Renting of immovable property service—Separate small business exemption to co-owners—In the instant application, question before authority is as follows:

1. Whether small business exemption under Section 22 of the GST Act is available to all owners separately in case of jointly owned property?
2. Whether engaging a co-owner to collect and distribute rent among all the owners for administrative convenience will have any implication on the business exemption under Section 22 of the GST Act for individual co-owners?

Held that—The rent collected from joint property is equally distributed among the co-owners. Each co-owner received a rent income of below 20 Lakh, which is below the threshold limit under GST. By mere joining of hands of two or more persons, a different and distinct legal entity or legal personality does not come into existence, unless there is an intention to do so.  

A co-owner holding immovable property jointly with other co-owners, but receiving lease rent separately, in proportion to his share in the property, is eligible for the benefit of threshold exemption. There is also Judicial pronouncement under Service Tax that clubbing of rent amount received by each co-owner, as per their share in jointly owned rented property, is not permissible.
Refer case—[ANIL SAINI, KABAL SINGH, NEELAM SAINI, SURINDER KAUR, JASWINDER SINGH, PARMOD KUMAR CHAUDHARY, SUKHJEET JODHA VERSUS CCE, CHANDIGARH-I] [2017] [CESTAT CHANDIGARH]

Ruling—

1. Small business exemption, provided under Section 22 of the GST Act, is eligible to the co-owners separately in the case of jointly owned property, where the rent is collected together, but divided equally and transferred to the respective co-owner.

1. Engaging a co-owner to collect and distribute rent among all the owners for administrative convenience has no implication on the business exemption under Section 22 of the GST Act for individual co-owners.[ELAMBRANCHERI KHALDOON] [2018] 4 TAXLOK.COM 014 (AAR-Kerala)