Long-term lease exemption fails where government ownership is not proved for the supplier under the notification.

Upfront premium for a thirty-year lease of land for a commercial office complex was found outside entry 41 of Notification No. 12/2017-Central Tax (Rate) because the exemption applies only to long-term leases of industrial plots or plots for infrastructure for financial business, and only where the supplier is a specified government development body or an entity with 20% or more government ownership. The material showing SMPK as an autonomous body, a tax deductor, and CAG-audited did not establish the required government ownership or control, and section 51 tax-deductor status was held insufficient to satisfy the exemption condition. The leasing supply was therefore not exempt.

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Issues: Whether the upfront premium payable for a thirty-year lease of land by SMPK for setting up a commercial office complex was exempt under entry 41 of Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017.

Analysis: The exemption under entry 41 applied only where the upfront amount was paid for a long-term lease of industrial plots or plots for development of infrastructure for financial business and the service was provided by specified government development corporations or undertakings or by an entity having 20% or more government ownership. The Authority examined the status of SMPK and the material placed on record, including its being an autonomous body, its registration as a tax deductor, and the fact that its accounts were audited by the Comptroller and Auditor General of India. These circumstances were held insufficient to establish that SMPK was an entity having 20% or more government ownership. The Authority also held that tax-deductor status under section 51 did not equate to the ownership condition in the exemption entry.

Conclusion: The supply of leasing the land by SMPK to the applicant did not fall within entry 41 of Notification No. 12/2017-Central Tax (Rate) and was not exempt.

Final Conclusion: The exemption claim failed because the supplier did not satisfy the ownership or control condition required by the notification.

Ratio Decidendi: An exemption for upfront premium on long-term lease of industrial land is available only when the supplier satisfies the specific statutory conditions in the exemption entry, and tax-deductor status or audit by the Comptroller and Auditor General does not by itself establish the required government ownership or control.

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