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Section 2(50) of CGST Act - Fixed Establishment

10 August 2017

I am registered in Chandigarh and provide an office space to a firm in Unitech Cyberpark, Gurgaon. I do not have any technical or human resources at the site. Maintenace is paid for by the tennents. Does it qualify to be a "fixed establisment" . The Tennent Firm, a multinational, is insisting that I take Haryana registration and bill under SGST & CGST as they can face loss in iff setting tax paid on my invoice billed under IGST.

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5 Replies

Umesh V Naig (Statutory Analyst) (452 Points)
Replied 10 August 2017

Definite answers are required for this.

1.Unitech is corporate

2. Rental agreement is made and registered

3.Propertity tax etc paid for claiming under I.T deductions

4.Rent above Rs 50000

if above are correct you need to take a regn online under GST at your property location and local billing needs to be done CGST+SGST as per " supply of services on destination basis " . This is technical issue.

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Studentsca (CA Practice ) (3577 Points)
Replied 10 August 2017

It is a fixed establishment for them and not for you.

Chhatra Singh Dugar (1464 Points)
Replied 10 August 2017

For determining whether renting of your commercial property is inter State supply or intra state supply two co-ordinates are to be established :
1) Place of supply of service
2) Location of supplier of service

PLACE OF SUPPLY

Section 12(3) of IGST Act clearly defines place of supply in case of immovable property. It says that place of supply is where property is located. In your case it is in Gurgaon. So place of supply without any doubt is Gurgaon.

LOCATION OF SUPPLIER

Section 2_(25) of IGST Act contains 4 clauses which needs to be examined to decide this.
Clause a) it requires that land owner should have any type of business in place of supply and is also registered there Gurgaon. As it not there so this clause is no applicable in your case.Section 2(85) of CGST Act defines place of business more clearly. It says that for it to be a location of business is mandatory that whether any kind of business is carried from this place - answer is emphatically No. Also is there any warehouse, a godown or any other place where taxable person stores his goods, supplies or receives goods or devices or both. or maintains books of accounts or a place where where he is engaged through an agent So having immovable property does not show you have no place of business Gurgaon. So this clause has no bearing in your case.
Clause b) As you have no Fixed Establishment in Gurgaon. So you are not covered in this clause. I will explain Fixed Establishment layer.
Clause c) Supply of Service from more than one establishment is not there in your case.
Clause d) so your cadr falls in this residual class which says that in the absence of above said clauses a), b) & c) the location of the usual place of residence of the supplier. So your usual place of residence in Chandigarh so this is location of supplier.
Thus as place of supply and location of supplier are located in different taxable territory I.e. in two different states. So it constitutes Inter state supply. Hence IGST is applicable.