TaxTMI 
TaxTMI 
2024 (8) TMI 1375
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..... 1.1 At the outset, we would like to make it clear that the provisions of the Central Goods and Services Tax Act, 2017 (the CGST Act, for short) and the West Bengal Goods and Services Tax Act, 2017 (the WBGST Act, for short) have the same provisions in like matter except for certain provisions. Therefore, unless a mention is specifically made to such dissimilar provisions, a reference to the CGST Act would also mean reference to the corresponding similar provisions in the WBGST Act. Further to the earlier, henceforth for the purposes of these proceedings, the expression 'GST Act' would mean the CGST Act and the WBGST Act both. 1.2 The applicant submits that he has entered into a leasing agreement with the Shyama Prasad Mookerjee Port, Kolkata (hereinafter referred to as SMPK), a body incorporated under the Ministry of Ports, Shipping and Waterways, Government of India, wherein, the SMPK has agreed to lease a industrial plot of land at Taratala Road for a period of thirty years (30 years) for setting up commercial office complex. The applicant made an application on 11.10.2022 seeking an advance ruling before the West Bengal Authority for Advance Ruling (hereinafter referred ....
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....nment or Union territory shall have 20 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 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: Provided further that the State Government concerned shall monitor and enforce the above condition as per the order issued by the State Government in this regard: Provided also that in case of any violation or subsequent change of land use, due to any reason whatsoever, the original lessor, original lessee as well as any subsequent lessee or buyer or owner shall be jointly and severally liable to pay such amount of central tax, as would have been payable on the upfront amount charged 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 fo....
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...., custodial institutions and penal institutions like jails, prisons, mental hospitals and reformatories. 8.2 "Assembly building": That is to say any building or part thereof where groups of people congregate or gather for amusement or recreation or for social, patriotic, civil, travel, sports and similar other purposes as the principal use excluding and except club, religious and political purpose. Such building shall include theatres, motion picture houses, drive-in-theatres, city halls, town halls, auditoria, exhibition halls, museums, skating rinks, gymnasiums, restaurants, eating houses, bars, hotels, boarding houses, dance halls, gymkhanas, passenger station and terminals of air, surface and other public transportation services, recreation piers and stadiums. 8.3 "Business building": That is to say any building or part thereof used principally for transaction of business for keeping of accounts and records or for similar purposes. Such building shall include offices, banks, professional establishments, court houses if the principal function of such offices, banks, professional establishments or court houses is transaction of public business or keeping of book....
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....sor, SMPK in the instant case, is a body incorporated under the Ministry of Ports, Shipping and Waterways, Government of India. The lessor is directly controlled by the Central Government department. 2.6 The applicant argues that SMPK in its official website "smportkolkata.shipping.gov.in" has declared vide notice dated 14.12.2018 bearing reference number FIN/368/B that SMPK is covered under the category of notified persons under notification number 50/2018 Central Tax dated 13.09.2018 and is required to deduct tax under section 51 of CGST/WBGST Act 2017. SMPK is therefore registered as a tax deductor in the state of West Bengal bearing registration number 19AAAJK0361L1DC. 2.7 Section 51 of the GST Act provides deduction of tax at source by the following persons: (a) a department or establishment of the Central Government or State Government; or (b) local authority; or (c) Governmental agencies; or (d) such persons or category of persons as may be notified by the Government on the recommendations of the Council, Notification No. 50/2018-Central Tax dated 13.09.2018 further requires to deduct tax under section 51 by the following persons:....
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....pplicant refers to the Advanced Law Lexicon 6th Edition by P Ramanatha Aiyar Vol 3, where 'ownership' means- "The collection of rights allowing one to use and enjoy property, including the right to convey it to others. Ownership implies the right to possess a thing, regardless of any actual or constructive control. Ownership rights are general, permanent and inheritable." The Applicant states that the control of the said Major Ports rests with the Central Government as there is no share capital in such organisations to determine the ownership in terms of percentage of share capital. However, as per the audited financial statement of SMPK it is clear that the audit of the same is done by the C&AG under Section 19 (2) of the Comptroller and Auditor General's (Duties, Powers and Conditions of Service) Act, 1971 read with Section 44 (2) of the Major Port Authority Act 2021 and everywhere in the audit report the regulations of The Ministry of Ports, Shipping and Waterways (MPSW), Government of India has been referred to. Therefore, it can be averred that SMPK satisfies the third condition stated above. 2.12 In regard to the last condition, the applicant submits that it is a manufa....
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....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." (emphasis inserted) 3.2 On the basis of the above condition, not only the plot should be used for industrial or financial activity but also the area where the plot is located should be an industrial or financial business area. 3.3 Industrial area means any area declared to be an industrial area by the State Government by notification in the Official Gazette, which is to be developed and where industries are to be accommodated. In the application, the applicant did not produce any evidence on the nature of the land and area to prove it as industrial business area. 3.4 Besides, in the petition itself, the applicant sought for advance ruling on....
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....to the sovereign functions of the Government including all the activities carried on by the departments of the Central Government dealing with defence research, atomic energy and space; or (7) any domestic service; or (8) any activity, being a profession practised by an individual or body or individuals, if the number of persons employed by the individual or body of individuals in relation to such profession is less than ten; or (9) any activity, being an activity carried on by a co-operative society or a club or any other like body of individuals, if the number of persons employed by the co-operative society, club or other like body of individuals in relation to such activity is less than ten;" 3.7 In the application, the allotment letter does not specify structure or activities of "commercial office complex". Also the applicant did not produce any document that can describe the activities to be done in that commercial office complex and whether such activity fulfills all conditions to be termed as "industrial activity". 3.8 Furthermore, in order to qualify for the exemption as per the afore-mentioned entry of this notification as applicable in thi....
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.... the matter that, where any immovable property is required for the purposes of the Board, the Central Government, or as the case may be, the State Government may, at the request of the Board, procure the acquisition thereof under the provisions of the Right to Fair Compensation and Transparency in Rehabilitation and Resettlement Act, 2013. 3.13 This statute also empowers the Board of Major Ports (including SMPK) to create specific master plan in respect of any development or infrastructure established or proposed to be established within the port limits. The Board also decides the rate for assets and services available at SMPK, as prescribed in Sec 27 of the Act, and there is no control of the Central Government for such. 3.14 Section 33 of the Act empowers the Board to take financial decisions, like it can raise loans for its capital expenditure or working capital requirements. The loans may be raised by Board in the open market within India and in any country outside India on port securities including but not limited to debentures, bonds and stock certificates issued by the Board or may be obtained from the Central Government or a State Government. 3.15 The Central Gover....
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....nstitute the Board by making fresh appointment to all posts of the Board on such terms and conditions as the Central Government may consider necessary, and in such case, any person who stand removed from their offices under clause (a) of sub-section (2) shall be deemed disqualified for appointment." 3.16 So, it is clear from the above mentioned Section that in normal course of time, the Central Government does not have any control in the management of the Board, and it operates as an autonomous body. The applicant, in this case, referred a particular transaction when the Board of SMPK is managing and exercising the administrative and financial power, so the Central Government had no control over the management in that period and the Central Government only plays a supervisory role. It is also to be mentioned here that the Central Government is liable to place a full report to be laid before the Parliament for taking control of the management of the Board, as prescribed u/s 49 of the Act. When the board of SMPK takes administrative and financial decisions, raises loans, pays salaries and other financial benefits to its employees and retired employees, decides the rate for asse....
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....the authority that the exemption should not be allowed as it does not cover all conditions laid down in the notification mentioned above. Additional submission by the applicant 4.1 In course of personal hearing, the authorized advocate of the applicant made a prayer to allow the applicant to rephrase the question admitting the fact that the land would not be used for industrial activity. The prayer was allowed and the applicant rephrased the question as follows: Whether the upfront premium payable by the applicant towards the services of by way of granting of long term lease of thirty years, or more of industrial plots or plots for development of infrastructure for financial business by SMPK is exempted under entry 41 of Notification No. 12/2017-CGST (Rate) dated 28.06.2017? Observations & Findings of the Authority 5.1 We have gone through the records of the issue as well as submissions made by the authorized advocate of the applicant during the course of personal hearing. We have also considered the submission made by the officer concerned from the revenue. The issue before us is to determine whether the services of leasing of an industrial plot of land at Tar....
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.... 5.5 Regarding the second condition for availing the benefit of exemption as per the aforesaid entry as to whether the property leased out is an Industrial plot or plots for development of infrastructure for financial business or not, the conditions as further laid down in entry number 41 of Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017 as amended from time to time may be revisited: "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: Provided further that the State Government concerned shall monitor and enforce the above condition as per the order issued by the State Government in this regard: Provided also that in case of any violation or subsequent change of land use, due to any reason whatsoever, the original lessor, original lessee as well as any subsequent lessee or buyer or owner shall be jointly and severally liable to pay such amount of central tax, as would have been payable on the upfront amount charged for the long term lease of the plots but for the exemption contained herein, along with the applicab....
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....ent for the first year @ Re. 1/- per sq. mtr. plus applicable taxes, within 30 days from the date of the offer letter for allotment. [Clause 15(i) of Annexure-VI: Conditions of Lease] The tax components will be as in vogue from time to time. Presently, the tax components are as mentioned below:- Payment of G.S.T Upfront @ 18% on the aggregate of quoted / accepted rent and occupier's share of Municipal Taxor as may be reviewed by Govt. of India Token annual rent (where upfront is paid) 18 % on token annual rent or as may be reviewed by Govt. of India Annual rent @ 18% on the aggregate of quoted / accepted rent and occupier's share of Municipal Taxor as may be reviewed by Govt. of India [Clause 15(f) of Annexure-VI: Conditions of Lease] 5.9 Thus, even we assume that the applicant has taken on lease an industrial plot for financial business from SMPK, the said supply of services doesn't fulfill all the conditions as specified in the relevant entry of the exemption notification supra. 5.10 Now we take the issue to decide the third condition for availing the benefit of exemption as per the aforesaid entry, i.e. whether service provider is a s....