TaxTMI 
TaxTMI 
2024 (8) TMI 233
X X X X Extracts X X X X
X X X X Extracts X X X X
....ld like to make it clear that the provisions of both the CGST Act and the MGST Act are the same except for certain provisions. Therefore, unless a mention is specifically made to any dissimilar provisions, a reference to the CGST Act would also mean a reference to the same provision under the MGST Act. Further to the earlier, henceforth for the purposes of this Advance Ruling, the expression 'GST Act' would mean CGST Act and MGST Act. 1. FACTS AND CONTENTION - AS PER THE APPLICANT FACTS: 1.1 Maharashtra Metro Rail Corporation Limited (Applicant') is a company incorporated in India under the provisions of The Companies Act, 2013 having its registered office at 1261, "Metro Bhawan", Opposite Dikshabhumi, Near Ambedkar College, Nagpur, Maharashtra, 440010. 1.2 The Applicant is engaged in establishing a Metro Railway System and/or Guided Urban Transit system in the State of Maharashtra outside Mumbai Metropolitan Region so as to meet the urban Transport needs. 1.3 The Applicant is registered under the provisions of Central Goods and Services Tax Act, 2017 ('CGST Act') and Maharashtra Goods and Services Tax Act, 2017 ('MGST Act') having GSTIN 27AAECN8723A1ZN. 1.4. The App....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ate Government Industrial Development Corporations or Undertakings or by any other entity having 20% or more ownership of Central Government, State Government, Union territory to the industrial units or the developers in any industrial or financial business area. 3.5 3 Provided that the leased plots shall be used for the purpose for which they are allotted, that is, for industrial or financial activity in an industrial or financial business area: 3.6 4 Provided also that the lease agreement entered into by the original lessor with the original lessee or subsequent lessee, or sub-lessee, as well as any subsequent lease or sale agreements, for lease or sale of such plots to subsequent lessees or buyers or owners shall incorporate in the terms and conditions, the fact that the central tax was exempted on the long term lease of the plots by the original lessor to the original lessee subject to above condition and that the parties to the said agreements 3.7 2.4. The upfront premium is for building and not land 2.4.1. As per Clause A 1. a) of LOA, "the bare shell commercial space so constructed shall be considered deemed hander over to the successful bidder on ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 2017 in the case of Builders Association of Navi Mumbai and Neelsidhi Realties v. Union of India. 2.5.8. Similar advance ruling has been given by the Gujarat Advance ruling authority in the case of Jinmagal Corporation. 2.5.9. From the above facts and references, we understand the licensed space cannot be termed as industrial or financial plot. 2.6. The space is not intended to be used for industrial or financial property 2.6.1. As stated above, the rented space is proposed to be used for parking or hospitality or institutional use, therefore not satisfying the said condition. 2.7. Agreement does not mention that central tax shall be exempted on long term lease 2.7.1. As per para 4.8 clause c of 'consideration to Maha-metro' given under Tender it is clearly mentioned that "the applicable GST along with applicable cess (if any) or any other taxes as applicable shall be payable in addition to the Total consideration. All other statutory dues, local levies, as applicable shall be charged extra and shall have to be paid to the respective authorities directly. 2.7.2. Further, clause E of LOA also specifically states that GST @ 18% shall be INR 1.26 crores on the fi....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ncial activity in an industrial or financial business area: 4 Provided also that the lease agreement entered into by the original lessor with the original lessee or subsequent lessee, or sub-lessee, as well as any subsequent lease or sale agreements, for lease or sale of such plots to subsequent lessees or buyers or owners shall incorporate in the terms and conditions, the fact that the central tax was exempted on the long term lease of the plots by the original lessor to the original lessee subject to above condition and that the parties to the said agreements and that the parties to the said agreements Non-Satisfaction of condition mentioned in Sr. No. 1 above table: 3.3.1 I have referred to Clause A 1. a) of LOA which states as under: "the bare shell commercial space so constructed shall be considered deemed hand over to the successful bidder on 'license basis' at the end of 24 months from the date of signing of License Agreement." 3.3.2. I have referred to the definition provided in the license agreement between the Applicant and service recipient, "licensed spaces means the specified bare shell commercial space (built-up area) in the property developmen....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... can be treated as commercial area. 3.3.13. Further, I would like to attract your attention towards the judgement of Hon'ble High Court Bombay, Writ Petition No. 12194 of 2017, in the case of Builders Association of Navi Mumbai and Neelsidhi Realties v. Union of India1. 3.3.14. Similar advance ruling has been given by the Gujarat Advance ruling authority in the case of Jinmagal Corporation. 3.3.15. The above facts and references, support the view of the register tax payer and in my opinion licensed space cannot be termed as industrial or financial plot. Non-Satisfaction of condition mentioned in Sr. No. 3 and 4 above table: 3.3.16. From the Leasing Agreement and Tender Document, I find that the purpose of rented space is for parking or hospitality or institutional use, and not for industrial or financial use. 3.3.17. In my opinion leased space is not intended for being used for industrial or financial business thus not satisfying the conditions of clause 41. Consideration Clause as per Tender Document and LOA: 3.3.18. As per para 4.8 clause C of 'consideration to Maha-metro' given under Tender it is clearly mentioned that "the applicable GST along with appli....
X X X X Extracts X X X X
X X X X Extracts X X X X
....t; adjacent to Airport Metro Station, bearing Kh. No. 147 (P) Mz. Somalwada vide Tender No-N1PD-12/2019 dated 09/06/2019. 5.1.3 M/s. Abhijit Realtors and Infraventures Pvt Ltd. (hereinafter referred as "Abhijit") was successful bidder. Consequent to acceptance of the bid agreement was signed on 18th July 2022, between the applicant and M/s. Abhijit. Some of the Important clauses required for decision are reproduced below, Title of Agreement: -License Agreement for allotment of commercial space adjacent to Airport Metro Station for a period of 60 buyers. Name of Work: Allotment of commercial space adjacent to Airport metro station. 5.1.4 Relevant terms of agreement are as under: Definition clauses- a. 'License period' means a period of 60 years the date of deemed transfer of commercial space to the licensee and ending on the Transfer Date; b. 'Licensed Space' means the specified bare shell commercial space (built-up area) in the property development building to be developed advancement to Airport Metro Station for commercial operations by the licensee under and in accordance with this License Agreement. c Clause 2.3 Construction of Bare Shell S....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... B. The Annual License Fees: a. The licensee has quoted an amount of Rs. 45.84 per Sqm per month towards the annual license fees for the first years of operations of the commercial space. b. The annual license fees as quoted shall be paid on annual basis, during the entire license tenure and shall be paid on higher of 10,000 Sqm or the actual built-up area constructed in the project. f. Annexure 1- Details of Land for Construction of Built-up Space- The designated land use for the built-up space to licenses to Abhijeet is stated in Annexure 1: Details of land for construction of Built-up Space Land details Area: 2899 Sqm Designated Land use Parking and commercial However, considering airport in the vicinity, best suited for hospitality sector and institutional use. Allowable FSI As per applicable unified Development control and promotion rules, 2022 (UDCPR-2020) Planning Authority Maharashtra Metro Rail Corporation limited Accessibility Road the proposed station has direct accessibility via wardha road rail suburban Railway Station: Khapri (6.8KMs) and Nagpur (9.2KMs) Air Nagpur international air....
X X X X Extracts X X X X
X X X X Extracts X X X X
....Abhijit Realtors and infra ventures Pvt. Ltd. ('Service recipient')? These questions are pertaining to upfront payment of Rs. 10.26. Cr only. 5.3 Provisions of Law relevant and applicable to decide the issue are; - 5.3.1 Classification of services and HSN codes and Explanatory Notes applicable are 9972 - Classification of services Sr. No. Chapter, section, Heading or Group Service Code (Tariff) Service Description (1) (2) (3) (4) 220 Heading 9972 Real estate services 221 Group 99721 Real estate services involving owned or leased property 222 997211 Rental or leasing services involving own or leased residential property 223 997212 Rental or leasing service involving own or leased non-residential property 5.3.2 Classification in Notification No 11/2017-Central Tax (Rate) for levy of Tax- Sr.No. Chapter, Section or Heading Description of Service Rate (Per cent.) Condition (1) (2) (3) (4) (5) 14 Section 7 Financial and related services; real estate services; and rental and leasing services. 16 Heading 9972 ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....arged for the long term lease of the plots but for the exemption contained herein, along with the applicable interest and penalty: Provided also that the lease agreement entered into by the original lessor with the original lessee or subsequent lessee, or sub-lessee, as well as any subsequent lease or sale agreements, for lease or sale of such plots to subsequent lessees or buyers or owners shall incorporate in the terms and conditions, the fact that the central tax was exempted on the long term lease of the plots by the original lessor to the original lessee subject to above condition and that the parties to the said agreements undertake to comply with the same.] 5.4 To decide the issue of applicability of exemption entry No. 41 of 12/2017 central tax rate dated 28.06.2017 following issue need to be decided. 5.4.1 Whether the applicant is undertaking or any other entity having 20% or more owner ship of central govt or state government? a. Submission of Applicant-owner ship of the Government is 100% (50% each of Central Government & State Government) b. Submission of Jurisdictional Officer-owner ship of the Government is 100% (50% each of Central Governme....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ee shall construct the commercial space in the form of bare shell structure under supervision of Maha Metro, at his own cost, within a period of 24 months from the effective date. The bare shell structure shall include RCC works such as foundation, retaining wall, columns, beams, Slabs and staircase only. From these terms of contract it is clear that M/s Abhijit has to construct "Bare-shell structure" on the space allotted to him; which after development is deemed to be handed over to the applicant. After completion of the "Bare-Shell structure", it will be given as a "licensed space" for period of 60 years to M/s Abhijit, subject to other terms in contract. 5.4.4 whether license or lease is or industrial plot for development for infrastructure for finance business? a. Submission of Applicant- Licence of commercial space. b. Submission of Jurisdictional Officer - Licence of commercial space. c. Findings, observation, discussion & decision I) Please refer the Government Notification dated 14-March 2018. It clearly states the purpose of Land use is for "parking lots, stations and for commercial use" from this GR it is very clear that th....