Long-term lease premium under GST is taxable as service supply, with reverse charge liability applying to the recipient.

A long-term lease of a commercial plot, including one-time lease premium and annual lease premium, is treated as a supply of services under GST because lease of immovable property is covered by the statutory definition of supply and Schedule II expressly includes lease, tenancy, easement and licence to occupy land. A 99-year term does not by itself convert the arrangement into a sale, especially where transfer, mortgage and user restrictions remain in the lease deed. The exemption for upfront amounts on long-term lease of industrial plots was unavailable on the facts. GST on the lease premium is also payable under reverse charge because the applicable notification covers long-term lease of land for construction-related purposes and fastens liability on the recipient.

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Issues: (i) Whether the one-time long-term lease premium and the annual lease premium payable for leasing a commercial plot are supply of services and taxable under GST; (ii) Whether GST on the lease premium is payable under reverse charge mechanism.

Issue (i): Whether the one-time long-term lease premium and the annual lease premium payable for leasing a commercial plot are supply of services and taxable under GST.

Analysis: A lease of immovable property is covered by the statutory definition of supply, and Schedule II specifically treats any lease, tenancy, easement or licence to occupy land as a supply of services. The mere fact that the lease is for 99 years does not convert it into a sale, since duration alone is not decisive and the lease deed retained substantial restrictions on transfer, mortgage and user. The exemption for upfront amount on long-term lease of industrial plots was held unavailable because the plot was not shown to be in an industrial or financial business area within the meaning relevant to the exemption entry.

Conclusion: The one-time lease premium and the annual lease premium are taxable supplies of services, and the answer is against the applicant.

Issue (ii): Whether GST on the lease premium is payable under reverse charge mechanism.

Analysis: Reverse charge was attracted because the applicable notification specified long-term lease of land of 30 years or more against upfront amount or periodic rent for construction of a project by a promoter as a category liable to tax on reverse charge basis. The applicant fell within the relevant recipient category for the transaction in question, and the notification operated to fasten liability on the recipient.

Conclusion: GST on the lease premium is payable under reverse charge mechanism, and the answer is against the applicant.

Final Conclusion: The ruling treats the long-term lease transaction as a taxable supply of services and confirms reverse charge liability on the recipient for the lease consideration.

Ratio Decidendi: A long-term lease of land remains a supply of services under GST, and reverse charge applies where the applicable notification specifically brings the transaction within its scope.

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