2024 (7) TMI 979 - AAR - GST

GST Exemption Dispute: Lease Deed Registration Fees Challenged Under Section 98(2) of CGST Act

Ruling by SC/HC on GST applicability for lease deed registration fees. Authority rejected the advance ruling application due to ongoing audit proceedings, ... Levy of GST - stamp duty & registration fee paid for the purpose of a registering lease deed with registering authority - nil rate of tax under Sl. No. 47 of the exemption N/N.12/2017-CT dtd. 28.06.2017 - treatment of stamp duty and registration fee as consideration for mining lease service - HELD THAT:- The Asst. Commissioner of Audit, Angul Circle Gr.-I, CGST Bhubaneswar has issued Audit Observation No. 6 dated 10.11.2023 to the Applicant for recovery of Rs. 6,27,74,106/- towards GST on RCM on the amount paid towards Stamp duty and Registration fees. Pursuant to the said audit observations the Applicant has sought ruling. Further, it is also seen that the Applicant has been issued GST DRC-01A by the Addl. Commissioner, Audit Commissionerate vide C.No. GADT/CnG/ADT/GST/2791/2023-GR-1-CGST-ADT CIR-ANGL-ADT-2941 A dated 23.02.2024 for payment of GST on the aforesaid amount. It would be pertinent to mention here that the proviso to sub-section (2) of Section 98 of the CGST Act, 2017 provides that “the Authority shall not admit the application where the question raised in the application is already pending or decided in any proceedings in the case of an applicant under any of the provisions of this Act'. In the instant case, the Applicant i.e. M/s. Geeta Rani Mohanty, Barbil, appears to have fallen under the first proviso to Section 98 (2) of the CGST Act, 2017, by opting for advance ruling at this stage particularly when the subject matter is already taken up and pending in proceedings initiated by the Audit Commissionerate, CGST, Bhubaneswar under Section 65 of the CGST Act, 2017. Issues Involved:1. Whether GST is leviable on stamp duty & registration fee for registering a lease deed.2. Applicability of nil rate of tax on stamp duty & registration fee under exemption notification.3. Treatment of stamp duty and registration fee as consideration for mining lease service.Analysis:Issue 1:The Applicant sought a ruling on the levy of GST on stamp duty and registration fee paid for registering a lease deed. The Applicant, engaged in mining and supply of Iron Ore, argued that GST on stamp duty would lead to a cascading effect, as it amounts to tax on tax. The Applicant highlighted that stamp duty is a statutory duty under the Indian Stamp Act, collected by the State Government. The Applicant also referred to an exemption notification providing nil tax rate for services by the Government for registration, indicating that the duties paid are essential for registering the lease deed.Issue 2:Regarding the applicability of the nil tax rate on stamp duty and registration fee, the Applicant emphasized the exemption notification's provision for services by the Government for registration. The Applicant contended that both stamp duty and registration fee are prerequisites for registering the lease deed, qualifying for exemption under the notification. The Applicant's argument focused on the interpretation of the exemption notification to support their position against the imposition of GST on these charges.Issue 3:The Authority examined the Applicant's submission in light of the ongoing proceedings initiated by the Audit Commissionerate for recovery of GST on the stamp duty and registration fees paid by the Applicant. The Authority noted that the Applicant opted for an advance ruling while the matter was already under consideration in the proceedings by the Audit Commissionerate. Citing the proviso to Section 98(2) of the CGST Act, the Authority deemed the application for advance ruling as not maintainable under the law and rejected it on this basis.Conclusion:The Authority ruled that the application for advance ruling filed by the Applicant was not maintainable under the law and, therefore, liable for rejection. The Applicant was informed of the option to appeal to the Odisha State Appellate Authority for advance ruling within 30 days if aggrieved by the ruling. The decision was based on the procedural aspect of the application and its timing concerning the ongoing proceedings by the Audit Commissionerate, rather than delving into the substantive tax implications raised by the Applicant.