TaxTMI 
TaxTMI 
2021 (10) TMI 628
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.... between the MbPT and MMRDA. a. Way Leave fees & Lease rent payable every year as consideration for the grant of lease and way leave permission for the plot of land and water areas required by MMRDA for the MTHL project. The Annual Lease Rent of Rs. 22,58,30,199 is payable in respect of (i) Area under permanent occupation (i.e. 30 years lease period) and the Annual Lease Rentals of Rs. 33,23,36,835 is payable in respect of (ii) Area under temporary occupation during the construction period (i.e. Temporary occupation). b. Compensation equivalent to the amount of Rs. 24.48 crores in lieu of demolition of 4 existing sheds at STP yard situated on the said plot of land which is licensed to MMRDA for the purpose of the MTHL project and required to be demolished in order to render vacant possession of the said plot of land to MMRDA for the purposes stated in the MOU. The amount is arrived at on the basis of reconstruction cost at the present rate of construction based on Ready Reckoner of Government of Maharashtra (GOM) and payment thereof is one of the conditions of MOU. c. Compensation equivalent to the amount of Rs. 64 crores in lieu of decommissioning of Old....
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....erritory, as per the guidelines approved by Government of India from time to time. The applicant is duly discharging GST liability in respect of various taxable supplies made by it. 2.3 Mumbai Metropolitan Region Development Authority (MMRDA) is a body established under Mumbai Metropolitan Region Development Authority Act, 1974 ('MMRDA Act') and has been established for the purpose of planning, coordinating and supervising the proper, orderly and rapid development of the Mumbai Metropolitan Region (MMR); to formulate and execute plans, projects and schemes for the development of the MMR and to provide for matters connected with the purposes aforesaid. 2.4. The Government of Maharashtra has entrusted the responsibility of the execution of MTHL project to MMRDA. The MTHL project, undertaken by Government of Maharashtra, refers to the construction of 'Mumbai Trans Harbour Link' (MTHL) 21.8 km, freeway grade Road Bridge for connecting the island city of Mumbai with mainland across the harbor and would also connect Sewri West and the Eastern Freeway through the Sewri Interchange over the Sewri Bunder Road after the construction of a bridge across the Central Railwa....
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....tion entrusted to a Panchayat under article 243G of the Constitution or to a Municipality under article 243W of the Constitution. Accordingly, the applicant wants to examine the applicability of the said entry to payments received by the applicant from MMRDA for activities contemplated under the said MoU. For the purpose of deciding the applicability of the entry No. (3) to the payments received/ receivable by the Applicant, supply made should be that of "pure services ", such supply should be made to the Central Government, State Government or Union territory or local authority or governmental authority or a Government Entity and the services should be in relation to any function entrusted to a Panchayat under article 243G of the Constitution or in relation to any function entrusted to a Municipality under article 243 W of the Constitution. 2.10.2 As per the relevant provisions of the CGST Act, services in the nature of the lease, tenancy, easement, license to occupy land is a supply of 'pure services ' as it does not involve the supply of any goods. Therefore, subject services supplied by Applicant are in the nature of "pure services". 2.10.3 The definition of the t....
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....es in lieu of decommissioning of Old Pir Pau Jetty / Berth situated on the said plot of land is also for obtaining the grant of wayleave/lease. 2.14 The amount equivalent to 15% of the Security Deposit, received by the applicant by way of Way Leave Agreement Charges is only in the nature of deposit for incurring expenditure to be incurred for and on behalf of MMRDA. The applicant will, therefore, be only acting as paying agent of the MMRDA in respect of such services procured by MMRDA from third parties or any expenditure incurred on account of MMRDA in connection with the execution of a Way Leave Agreement & Lease Agreement. The said amount is not payable by MMRDA to the Applicant as "quid pro quo "or "consideration " for provision of any service by the latter to the former, and thus there is no service provider/service receiver relationship between the applicant and MMRDA as regards the said payment. Consequently, the said amount would not attract any GST. Even otherwise, the said payments are made under the MOU and in connection with obtaining services of grant of way leave/lease in respect of land and water areas, which is directly required for the purposes of the MTHL proje....
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....d is a governmental authority because it satisfies he clause 2zf of the above said notification. 3.3 Further, the MMRDA Act clearly sets out the basic objective of establishing the MMRDA which is to plan and execute the developmental and infrastructure work which was otherwise being done by the municipalities themselves. Thus, it is proved that the MMRDA has been established with the objective of doing works which were originally done by the municipalities. So, any work being done by the MMRDA can be termed as related to the functions entrusted to the municipalities under article 243W of the Indian Constitution. Hence, the transactions between MMRDA and MbPT clear this criteria too for becoming eligible for exemption under the Entry no 3 of Notification No.12/2017-CTR dtd.28-06-2017. 3.5 Thus, in the opinion of this office which has been formed on the basis of the documents mentioned above, the present transactions between MbPT and MMRDA clear all the criteria for becoming eligible for exemption under the said notification. 04. HEARING 4.1 Preliminary hearing in the matter was held on 22.01.2020. Smt. Gayatri Vidhate, Account Officer and Shri. Mandar Telang, CA appeared....
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....c. Compensation amount of Rs. 24.48 crores in lieu of demolition of 4 existing sheds at STP yard situated on the said plot of land which is licensed to MMRDA for the purpose of MTHL project and required to be demolished in order to render vacant possession of the said plot of land to MMRDA for the purposes stated in the MOU. d. Compensation amount of Rs. 64 crores in lieu of decommissioning of Old Pir Pau Jetty / Berth situated on the said plot of land, licensed to MMRDA for the MTHL project and required to be decommissioned by MbPT in order to render vacant possession of the said plot of land to MMRDA for the purposes stated in the MOU. e. MMRDA will be required to pay 'Way Leave Agreement charges' to MbPT for the said purpose on the actual reimbursable basis. The charges will be calculated as 15% of security deposit payable by MMRDA to MbPT (equivalent to 12 months way leave fee/lease rent), in terms of clause 10 of the MOU. f. MMRDA will be required to lodge with MbPT interest-free refundable security deposit equivalent to 12 months Way Leave fee/Lease rent. g. MMRDA will also be required to pay to MbPT in advance, a refundable deposit....
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....where certain activities or transactions constitute a supply in accordance with the provisions of sub-section (1), they shall be treated either as supply of goods or supply of services as referred to in Schedule II. (2) .......................... (3) ........................ 5.7.3 Schedule II lists the activities or transactions to be treated as 'supply of goods' or 'supply of services'. Entry 2 (a) of Schedule II states that "any lease, tenancy, easement, licence to occupy land is a supply of services". 5.7.4 Thus, we find that in the instant case, the supply of leasing of immovable properties and water areas within its territory by the applicant to MMRDA is nothing but supply of services. From the submissions made by the applicant we observe that the impugned MOU does not envisage any supply of goods whatsoever, along with the supply of leasing services and therefore we conclude that the subject activity is a supply of pure services. 5.7.5 Relevant Entry No. (3) Of Notification No. 12/2017-CT(R) dated 28.06.2017 is as under:- SI.NO. Chapter, Section, Heading, Group or Service Code (Tariff) Description of Services Rate (percen....
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....3th October, 2017. The relevant provisions pertaining to the present case are mentioned in Notification No. 31/2017 Central Tax (Rate) dated 13th October, 2017 which are reproduced as under:- Notification No. 31/2017-Central Tax (Rate) dated the 13th October, 2017 G.S.R (E).- In exercise of the powers conferred by sub-section (1) of section 9, sub-section (1) of section 11,sub-section (5) of section 15 and sub-section (1) of section 16 of the Central Goods and Services Tax Act, 2017 (12 of 2017), the Central Government, on the recommendations of the Council, and on being satisfied that it is necessary in the public interest so to do, hereby makes the following further amendments in the notification of the Government of India, in the Ministry of Finance (Department of Revenue) No.11/2017- Central Tax (Rate), dated the 28^th June, 2017, published in the Gazette of India, Extraordinary, Part 11, Section 3, Sub-section (i), vide number G.S.R. 690(E), dated the 28"'June. 2017, namely:- In the said notification, (i) in the Table, - (a) against serial number 3, - A. in item (iii), in column (3), for the words "Government, a local authori....
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....y out a function entrusted by the Central Government, Slate Government, Union Territory or a local authority." 5.8.5 MMRDA is a body established by the Government of Maharashtra under Mumbai Metropolitan Region Development Authority Act, 1974 ('MMRDA Act'). As per the preamble of the Act, the MMRDA has been established for the purpose of planning, coordinating and supervising the proper, orderly and rapid development of the Mumbai Metropolitan Region (MMR); to formulate and execute plans, projects and schemes for the development of the MMR and to provide for matters connected with the purposes aforesaid. Therefore, MMRDA is seen to be under the control of the Govt, of Maharashtra. 5.8.6 As per the MMRDA Act, the Authority comprises consists of the following members, namely (i) The Minister for Urban Development; (ii) The Minister for Housing; (iii) The Minister of State for Urban Development; (iv) The [Mayor of Mumbai]; (v) The Chairman, Standing Committee, Municipal Corporation of Brihan Mumbai (MCGM); (vi), (vii) and (viii) three Councillors of the MCGM elected by the Corporation, the election being held by ballo....
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....such law may contain provisions for the (devolution of powers and responsibilities upon Municipalities, subject to such conditions as may be specified herein, with respect to- 1. The preparation of plans for economic development and social justice; ii. The performance of functions and the implementation of schemes as may be entrusted to them including those in relation to matters listed in the twelfth Schedule. (b) The Committees with such powers and authority as may be necessary to enable them to cany out the responsibility conferred upon them including those in relation to the matters listed in the Twelfth Schedule." Twelfth Schedule of the Indian Constitution provides for the following functions (relevant) as under: (1) Urban planning including town planning; (2) Regulation of land-use and construction of buildings (3) Planning for economic and social development (4) Roads and bridges 5.9.2 Further, Article 243G of the Indian Constitution states as under: "Article 243G. Subject to the provisions of this Constitution, the Legislature of a State may, by law, endow the Panchayats with such powers an....
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....to be received by the applicant from MMRDA in terms of clause 10 of the MoU, and to be refunded by MbPT to MMRDA after the termination of the lease agreement can be considered as amounts received in relation to pure services rendered by the applicants to a Government Entity, will also be exempt from payment of GST under Entry No. (3) Of Notification No. 12/2017-CT(R) dated 28.06.2017, mentioned above. 5.13.1 In terms of clause 12 of the MoU, MMRDA will be required to pay to MbPT in advance, a refundable deposit of Rs. 20 Crores to be adjustable by the MbPT only against possible damages during the execution of work, if any, the cost of which is not paid separately by the MMRDA. The advance will be refunded by MbPT to MMRDA after completion of work, by deducting the cost of rectification work, if any, not carried out by MMRDA (but which was supposed to be undertaken by MMRDA). 5.13.2 Again, this amount of Rs. 20 crores is received in relation to pure services rendered by the applicants to a Government Entity, will also be exempt from payment of GST under Entry No. (3) Of Notification No. 12/2017-CT(R) dated 28.06.2017, mentioned above. 5.13.3 Further, Applicant has taken a r....
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....ct link between the payment and supply. From the close scrutiny of above definition it is clear that there should be a close nexus between the payment and supply and thus any payment/exchange/barter etc would be treated as consideration for supply and liable to GST. Prima facie a conclusion can be drawn without much difficulty that a deposit given in respect of the supply shall not be considered as payment made for such supply unless the supplier appropriates such deposit as consideration for the said supply. 5.13.7 The term deposit is not defined in the GST Act. From the perusal of Dictionary meaning, deposit has several dimension that include part or full price of the purchase, sum money paid into a bank account, a sum you pay when you start a renting something etc. Thus for a payment to be considered as security deposit should have following attributes namely:- i) For performance of an obligation. ii) Security against return of the hired goods, iii) Security against damage to properties rented. iv) Must be reasonable. 5.13.8 Applying the above test to the facts of the case we find that, the security deposit taken by the applicant is to s....
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....ST in terms of Entry No.3 of the Notification No. 12/2012-CTR dtd.20-06-2012 on the following considerations payable to it by Mumbai Metropolitan Region Development Authority ("MMRDA'') in terms of Memorandum of Understanding (MOU) entered into between the MbPT and MMRDA. a. Way Leave fees & Lease rent payable every year as consideration for the grant of lease and way leave permission for the plot of land and water areas required by MMRDA for the MTHL project. The Annual Lease Rent of Rs. 22,58,30,199 is payable in respect of (i) Area under permanent occupation (i.e. 30 years lease period) and the Annual Lease Rentals of Rs. 33,23,36,835 is payable in respect of (ii) Area under temporary occupation during the construction period (i.e. Temporary occupation). B. Compensation equivalent to the amount of Rs. 24.48 crores in lieu of demolition of 4 existing sheds at STP yard situated on the said plot of land which is licensed to MMRDA for the purpose of the MTHL project and required to be demolished in order to render vacant possession of the said plot of land to MMRDA for the purposes stated in the MOU. The amount is arrived at on the basis of reconstruction cost at the p....