2021 (12) TMI 61

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....ilar provision under the CGST or MP GST Act would be mentioned as being under the GST Act. 3. BRIEF FACTS OF THE CASE - 3.1. Gwalior Development Authority is the company that provides residential land on lease is located at Ravinagar in the Gwalior district of the state of Madhya Pradesh (474002). 4. QUESTION RAISED BEFORE THE AUTHORITY - 4,1. We are providing residential land on lease basis for which we are charging or receiving lease premium whether GST is leviable or not? 4.2. Please also clarify whether GST is leviable on the maintenance charges and lease rent received on such residential land. 5. DEPARTMENT'S VIEW POINT- The Asst. Commissioner, Commercial Tax, Gwalior Circle-1 Madhya Pradesh has submitted his view by letter no. 350 Dated 16-06-2021 on the questions raised by the applicant as follows - "External Development Works" - Includes roads and road system landscaping, water supply, sewage and drainage systems, electricity supply transformer, sub-station, solid waste management and disposal or any other works which may have to be executed in the periphery of, or outside, a project for its benefit, as may be provided under the lo....

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.... of the Transfer of Property Act, 1882, defines lease, lessor, lessee, premium and rent. The provision is reproduced hereunder for ease of reference: "105. Lease defined A lease of immoveable property is a transfer of a right to enjoy such property, made for a certain time, express or implied, or in perpetuity, in consideration of a price paid or promised. or of money, a share of crops, service or any other thing of value, to be rendered periodically or on specified occasions to the transferor by the transferee, who accepts the transfer on such terms. The transferor is called the lessor, the transferee is called the lessee, the price is called the premium, and the money, share, service or other thing to be so rendered is called the rent." The important facts that the provision states, which are germane to the discussion at hand, are - - A lease of immoveable property is a transfer of a right to enjoy such property; - The consideration may be in the form of premium or rent or both; - Price is called the Premium; - The money, share, service or other thing to be so rendered is called the rent. 7.1.3 A combined readin....

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....transaction does not depend on the nature of the consideration. Even if the consideration is in the form of a one-time payment by way of premium, the supply shall remain to be that of a Lease and shall not become a Sale. 7.1.7 Again, it may be argued that if the intention of the legislation was to charge GST on this one-time lease premium, then, appropriate provisions would have been inserted. In this regard, it may be noted that 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. It is therefore clear that the legislature in its infinite wisdom has treated the Lease of land to be taxable. Since the premium on lease of land is treated to be taxable, conditional exemption has been granted by way of Entry No. 41 supra. 7.1.8 The Honorable Bombay High Court had the occasion to consider the taxability of one time premium on lease of land under the GST Laws in the matter of Builders ....

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....n the renewal of the lease. Thus, in the case of residential building constructed by the lessee on leased land, it is always the lease of the land that is renewed. The building does not attain the character of a leasehold property. 7.2.4 Since the entry grants the exemption to a leased / rented residential dwelling, the benefit is therefore restricted to a residential building which has been let out and does not extend to a parcel of land which has been taken on lease for construction of a residential dwelling on the said land. 8. Ruling 8.1. In respect to Question 1, we are of view that the GST is leviable on residential land provided on the lease basis. 8.2. In respect to Question 2, we are of view that the GST is leviable on maintenance charges and lease rent received by the applicant on such residential land. 8.3. The ruling is valid subject to the provisions under section 103 (2) until and unless declared void under Section 104 (1) of the GST Act. ============= Document 1 उक्त संदर्भित पत्र एवं पत्र के संलग....

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....्य किये जाते है। साथ ही साथ प्राधिकरण के द्वारा स्वयं कोई निर्माण कार्य नहीं कराया जाता है । उनके द्वारा निर्माण स्थल / भूमि पर निर्माण कार्य संबंधी निविदा जारी की जाती है। निविदा की शर्तो के अध्यधीन ऐसे संविदाकार / उप-संविदाकार ज....