providing accommodation to stay on rent. If a person (say Mr. A) leases out his own residential house to a family ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e mechanism of filing an application online on common portal would be otiose as it is not serving any practical purpose, if date of filing or receipt of application has to be taken as date on which manual application is filed. Accordingly, they argued that the date of filing of application shall be taken as 23 August 2019 instead of 06 December 2019 and therefore, since the order has not been passed within the time limit prescribed under statute, the order must be set aside as having no legal sanctity. They further submitted that, even if date of filing of application is considered as the date on which manual documents are filed by the Appellant, i.e. 06 December 2019, as considered by Ld. AAR, Karnataka, order has been passed beyond prescribed time limit of 90 days. They placed reliance on the following judicial pronouncements in this regard: Khandelwal Extractions Ltd. v. State of U.P., cited in 2019 (20) G.S.T.L. 727 (All.) = 2018 (12) TMI 891 - ALLAHABAD HIGH COURT , and Siddhi Vinayaka Enterprises Pvt. Ltd. v. Commissioner, S.T., Raipur, cited in 2016 (43) S.T.R. 474 (Tri. - Del.) = 2016 (6) TMI 19 - CESTAT NEW DELHI . Accordingly, they submitted that the Impugned order ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Authority may be set aside as null and void ab initio since it has already been held by the Authority that . ......,Appellant is not effecting any supply of service to Lessee directly. PERSONAL HEARING 7. The appellant was called for a virtual hearing on 31 st August 2020 which was conducted on the Webex platform following the guidelines issued by the CBIC vide Instruction F.No 390/Misc/3/2019-JC dated 21 st August 2020. The Appellant was represented by Shri. Atul Gupta, Chartered Accountant. 7.1. The authorised representative gave a brief about the facts of the case and reiterated the submissions made in the grounds of appeal. In addition, they submitted the following documents which have been relied upon in the grounds of appeal: a. Document containing Zoning Regulations of Bangalore city b. Relevant extracts of the Education Guide; and, c. Case laws relied upon in Grounds of Appeal 7.2. In his submissions, the authorised representative drew attention to the Trade Licence obtained by M/s D Twelve Spaces wherein a licence has been procured for running a paying guest accommodation for girls. Further, he also placed on record the approved plan of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Lessor 1, Lessor 2, Lessor 3, Lessor 4 and Lessor 5) have jointly executed a Lease Deed with M/s DTweleve Spaces Pvt Ltd (referred to as Lessee) whereby the Lessors have agreed to lease their portion of the building to the Lessee for the purpose of sub-lease/sub-licence to individuals (including students) for long-term accommodation. In consideration for the lease, the lessee has agreed to pay a monthly rent of an agreed upon amount and the lessee undertakes to deposit an agreed percentage of the monthly rent in the bank account of each individual lessor. 11. With the above facts, let us examine the applicability of entry Sl.No 13 of Notification No 09/2017-IT (Rate) dated 28.06.2017. The relevant entry reads as under: Sl.No. Chapter, Section, Heading Group or Service Code Description of services Rate (percent) Conditons (1) (2) (3) (4) (5) 13 Heading 9963 or 9972 Services by way of renting of residential dwelling for use ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ablishment which provides inexpensive accommodation to specific categories of persons such as students, workers, travellers. On the other hand, a common understanding of the term residential dwelling is one where people reside treating it as a home. We find that the Appellant has constructed the building with the intention of providing hostel accommodation which is more akin to sociable accommodation rather than what is commonly understood as residential accommodation. Therefore, we conclude that the impugned property cannot be termed as residential dwelling . Once the impugned property is not a residential dwelling, the exemption under Sl.No 13 of Notification No 09/2017-IT (Rate) dt 28.06.2017 will not apply to the renting/leasing of such property. 13. The Appellant has argued at great length that the lessee has taken the impugned property on lease for purpose of running a paying guest accommodation for students. They have submitted documents to evidence that the students reside in the accommodation for durations between 3 months and 12 months. They argued that since there is a certain degree of permanency in the students stay at the property, it can be said that the proper ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed in Chapter XII, any reference to electronic filing of an application, intimation, reply, declaration, statement or electronic issuance of a notice, order or certificate on the common portal shall, in respect of that process or procedure, include the manual filing of the said application, intimation, reply, declaration, statement or issuance of the said notice, order or certificate in such Forms as appended to the CGST Rules. Further Circular No 25/25/2017 GST dated 21.12.2017 clarified that an application for obtaining an advance ruling under sub-section (1) of section 97 of the CGST Act and the rules made there under, shall be made in quadruplicate, in FORM GST ARA-01. Although the application shall be filed manually till the advance ruling module is made available on the common portal, the fee is required to be deposited online in terms of section 49 of the CGST Act. In view of the above, we do not find any merit in the argument of the Appellant that the date of application should be the date of online submission. The lower Authority is correct in adopting the manual filing date as the date of application. 15. As regards the time period within which the lower Authority is r ..... X X X X Extracts X X X X X X X X Extracts X X X X
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