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2019 (3) TMI 1950 - AAAR - GSTLevy of GST - one time concession fees charged by the appellant in respect of their property - long term lease of 60 years for development of infrastructure for financial business or private investment made on DBFOT (Design, Build, Finance, operate and Transfer) providing - exemption as per Sr. No.41 of the N/N. 12/2017 -Central Tax (Rate), dated 28/06/2017 as amended by N/N. 32/2017 - Central Tax (Rate), dated 13/10/2017 - HELD THAT - The appellant is not the authority primarily involved in developing or leasing any industrial plots / other plots for Financial Business - To consider the Appellant's entitlement to exemption, the Lessee should be the entity involved in the activity of developing a land / particular mass of area into multiple industrial plots which in turn would be allotted to different potential industrialists. However, in the instant case, the Lessor is not the entity involved for development of any Industrial or Financial Business area but for promotion of tourism and allied activities simply - Lessor being not involved in the activity of allotting industrial space and Lessee being the entity not involved into developing multiple industrial plots, the benefit of the said Notification is not applicable to the Appellant. It is an established and settled position of law that the conditions of the Notifications are required to be strictly interpreted. As the Appellant does not meet all the requirements stipulated in the- Notification, the benefit of the said Notification will not be available to them. On a careful reading of the correct position of the statute vis-a-vis the appellant's contention, it clearly emerges that the language employed in the statute as discussed in para 10 (i) to (iv) are plain and unambiguous and it amply conveys the legislative intent. The appellant does not satisfy the criteria laid down in Sr. No. 41 of the Notification No. 12/2017 (CGST (Rate) dated 28/06/2017) as amended by Notification No. 32/2017 (CGST (Rate) dated 13/10/2017. The Ruling given by AAR-Goa being consistent with the extant statute is maintained. The appeal is rejected.
Issues Involved:
1. Applicability of GST on one-time concession fees for a long-term lease. 2. Eligibility for exemption under Sr. No. 41 of Notification No. 12/2017 (CGST (Rate)) as amended by Notification No. 32/2017 (CGST (Rate)). 3. Interpretation of "industrial plots" and "plots for development of infrastructure for financial business." 4. Compliance with the conditions stipulated in the exemption notification. Issue-wise Detailed Analysis: 1. Applicability of GST on One-Time Concession Fees for a Long-Term Lease: The appellant, registered under the GST Act, sought an advance ruling on whether GST is applicable on one-time concession fees charged for a 60-year lease of property for developing a 5-star hotel. The Authority for Advance Ruling (AAR) held that the service provided does not satisfy the criteria for exemption under Sr. No. 41 of Notification No. 12/2017 (CGST (Rate)) as amended by Notification No. 32/2017 (CGST (Rate)), making the long-term lease liable for GST. 2. Eligibility for Exemption under Sr. No. 41 of Notification No. 12/2017 (CGST (Rate)) as Amended by Notification No. 32/2017 (CGST (Rate)): The appellant claimed exemption under Sr. No. 41 of the mentioned notification, arguing that the transaction is an upfront one-time premium, not merely periodic lease rental. However, the AAR-Goa concluded that the service did not meet the exemption criteria, and the Appellate Authority upheld this decision, stating that the appellant does not fulfill the conditions laid out in the notification. 3. Interpretation of "Industrial Plots" and "Plots for Development of Infrastructure for Financial Business": The notification specifies that the exemption applies to long-term leases of industrial plots or plots for developing infrastructure for financial business, provided by government entities. The Appellate Authority examined the agreement and found that the lease was for constructing a hotel, not for industrial or financial business development. The appellant's property was intended for commercial use, not industrial development, thus failing to meet the exemption criteria. 4. Compliance with the Conditions Stipulated in the Exemption Notification: The exemption notification requires: - A long-term lease of thirty years or more. - The lease should be for industrial plots or plots for infrastructure development for financial business. - The lease should be provided by government entities or those with over 50% government ownership. - The lease should be to industrial units or developers in industrial or financial business areas. In this case, the lease period and the government entity condition were met. However, the property was not an industrial plot, and the lessee was not an industrial unit or developer in a financial business area. Therefore, the appellant did not satisfy all the conditions for exemption. Conclusion: The Appellate Authority upheld the AAR-Goa's decision, stating that the appellant did not meet the criteria for exemption under the notification. The lease was for commercial use, not for industrial or financial business development, and thus, the one-time concession fees were liable for GST. The appeal was rejected, maintaining the ruling consistent with the extant statute.
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