2018 (11) TMI 1076 - AAR - GST

Levy of GST - ancillary service provided by a company duly registered under the Companies Act, 2013 which is owned by State Government of Punjab - Transfer fees - Extension fees - conversion fees - processing fees - bifurcation fees - tower charges - N/N. 12/2017 -Central Tax (Rate), dated 28.06.2017 - applicant is engaged in providing (30 years or more) lease of Industrial Plots against one time upfront amount. Held that - The services provided by the applicant, as enumerated at serial No. 14 of their application, though are in respect of the same plots but the entry No. 41 ibid, does not provide exemption to all services related to the plots covered there as is evident from the description of service which grants exemption only to the Upfront amount (called as premium, salami, cost, price, development charges or by any other name) payable in respect of service by way of granting of long term lease of thirty years, or more. Therefore, the other subsequent services rendered by the applicant as enumerated by them in their application (Sr. No. 14) are not mentioned therein and thus, appear to be not covered under the said exemption entry or any additional other entry in Notification No. 12/2017-CT(R) for that matter and thus appear to be liable for payment of CGST and UTGST. These services are, therefore, covered under Other Miscellaneous services -Group 99979 scheme of classification of services in the Annexure to Notification No.11/2017- Tax (Rate) dated 28.06.2017 with CGST rate of 9% as provided at Sr. No. 35 of Notification No. 11/2017-Central Tax (Rate) dated 28.06.2017 (as amended) with equal rate (9%) of UTGST as per entry No. 35 in Notification No. 11/2017-Union Territory Tax (Rate) dated 28.06.2017 (as amended). Ruling - The said services are taxable services in terms of sub-section (21) of section 2 read with section 9 of the CGST Act, 2017. The services are not specifically exempted in terms of Notifications issued under section 11 of the GGST Act, 2017. For the purpose of charging the tax, the services are covered under Other Miscellaneous services -Group 99979, Service Code 999799- Other services nowhere else classified as per the scheme of classification of services and taxable at 18%.

Summary

Issues:
1. Whether ancillary services provided by a state Government owned Industrial Development undertaking are exempt from GST under Notification No. 12/2017 - Central Tax (Rate), dated 28.06.2017.

Comprehensive Analysis:

Issue 1: Ancillary Services Exemption

Facts:
The Applicant, a state Government owned Industrial Development undertaking, provides long-term lease of Industrial Plots exempt from GST under Notification No. 12/2017. Ancillary services include Transfer Fees, Extension Fees, Conversion Fees, Processing Fees, Bifurcation Fees, and Tower Charges.

Applicant's Interpretation:
The Applicant argues that these ancillary services are linked to the exempted lease service and should also be exempt from GST.

Observation and Ruling:
The Notification exempts the upfront amount for long-term lease, not all services related to the plots. Thus, the ancillary services provided by the Applicant are not covered under the exemption entry. These services fall under "Other Miscellaneous services" and are taxable under CGST and UTGST at a rate of 9%.

Conclusion:
The Authority ruled that the ancillary services provided by the Applicant are taxable under CGST and UTGST, falling under "Other Miscellaneous services" and not exempted under Notification No. 12/2017.

This judgment clarifies that while the long-term lease of Industrial Plots may be exempt from GST, ancillary services provided in connection with such leases are not automatically exempt. The ruling emphasizes the importance of specific exemptions and highlights the taxable nature of services not explicitly covered under exemption provisions.