AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2020 (7) TMI 353
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....05001 Rajasthan (hereinafter the applicant) is fit to pronounce advance ruling as it falls under the ambit of the Section 97(2) (a)(b) given as under: a. Classification of any goods or services or both; b. Applicability of a notification issued under provisions of this act; * Further, the applicant being a registered person (GSTIN is 08AAECH7175C1ZL) as per the declaration given by him in Form ARA-01) the issue raised by the applicant is neither pending for proceedings nor proceedings were passed by any authority. Based on the above observations, the applicant is admitted to pronounce advance ruling. A. SUBMISSION AND INTERPRETATION OF THE APPLICANT: 1. That the Rail land Development authority (hereinafter referred to as "RLDA"), a statutory authority under Ministry of Railway, Government of India having its office near Safdarjung Railway Station, Moti Bagh-I, New Delhi issued a Request for proposal (RFP) (enclosed at Page 134 in the Lease Agreement Executed between RLDA and Hazari Bagh Builders Pvt. Ltd.) which was publicized by RLDA for grant of lease for residential 86 commercial development along with development of financial infrastructure on 6.84 Ha (approx.) of Railwa....
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.... 6. that as per the facts the Applicant Company is registered in the State of Rajasthan and having GSTIN in State of Rajasthan. The Applicant company has entered into a long term Lease Agreement of 99 years with RLDA for undertaking residential 86 commercial development along with development of financial infrastructure as on 08.11.2019. The Applicant Company paid a sum of Rs. 158657105.00 in parts by way of RTGS on separate days in the month of February, 2019 as Security deposit which, in case of breach is refundable after forfeiting the bid security deposited separately for both the Plots as per the terms of the lease agreement which is Rs. 3300000.00 for Plot A and of Rs. 5200000.00 for Plot B. The issue to be examined in the present case is whether the amount paid prior to 29.03.2019 in pursuance to the lease agreement of 99 years executed on 08.11.2019 are exempt from levy of GST or not; 7. that the transaction in question is between RLDA and the applicant company to whom the land is given for undertaking commercial development and financial infrastructure on a long term lease of 99 years vide a lease agreement. A certain amount has been paid by the Applicant Company before e....
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....nly a security by way of which the contract is confirmed it cannot attract the liability of GST. The payment of premium would commence only after the said agreement has been entered into and not prior to that. Any amount paid before entering into the contract and where no services are provided it cannot be considered as a premium. Such amount is only for confirmation by the parties to enter into the Long term lease Agreement. The said amount does not fall under the scope of consideration as there was neither any contract between the parties nor any services provided. Hence, such amount is beyond the scope of GST; 12. that in the alternate, without prejudice to the above contentions, even if the said amount is considered as "lease premium" it is to be pointed out here that the Government, Ministry of Finance by way of Notification No. 04/2019-Central Tax Rate date 29.03.2019 has exempted any upfront amount payable for grant of long term lease of thirty years. Certain conditions have been prescribed in the said Notification which have not been violated by the Applicant and hence is squarely covered under the said Notification and is exempt from any GST liability for the amount paid ....
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....completion certificate or first occupation. The liability to pay central tax on the said proportion of upfront, amount (called as premium, salami, cost, price, development ; charges or by any other name) paid for long term lease of land, calculated as above, shall arise on the date of issue of completion certificate or first occupation of the project, as the case may be. 13. that it is submitted here that the lease agreement has been entered into on 08.11.2019 and the said Notification covers any amount which becomes payable on or after 01.04.2019. In the present case as the Agreement has been executed on 08.11.2019, the lease premium in pursuance to such an agreement is squarely covered under the said Notification and is totally exempt from the levy of GST. It is again submitted here that neither the agreement was executed nor any services of lease were extended by RLDA in the form of possession to the applicant therefore the amount if paid as premium was in pursuance to an agreement executed after the exemption Notification came into effect; 14. that without prejudice to the above submissions, on perusal of the Long term lease Agreement, it can be seen that the Applicant is a....
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....action is exempt from the levy of GST. In view of the aforesaid facts, legal provisions we are of the opinion on the queries that the amount paid earlier and payable in pursuance of long term lease between the Applicant Company and RLDA are not liable to GST. B. QUESTIONS ON WHICH THE ADVANCE RULING IS SOUGHT: i. Whether the Lease Agreement between the Applicant Company i.e. the Lessee and RLDA for a period of 99 years is exempt from levy of GST in view of the Notification No. 04/2019-Central Tax (rate) dated 29.03.2019 or Notification No. 12/2017-Central Tax (rate) dated 28.06.2017? ii. Whether the amount of Rs. 158657105.00 which is transferred by the Applicant Company as Security Deposit in pursuance to the tender and lease agreement dated 08.11.2019 is exempt under GST in view of the Notification No. 04/2019-Central tax(rate) dated 29.03.2019 or Notification No. 12/2017-Central Tax (rate) dated 28.06.2017? iii. Whether the amount of Rs. 158657105.00 deposited during February, 2019 is exempt under Notification No. 04/2019-Central Tax (rate) dated 29.03.2019 or Notification No. 12/2017-Central Tax (rate) dated 28.06.2017? C. PERSONAL HEARING In the matter personal hearing t....
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....". In this context, it is mentioned that RLDA has leased 7.337-hectare land to the applicant company i.e. M/s. Hazari Bagh Builders Pvt. Ltd., Ajmer, which do not fulfill the condition / definition of the said notification. Therefore, in view of this office reply for question No.1 is not affirmative. 2) Whether the amount of Rs. 15,86,57,105/- which is transferred by the applicant company as security deposit in pursuance to the tender and lease agreement dated 08.11.2019 is exempt under GST in view of Notification No.04/2019-Central Tax (Rate) dated 29.03.2019 or Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017? Comments: It is not correct contention that applicant company has transferred Rs. 15,86,57,105/- as security deposit in pursuance to the tender and lease agreement dated 08.11.2019. Whereas, as per agreement dated 08.11.2019 made between RLDA and Applicant Company at page No. 3 (as per copy forwarded with the application of the applicant), it was clearly mentioned that (F) "The lessee/ selected bidder in compliance of the term and condition of the LOA has (a) paid to RLDA following amount towards the first installment of the lease premium as specified in the ....
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....rea of the residential apartments in the project which remain un-booked on the date of issuance of completion certificate or first occupation / Total carpet area of the residential and commercial apartments in the project); Provided further that the tax payable in terms of the first proviso shall not exceed 0.5 per cent. of the value in case of affordable residential apartments and 2.5 per cent. of the value in case of residential apartments other than affordable residential apartments remaining un- booked on the date of issuance of completion certificate or first occupation. The liability to pay central tax on the said proportion of upfront, amount (called as premium, salami, cost, price, development ; charges or by any other name) paid for long term lease of land, calculated as above, shall arise on the date of issue of completion certificate or first occupation of the project, as the case may be. Therefore, the amount deposited by the applicant company i.e. M/s Hazari Bagh Builders Pvt. Ltd., Ajmer appears not exempted from the purview of GST. Thus, in view of this office, reply for question No.3 is not affirmative. E. FINDINGS ANALYSIS & CONCLUSION: 1. We have considered t....
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.... duration as provided under Form-12. 8. We observe that, the applicant deposited Rs. 15,86,57,105/- as a first installment of the lease premium in the month of February, 2019. The applicant's contention that it is not a lease premium but only a security amount is not tenable on the ground that security of contract was ensured when Letter of acceptance (LoA) was issued on 26.09.2018 by RLDA to the highest bidder i.e. the Applicant. In post LoA, bid conditions mandated that the highest bidder will form a SPV and will deposit first installment. Further, the applicant himself in his submissions stated that as against bid security of both the plots, they deposited Rs. 33,00,000/- for Plot A and of Rs. 52,00,000/- for Plot B. Therefore, the contention that the money deposited is not a lease premium but a security amount is not rational and tenable. The first installment of the lease premium was made to the RLDA after LoA. Whereas the amount so paid to secure and confirm the execution of the contract was bid security amount (Rs. 33,00,000/- for Plot A & of Rs. 52,00,000/- for Plot B). Therefore, amount of Rs. 15,86,57,105/- is installment of lease premium. 9. Whereas, the applicant is c....
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.... has deposited first installment of lease premium of Rs. 15,86,57,105/- by various RTGS on different dates from 16.02.19 to 22.02.19. In view of the facts of law as discussed above, we find that lease premium deposited by the applicant is a consideration towards leasing services supplied by RLDA to the applicant and thus liable to GST. 10. Whereas, while examining on functions of RLDA, we find that it is a statutory authority constituted under the Railways Act, 2005 with obligation, inter alia of development on Railway land for commercial use, entrusted to it by the Central Government for the purpose of generating revenue by non-tariff measures. We observe that in background of its function, especially of generating revenue, RLDA is leasing the parcels of land and thus it is a rental or leasing service of land for commercial function. In a way, it is clear from facts that RLDA is supplying rental or leasing service involving own land. The said service is classifiable under HSN 9972 12 'rental or leasing services involving own or leased non-residential property'. Further, the Services of HSN 997212 falls under Serial No. 16 (iii) of the Notification 11/2017- Central Tax (Rate) ....
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....Central Tax (Rate) dated 28.06.20 17 (as amended). Thus, we find that, the leasing services supplied by the RLDA to the applicant falls under HSN 997212 attracting GST @ 18% (SGST 9% + CGST 9%). 13. The applicant has further made a contention that leasing services provides by RLDA to them is exempt from GST as provided under Serial No. 41B of Notification 12/2017- Central Tax (Rate) dated 28.06.2017 as amended vide Notification 04/2019-Central Tax (Rate) date 29.03.2019. The relevant portion of the Notification 04/2019-Central Tax (Rate) date 29.03.2019 is as below: 41B Heading 9972 Upfront amount (called as premium, salami, cost, price, development charges or by any other name) payable in respect of service by way of granting of long term lease of thirty years, or more, on or after 01.04.2019, for construction of residential apartments by a promoter in a project, intended for sale to a buyer, wholly or partly, except where the entire consideration has been received after issuance of completion certificate, where required, by the competent authority or after its first occupation, whichever is earlier. The amount of GST exemption available for construction of residential apart....
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....01.04.2019 but in the instant case the amount of Rs. 15,86,57,105/-was deposited by the applicant during the month of Feb, 2019 which is prior to the applicable date 01.04.2019 of the said Notification. b. Further, as discussed in the para 9 above the 'Time of Supply of Services' in cases of RCM viz. Section 13(3) of GST Act, 2017, which is applicable to applicant in the instant case is "Feb 2019" and as the applicant has deposited the lease premium in "Feb 2019" the GST liability, Time of Supply of Service and Point of taxation are applicable in Feb, 2019. Thus, the said Notification is not applicable in the instant case. Thus, we find that the contention made by the applicant regarding applicability of Serial No. 41B of Notification 12/2017-CT (R) dated 28.06.2017 (as amended) is not tenable. 14. Whereas, the applicant has also made a contention for applicability of Serial No. 41 of Notification 12/2017-CT (R) dated 28.06.2017 (as amended) read with Circular No. 101/20/2019-GST dated 30.04.2019. The relevant entry of the Notification is reproduced here- Sl. No. Chapter, Section, Heading, Group or Service Code (Tariff) Description of Services Rate (per cent.) Condition 4....