Govt/Property Owners Liable for Organiser’s Compliance with GST
The Government has introduced a significant shift in accountability for GST compliance regarding events held on government-owned or private commercial properties. Under the new guidelines, property owners and government departments may now be held secondary liable if event organisers fail to meet their GST obligations.
Key Highlights of the New Rule:
Joint and Several Liability: If an organiser hosts a commercial event (concert, trade fair, or exhibition) on a rented property and defaults on GST payments, the tax authorities can now look to the property owner to recover the dues.
Mandatory Verification: Property owners (including Government Municipal Corporations and Development Authorities) are now required to verify the GST Registration and filing status of the organiser before entering into a lease or rental agreement.
The “No-Objection” Clause: It is now recommended that owners include a specific indemnity clause in rental contracts. This clause should ensure that the organiser is solely responsible for taxes and that the owner is protected against any future tax demands arising from the event.
Due Diligence for Govt. Departments: Government bodies renting out public grounds (like Parade Grounds or Stadiums) must now maintain a record of the organiser’s GSTIN and ensure that a “Provisional Tax Deposit” or “Bank Guarantee” is collected to cover potential tax liabilities.
Impact on Stakeholders:
| Stakeholder | New Responsibility |
| Organisers | Must provide proof of GST compliance and often a security deposit to the landlord. |
| Private Owners | Higher administrative burden to vet tenants; increased legal risk for non-filing by tenants. |
| Government Bodies | Stricter protocols for allotting public spaces to prevent revenue leakage. |
Significance:
This measure is designed to curb the “fly-by-night” operations in the event management industry, where organisers frequently collect tax from ticket-buyers but disappear without depositing it with the exchequer. By making the property owner a “gatekeeper,” the government aims to ensure 100% revenue collection from high-value commercial events.