Businesses premises is on the name of wife of taxpayer with a consent letter. Proper officer deemed it as supply as per schedule I related party transaction. Asked taxpayer to pay RCM on arms length price even if no rent expenses is debited in profit n loss account.
Is Proper officer is correct. Any relief that can be seek or provision which contradict proper officer's view.
Please guide. Thanks in advance. 🙏
Under GST law, transactions between related parties are treated as "supply" even if made without consideration, as per Schedule I of the CGST Act. Since the business premises are owned by the taxpayer's wife, this relationship qualifies as a "related party" under Section 15 of the CGST Act. The proper officer's view aligns with the law, as GST is applicable on such transactions, and the valuation is determined based on the arm's length price. However, relief may be sought by challenging whether the transaction meets all conditions for deemed supply or by ensuring compliance with valuation rules and claiming ITC where applicable.
An advance ruling can be sought to clarify whether such a transaction qualifies as supply under GST law. There are potential arguments for relief:
No Rent Expense in Books: If no rent is debited in the profit and loss account, it could be argued that there is no "supply" in the course or furtherance of business, which is a prerequisite for GST applicability.
Consent Letter: The consent letter might indicate that the premises are provided without any commercial intent, further supporting the argument that no taxable supply exists.
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