TaxTMI 
TaxTMI 
2021 (1) TMI 549
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....0/-as one time long term lease premium/ salami as consideration for the said plot. The applicant is also required to pay annual lease premium of Rs. 5 per Sq. Mtr each year for 99 years as per the tender document as annual lease premium paid. 4. The applicant submitted that they are of the view that a long term lease for a period exceeding 30 years tantamount to sale of the immovable property since the lessor is deprived of the right to use , enjoy and possess the property once the said lease has been granted. 4. The applicant submitted that the attention is drawn to the Entry No. 49 of the List II of Seventh Schedule of the Constitution of India, which empowers only the State government to levy any tax on land which is produced hereunder : "49 Taxes on Land and Building" Attention is also drawn to Article 30 of Gujarat Stamp Duty Act wherein the aforesaid transaction is treated as conveyance. Such an instrument style as conveyance and conveying a right, title and interest in the 'immovable property' is brought into existence. 5. The applicant submitted that the Stamp duty is levied on the value including upfront premium and five times the average annual rent r....
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.... attached to the earth, or permanently fastened to anything attached to the earth" 11. The applicant has drawn the attention to term "Sale" as defined under the Immovable Property Act, 1981: Section 54 of Transfer of Property Act, 1882 defines the term "Sale" as a transfer of ownership in exchange for a price paid or promised or part-paid and part-promised. Supreme Court in the case of Kaliaperumal vs Rajagopal and anr (AIR 2009 SC 2122) has observed that 'Sale' is defined as a transfer of ownership for a price. In a sale there is an absolute transfer of all rights in the properties sold. No rights are left with the transferor. Hon'ble Bombay High Court in the case of Provident investment Co. Ltd vs Commissioner of income tax - AIR 1954 Bom 95 observed that a sale or transfer presupposes the existence of the property which is sold or transferred. It presupposes the transfer from one person to another of the right in the property. 12. The applicant has submitted that Entry 49 of the List II of Seventh Schedule of the Constitution of India, which empowers only the state government to levy any tax on land which is produced hereunder: "49. Taxe....
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....I of the GST Act,2017 is read as - "any lease, tenancy, easement, licence to occupy land is a supply of services". Lease premium is a periodical payment. Up front premium/ Salami is not. 20. The applicant submitted that one-time lease premium is different and distinct from lease rent. It is not a periodical payment, but a one time. It is in conceivable that on such a premium, the tax could be levied when Schedule II purposefully omits the words- Upfront premium/Salami. of the legislation was to charge GST on this one-time lease premium, then, appropriate provisions would have been inserted. 21. The applicant further submitted that if the intention of the legislation was to charge GST on this one-time lease premium, then, appropriate provisions would have been inserted. Though not being inserted, as there was a clear intent to leave out a transaction tantamount to a sale. Lease premium is not a periodical payment, but a one time. It is not, therefore, conceivable that on such a premium, the tax could be levied, assessed and recovered. 22. The applicant further submitted that one time premium under long term leases is generally regarded as equivalent to consideration for sal....
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....pplicant, relevant facts & the applicant's interpretation of law. At the outset, we would like to state that the provisions of both the CGST Act and the GGST Act are the same except for certain provisions. Therefore, unless a mention is specifically made to such dissimilar provisions, a reference to the CGST Act would also mean a reference to the same provisions under the GGST Act. 30. We observe that the Ahmedabad Urban Development Authority (hereinafter referred to as "AUDA") had carried out e-auction for leasing certain plots for a period of 99 years. The plot so auctioned could be used only for the purpose of construction of commercial projects and applicant has secured bid for plot No. 265, TP 22, Chandkheda through e-auction conducted by AUDA. They required to pay one time lease premium /salami of Rs. 35,65,85,940/-as one time long term lease premium/ salami as consideration for the said plot. The applicant is also required to pay annual lease premium of Rs. 5 per Sq. Mtr each year for 99 years as per the tender document as annual lease premium paid. 31. The first thing to be determined in the present case is whether the said transaction falls under the definition of Su....
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....n 3 (three) months of the Letter of Letter of Possession of plot for construction. The original deed shall remain with the Lessee and duplicate shall be given to the AUDA. The lease period is of 99 years. The period of lease may be extended or a fresh lease agreement may be entered with the lessee at the sole discretion of the Lessor for a further period 99 years or less for period as decided by Lessor, provided Lessee shall pay the lease rent at the enhance rate as may be fixed by the Lessor. 9. Plot shall be utilized only for the purpose of which it will be allotted any part of the building . Any part of the building or any unit/permissible therein cannot be soild or given on rent to anybody for the use other tan the permissible use 12. The Lessee shall not mortgage or transfer or part with permission or sublet the premises or apportion there or without the permission of AUDA. After completion of construction/development of building over the plot, the lessee shall have the right to sell/ convey/ transfer the built -up space / premise to the unit holder(s)/ occupant(s) along with sub-lease/ assignment of undivided leasehold rights in the land for residue period o....
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....or residential complex for business or commerce, either wholly or partly, is a supply of services. 33. The upfront concession fee received against the lease made for more than 30 years is exempted from the payment of GST under the provisions of entry No. 41 of Notification No. 12/2017-Central Tax (Rate), date 28-6-2017 as amended by Notification No. 32/2017-Central Tax (Rate), dated 13-10-2017, only when all the conditions of the Notification are met. The text of Entry No. 41 in Notification No. 12/2017-Central Tax (Rate), dated 28-6-2017 was substituted vide Notification No. 32/2017-Central Tax (Rate), dated 13-10-2017 and same is reproduced below: "One time upfront amount (called as premium, salami, cost, price, development charges or by any other name) leviable in respect of the service, by way of granting long term (thirty years, or more) lease of industrial plots, provided by the State Government Industrial Development Corporations or Undertakings to industrial units." [Entry before replacement] "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 le....
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....x (Rate), dated 13-10-2017 are not available to the applicant. 35. The Hon'ble High Court Bombay has dealt with the identical issue in the matter of Writ Petition No. 12194 of 2017 [2018 (12) G.S.T.L. 232 (Bom.)] in the case of Builders Association of Navi Mumbai and Neelsidhi Realties Vs. Union of India and Others. The issue before their lordship was to decide whether GST can be levied and collected on the long term lease granted by City Industrial and Development Corporation of Maharashtra Ltd. (CIDCO) for 60 years. While dealing with the issue the Hon'ble High Court has observed that lease premium amount is a consideration against supply of service and is subject to Goods and Services Tax. The relevant portion of the said order is reproduced as follows:- "21. We are, therefore, of the clear view that the demand for payment of GST is in accordance with law. The said demand cannot be said to be vitiated by any error of law apparent on the face of the record. In these circumstances, we do not find any merit in the writ petition. It is accordingly dismissed. Rule is discharged. There would be no order as to costs." 36. Leasing of a private property (land, building etc....
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....le to pay GST under Reverse Charge Mechanism under Section 9(3) of CGST Act, 2017. To determine the eligibility of the applicant for payment of GST under Reverse Charge Mechanism, we refer the Section 9(3) of CGST Act, 2017. The relevant text of Section 9(3) of CGST Act, 2017 is reproduced as under: 3) The Government may, on the recommendations of the Council, by notification, specify categories of supply of goods or services or both, the tax on which shall be paid on reverse charge basis by the recipient of such goods or services or both and all the provisions of this Act shall apply to such recipient as if he is the person liable for paying the tax in relation to the supply of such goods or services or both. 38.1 The Government on the recommendation of GST Council has issued Notification No. 13/2017-CT (rate) dated 28.06.2017 subsequently amended by Notification No. 05/2019-Ct (Rate) dated 29.03.2019. The relevant entry of the amended Notification No. 05/2019-CT (Rate) dated 29.03.2019 is reproduced as under: Sl.No. Category of Supply of Services Supplier of service Recipient of Service (1) (2) (3) (4) 5C Long term lease of land (30 years....