• Kandivali West Mumbai 400067, India
  • 022 39167251
  • support@email.com
April 19, 2022

GST registrations for several businesses from the same address: AAR rejects application

by CA Shivam Jaiswal in GST

GST registrations for several businesses from the same address: AAR rejects application

Facts and issue of the case

SPACELANCE OFFICE SOLUTIONS PRIVATE LIMITED, 715 A, Spencer Plaza, 7th floor, Anna Salai, Chennai-600002 (hereinafter called the Applicant) are registered under GST with GSTIN 33AAZCS2065D1Z7.The applicant has sought Advance Ruling on the following question:

Can GST registrations be allowed for multiple companies from same address, provided they follow all GST rules related to “Principle Place of Business”?

The applicant has stated that they are involved in the business of sub-leasing of office spaces (also known as “co-working spaces”) to start-up companies in their initial time of business to have a place to work and get the registrations done without much investment. They have a Lease agreement with the landlord which permit them to do sub-leasing. They have also obtained NOC from the landlord for registering GST for their customers. They provide dedicated landline number, Fax number, high speed internet, Air-conditioning, housekeeping, pantry with drinking water, power back-up, receptionist support, letter and postage handling and meeting rooms to companies registered there. The Applicant’s customers are into Service category where no stock is to be maintained. Their model of co-working solution also offers the customers, space to work, working from a separate and identifiable office within the main office. These companies are maintaining their financial records in electronic form which are very well accessible from the co-working space at all the time. The applicant has stated that leasing and maintaining full-fledged independent offices in big cities like Chennai are unaffordable and unfeasible to most of the start-up companies due to the high rental and related charges for amenities. Also in current pandemic situation, no one is doing good business to pay for rent, staff etc. Due to this reason, many start¬up prefer co-working solution. The applicant has stated that many of these businesses would not have survived, hadn’t they adopted this kind of cost control and cost reduction measures. The applicant has submitted that they have already got the advanced ruling in Kerala for the same question and they have furnished a copy of that order.

On interpretation of law the applicant has referred to Rule 18 of the CGST Rules viz., Display of registration certificate and Goods and Service Tax identification Number on the name board. They have stated that they comply with the said rule as the registered companies will keep the GST Certificate in the shared space as soon as it is received and they will display the name board with GST number in the prescribed format at the shared office lobby. The applicant has also referred to the provisions of Section 35 of the CGST Act 2017 which are as follows:-

Due to the prevailing PANDEMIC situation and in order not to delay the proceedings, the applicant was addressed through the Email Address mentioned in the application to seek their willingness to participate in a virtual Personal Hearing in Digital media. The applicant consented and the hearing was held on 19.01.2022. The Authorised Representative Mr. Boby Thomas, Director appeared for the hearing virtually and reiterated the submissions. The Member asked in what capacity the applicant is seeking the ruling on behalf of his service recipient. The AR replied that his clients are facing issues on registration as the principal place of business accommodates multiple units requiring separate registrations and as a space provider it affects their business. The applicant was asked to furnish agreement entered with clients; write up on the service provided to the clients; bills/invoices raised

The applicant was given another opportunity to be heard virtually on 25.02.2022. The Authorised representative (AR), Shri.Boby Thomas appeared for the hearing virtually. The AR was asked to explain in what capacity they seek the ruling. He stated that they issue NOC to their customers and they want to know whether their customers are eligible for GST registration based on the NOC issued by them, i.e., Multiple registration in the same building. They were asked whether the ruling is sought on behalf of their customers and the representative replied in affirmative. The AR stated that he has furnished the copies of the deeds and AAR ruling of Kerala and there is nothing more to be submitted.

The Centre Jurisdictional authority who has administrative control over the applicant has submitted that as on date there are no pending proceedings on the issue raised by the applicant. The state jurisdictional authority has stated that there are no pending proceedings on the issue raised by the applicant in their Advance Ruling application.

Observation

Court has carefully examined the statement of facts, supporting documents filed by the Applicant along with application, submissions made at the time of Virtual hearing and the comments of the Jurisdictional Authorities. The applicant has stated that they are in the business of sub-leasing office spaces to start-up companies. The applicant has entered in to a lease agreement with the landlord which permits them to sub-lease the premises. The applicant has executed a sub-lease agreement with the customers allowing them to use the space allotted to them. The applicant provides the work space and also renders allied services such as dedicated landline number, Fax number, high speed internet, Air-conditioning, housekeeping, pantry with drinking water, power back-up, receptionist support, letter and postage handling and meeting rooms to companies registered there. They have stated that their clients viz., offices operating in the shared space are facing issues in obtaining GST registration as the principal place of business accommodates multiple units requiring separate registrations. Further they have stated that they issue NOC to their customers and they want to know whether their customers are eligible for GST registration based on the NOC issued by them, i.e., Multiple registration in the same building. The applicant has sought Advance Ruling on the following question:

Can GST registrations be allowed for multiple companies from same address, provided they follow all GST rules related to “Principle Place of Business”?

It is evident that an applicant can seek an Advance Ruling only in relation to supply of goods or services or both undertaken or proposed to be undertaken by them. In the case at hand, entities sharing the work space are to be registered under GST Act and they have to furnish details of principal place of business along with documentary proof for the same. Hence the activity of registration is undertaken or proposed to be undertaken by the entities sharing the space and not the applicant, who lets out the shared space. The applicant in the instant case has admitted before the authority that the ruling is sought on behalf of their customers who are seeking registration and are facing issues on registration as the principal place of business accommodates multiple units requiring separate registrations. In the instant case the applicant has sought ruling before us on behalf of their customers and the act of registration is not undertaken or to be undertaken by the applicant. Therefore, we hold that this question is not admissible as per Section 97 read with Section 95 of the Act and therefore not admitted.

Further, the provisions of 5.103 categorically states that the ruling pronounced is binding only on the applicant.

Conclusion

Court rejected the subject application.

Enter your email address:

Subscribe to faceless complainces