Levy of GST— In the instant case, the applicant has sought Advance Ruling on the following questions:

1. Whether GST liability does arise in respect of property of the partner used by the Partnership Firm to carry out the business by the firm at free of rent?

2. If so, what is the relevant section or rule or provision in GST law under which the partner of the firm is required to pay GST on notional rent?

3. Is it mandatory to execute rental deed between partner and Partnership firm, when there is no furtherance of business for that partner?

4. What is the applicable valuation rule, when consideration is not fixed and not received by the Partner?

In the case at hand the applicant is the owner of the properties. He also holds 2/3rd of the shares in the partnership firm in which the Managing Partner and controls the firm. Therefore, the applicant and the firm who are separate persons are “Related Persons” for the purposes of this Act. Therefore, as per the above schedule, the supply of service between such related persons i.e., the applicant and the partnership firm, when made in the course or furtherance of business, the same is a taxable supply even when rendered without consideration.

Where the open market value is not available, the value of supply of goods or services of like kind and quality will be the taxable value. In the instant case, the property being rented and the supplier and recipient being related Rule 28 of CGST/TNGST Rules 2017 applies and the value should be arrived at accordingly for the purposes of GST.

Held that— GST is liable to be paid in respect of properties of the applicant rented out to the partnership firm to carry out the business of the firm even if it is free of rent as the activity is in furtherance of business and amounts to supply as per Section 7(1)(a) read with Schedule I of the CGST/TNGST Act, 2017.

The value to be adopted for the purposes of GST shall be as per Rule 28 of the CGST/TNGST Rules, 2017.