AAR: Multiple companies functioning from same address shall be allowed to take separate GST registration

Categories: Advance Ruling
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Recently, the Hon’ble Advance Ruling Authority, Kerala vide Order No. KER/55/2019 dated July 15, 2019 allowed separate GST registrations to the Applicant engaged in business of sub-leasing of office spaces as ‘co-working spaces’ to their clients and in ‘co-working space model’ it offers dedicated distinct and identifiable space, tables and chair to each client working there and each client company is working as separate and identifiable office within main office and which provide services alone.

Facts & Background:

  • Spacelance Office Solutions (P.) Ltd. (“the Applicant”) is engaged in the business of sub leasing of office spaces as “co-working spaces” to their clients. The lease agreement between the Applicant and landlord permit sub leasing and accordingly they obtain NOC from landlord for registering GST for the customers.
  • The Applicant provides dedicated land line number, fax number, high speed internet, air conditioning, housekeeping, pantry with drinking water, power back up, receptionist support, letter and postage handling and meeting room to the clients.
  • In the “co-working space model” the Applicant offers dedicated distinct and identifiable space, tables and chairs to each client working there. Each client company is working as separate and identifiable office within the main office. These companies are maintaining their financial records in electronic form and very well accessible from the “co-working space” at all the time.

Issue:

  • Whether GST registrations allowed for multiple companies at same address, if all such companies follow all GST rules and regualtions related to “Principal place of business”?

(Note- These are start-up companies in service sector, where no stock has to be maintained.

Held:

The Authority of Advance Ruling of Kerala has held:

  • There is no prohibition under the GST law for obtaining GST registration to a shared office space or virtual office, if the landlord permits such sub leasing as per the agreement. Each “co-working space” is demarcated with different suit number or desk number.
  • As the GST registration is based on PAN, identification of taxpayer is not a difficult task. While applying for GST registration for the co-working space, the rental agreement with the landlord and lessee along with the agreement between lessee and sub lessee must be uploaded as proof of address of principal place of business of respective suit or desk number.
  • The GST number assigned to each co-working space must be displayed at a prominent location and books of accounts relating to the activities or business are to be kept in the principal place of business.

Thus, separate registration can be allowed to multiple companies functioning in a ‘”co-working space”. Such companies shall upload the rental agreement with the landlord and lessee. If there is any sub-lease, then rental agreement between lessee and sub lessee should also be uploaded as proof of address of principal place of business of respective suit or desk number assigned to them. In addition to this, the Applicant can upload a copy of “monthly utility bill” in connection with payment towards electricity charges, water charges or other common services availed by the respective suit or desk number.

Citation: [2019] 108 taxmann.com 234 (AAR – KERALA)