TaxTMI 
TaxTMI 
2021 (10) TMI 368
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....ry park in Surat, which has traditionally been the head-quarter of Diamond polishing, trading and export industry in Gujarat; that for the fulfilment of its objects, GHB has acquired pieces of land within the village limits of Ichchapore-Bhatpore of Surat District vide Lease Deed executed between the Gujarat Industrial Development Corporation (GIDC) as owner and GHB as Lessee, for a period of 99 years which is further sub-leased based on plots allotted to its members/applicants; that to achieve the intended purpose, GHB receives contribution from its members who are well known Gem and Jewellery exporters which is used towards the Infrastructure cost of the facilities like road, drainage, park, water supply, etc. for the members/applicants as per their booked area; that the members' contribution towards the infrastructure cost includes building of roads, storm water drainage, water distribution network, sewage network, landscape infrastructure, cable network, ESR water tank, sump, pump house, control room, sub-station, minor bridge on canal, approach road, electrical and power installation and fittings and street light infrastructure, Administrative cum Custom House Building, Compou....
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....e property and the seller shall retain no rights in the transferred property. (iii) As per the MOU executed with GIDC, the land is to be transferred to GHB after 15 years, for which the process is already initiated. Therefore, it can be inferred that the initial transaction can be termed as pre-sale arrangement. Like in any executed sale transaction, there are two steps viz., Agreement to sale and actual sale through conveyance deed, by whatever name called, in the current transaction too, the activity of allotment of land initially, subject to permanent transfer after 15 years was one of the condition of sale/transfer of the land and not a separate transaction. Hence, it is clear that it is a sale/transfer of land and not leasing of the land. (iv) The transaction between GIDC and GHB was of 'Conditional sale of land' and the intention was not lease of land for earning rent income. Here it is significant to look at the substance of the transaction rather than just the legal form. (v) The said long term lease and sublease for the long term period is taxed under Gujarat Stamp Duty Act, 1958 at prevailing stamp duty rates equivalent to the sale of property (....
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....eby clarified that disposing of or partying with an asset or any interest therein, or creating any interest in any asset in any manner whatsoever, directly or indirectly, absolutely or conditionally, voluntarily or involuntarily, by way of an agreement (whether entered into in India or outside India) or otherwise, not withstanding that such transfer of rights has been characterised as being effected or dependent upon or flowing from the transfer of a share or shares of a company registered or incorporated outside India. Transfer of Property Act, 1882 [53A. Part performance.-Where any person contracts to transfer for consideration any immoveable property by writing signed by him or on his behalf from which the terms necessary to constitute the transfer can be ascertained with reasonable certainty, and the transferee has. in part performance of the contract, taken possession of the property or any part thereof, or the transferee, being already in possession, continues in possession in part performance of the contract and has done some act in furtherance of the contract, and the transferee has performed or is willing to perform his part of the contract, then, notwith....
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....ention of Government is to provide a land to the business units, but it is not practically feasible for the Government to deal with each businessman separately. Consequently, just to facilitate the Government and businesses, GHB-as SPV has been incorporated. (x) In furtherance to point no.(9) above, it is to state here that the sublease of demised property by the GHB to its property members is in accordance with the terms and conditions set forth in principal deed with GIDC shall mutatis mutandis apply to sub-lease creating a deeming fiction as if the deed is being executed between GIDC and sub-lease. The purpose of the Government to promote the industry can endure and sustain only if intention of the legislature to exempt certain category of persons (State Government Industrial Development Corporations or undertakings or by any other entity having 20% or more ownership of Central Government, State Government, Union territory) from tax for a specific purpose is to be applied to other person with similar purpose as well. Pursuant to the above, the supplier of land for all purpose is deemed to be GIDC. (xi) The word 'lease' and/or 'sub-lease' mentioned in various ag....
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....embers is merely for allotment of Industrial plots/premises to grant occupancy rights of the land supplied by GIDC to the property member of the company. 5. GHB has submitted the copies of the following documents: (a) Registration Certificate issued to Gujarat Hira Bourse u/s. 12A of the Income Tax Act. (b) Memorandum & Articles of Association of Gujarat Hira Bourse along with license u/s. 25 of the Companies Act, 1956. (c) Section 7 of the CGST Act, 2017. (d) Relevant Extracts of the Finance Act, 2021. (e) Advance Ruling decision dated 22-4-2021 given by the Karnataka Advance Ruling Authority in the matter of M/s. Bowring Institute. (f) State of West Bengal & Others vs. Calcutta Club Limited and Chief Commissioner of Central Excise and Service & Others [2019(29) GSTL.545 (SC)]. (g) Entry No.41 of the Notification No.12/2017-CGST (Rate) dated 28-62017 as amended from time to time. (h) Extract of the Additional Agenda of the 22nd GST Council Meeting. 6. GHB has submitted the following: i. Lease Deed between GIDC and GHB on 27-3-08 for Plot Nos.X2, X2A & X3 (totally admeasuring 2,30,970 sq. Mtrs. L....
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....e to GHB. (ii) Allotment of Industrial plot/premises made between GHB and M/s. Sonani Jewels pvt.ltd., Surat made on 2-6-2021: A plot measuring 837 square metres has been sub leased/allotted to M/s. Sonani Jewels pvt.ltd., Surat by GHB in the Gem and Jewellery Park (referred to in Lease Deed detailed at (ii) above above and referred to as principal lease deed herein) for a price of Rs. 1,00,10,500/-(Price Rs. 11,960/- approx. per square metre) subject to the terms of the Principal lease) but not in any case beyond the period of principal lease deed. M/s Sonani Jewels pvt.ltd., Surat is also required to pay an annual lease rent at the rate of Rs. 2/- per square metre to GHB. 7. Question on which Advance Ruling sought? a. Whether the contribution paid/payable by the members towards Development Cost of the Bourse amounts to supply liable to Goods and Service Tax? b. Whether the said Contribution by members towards Development Cost of Bourse for the promotion of Exports of Gem and Jewellery would be exempt under Entry No.41(Heading 9972) of Notification No.12/2017Central Tax(Rate) dated 28-6-2017 (hereinafter referred to as the said Notification)? 41 &n....
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....hether the questions/issues raised in the application are already pending or decided in any proceedings in the case of GHB. Ans: No proceedings are initiated against the dealer. (3) Whether the application can be admitted for granting Advance Ruling? If not give reasons? Ans: Yes. (4) Comments on Merits. Ans: Section 7(1)(aa) is inserted through Finance Budget 2021 which has retrospective effect from 1-7-2017. The inserted subsection (aa) reads as follows: 'the activities or transactions, by a person, other than an individual to its members or constituents or vice versa, for cash, deferred payment or other valuable consideration.' And also as per Circular No.101/20/2019-GST dated 30-4-2019 of Department of Revenue, Ministry of Finance, reads as follows: Upfront amount(called as premium, salami, cost price, development charges or by any other name) payable in respect of service by the way of granting of long term lease(of thirty years or more) of industrial plots for development of infrastructure for financial business provided by State Government Industrial Development Corporations or undertakings or by other e....
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....es like road, street lights etc. v. Vide subject application, GHB refers the amount of Rs. 45,57,553 and Rs. 1,00,10,500 as reflected at sr no iii & iv of this para as Development Cost received by its members/ applicants towards the infrastructure/ Development Cost of the Bourse and it is this amount for which Ruling has been sought by GHB. We, therefore, pronounce our Ruling regarding taxability on this specific amounts and not on the other considerations between GHB and its members/applicants. 13.1 We refer to the definition of Supply as per Section 7 CGST Act which reads as follows: 7. (1) For the purposes of this Act, the expression "supply" includes-- (a) all forms of supply of goods or services or both such as sale, transfer, barter, exchange, license, rental, lease or disposal made or agreed to be made for a consideration by a person in the course or furtherance of business; 13.2 We also refer clause 2 (a) of Schedule II which read as follows : ACTIVITIES [OR TRANSACTIONS] TO BE TREATED AS SUPPLY OF GOODS OR SUPPLY OF SERVICES' 2 (a) any lease, tenancy, easement, licence to occupy land is a supply of services 13.3 Further....
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....ture for financial business, provided by the State Government Industrial Development Corporations or Undertakings or by any other entity having 50 per cent. or more ownership of Central Government, State Government, Union territory to the industrial units or the developers in any industrial or financial business area."; Explanation.- For the purpose of this exemption, the Central Government, State Government or Union territory shall have 50 per cent. or more ownership in the entity directly or through an entity which is wholly owned by the Central Government, State Government or Union territory.". NIL NIL 16.1 On reading the words of the said entry of Notification, we find that the exemption is available for subject leasing of plots by GIDC to GHB for the period of 99 years. The description of services, in subject matter, may be read as long term leasing services of the subject plots by GIDC to GHB (Developer). 16.2 We find that subject entry 41 to said Notification provides exemption for providing said services by GIDC to GHB (developer). In this regard, we find no merit in the contention of GHB, that GIDC has supplied services to industrial units, such as M/s....
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....State industrial development corporation and thereby cannot claim eligibility to exemption on consideration received from its applicants. 18. Further, We, suo-moto, examine the GST scheme of law in detail and find it worth mentioning the entry No. 77 to Notification No. 12/2017-CT (R) dated 28-6-17 in this regard, which is reproduced as follows : 77 Heading 9995 Service by an unincorporated body or a non-profit entity registered under any law for the time being in force, to its own members by way of reimbursement of charges or share of contribution - (a) as a trade union; (b) for the provision of carrying out any activity which is exempt from the levy of Goods and Service Tax; or (c) up to an amount of five thousand rupees per month per member for sourcing of goods or services from a third person for the common use of its members in a housing society or a residential complex. Nil Nil 18.1 Here, we note that as GIDC supply of subject service to GHB is exempted, thereby vide sr no 77 to said Notification, GHB supply of subject service to its members will be exempted if GHB was receiving consideration from the units limited to reimbursement of char....
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.... a. Firstly, GHB is not an unincorporated association. b. GHB is a Not for profit Company incorporated under erstwhile Section 25 of Companies Act, now section 8 of Companies Act, 2013. c. As per Section 7(1)(a) CGST Act, Supply includes all forms of supply of services, including lease, for consideration by a person in the course or furtherance of business. d. Person, as per Section 2(84) CGST Act, includes, inter alia, a Company; an association of persons or a body of individuals, whether incorporated or not, in India or outside India. e. Business, as per section 2(17) CGST Act, inter alia, includes- (a) any trade, commerce, manufacture, profession, vocation, adventure, wager or any other similar activity, whether or not it is for a pecuniary benefit; (e) provision by a club, association, society or any such body (for a subscription or any other consideration) of the facilities or benefits to its members. f. Thus, from the conjoint reading of the provisions of GST law, in our present case, Supply includes leasing of plots by GHB (a person) to its members, either for a subscription or any other consideration. ....