Notice scn -63 leasing/rental for immovable property

Understanding the Context

• Section 63 deals with the assessment of non-taxable persons. It allows tax authorities to conduct a "best judgment assessment" if a person liable to register fails to do so, or if they fail to obtain registration despite being required to under the law.

• The Issue: The user in the forum has received a notice for failing to pay tax on the leasing/rental of immovable property (SAC code 997212) at an 18% tax rate, amounting to ₹63,48,858.

• The Query: The poster is asking whether a dealer is compulsorily required to be GST-registered and pay taxes for such services.

Key Points for Consideration

1. Mandatory Registration: Under the GST regime, if a person's aggregate turnover exceeds the threshold limit (generally ₹20 lakhs, or ₹10 lakhs for special category states), registration becomes mandatory. Furthermore, if you are engaged in the supply of taxable services, you must register if you cross these limits.

2. Taxability of Immovable Property Rental: Renting of immovable property is considered a "service" under GST and is generally taxable at 18%.

3. Next Steps: Since an SCN has already been issued under Section 63, the authorities have already initiated the assessment process. It is highly advisable to:

   • Verify the Turnover: Calculate your actual aggregate turnover to determine if you were legally required to register.

   • Consult a Professional: Given the high tax demand, you should immediately engage a Chartered Accountant or a tax professional to draft a formal response to the SCN.

   • Respond Promptly: Do not ignore the notice, as the authorities can proceed with a best-judgment assessment in your absence, which may result in a higher tax liability and penalties.