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2020 (8) TMI 487 - AAR - GSTExemption from GST - lease rent charged by the municipality for land i.e., water channel used for fish farming falls within the meaning of services relating to rearing of all life forms of animals by way of renting or leasing of vacant land - Notification No.12/2017-Central Tax (Rate) dated 28.06.2017 and corresponding notification under Kerala GST - HELD THAT - On reading of entry at Sl No. 54 of the said notification, it is clear that the services relating to cultivation of plants and rearing of all life forms of animals by way of renting or leasing of vacant land with or without structures is exempted under the entry. In the instant case, there is no doubt that the fish and crabs being reared by the applicant in the water channel taken on rent / lease are animals and the service of renting / leasing of the water channel has been availed by the applicant for the rearing of the animals. Thus, the activity of renting leasing the water channel by the Grama Panchayat to the applicant for fish farming for a consideration determined through auction is squarely covered under the exemption entry at Sl No. 54 of Notification No. 12/2017 Central Tax (Rate) dated 28.06.2017 as services relating to rearing of all life forms of animals by way of renting or leasing of vacant land. Exemption allowed.
Issues:
- Interpretation of GST exemption under Notification No. 12/2017 Central Tax (Rate) dated 28.06.2017 for lease rent charged by municipality for land used for fish farming. Analysis: 1. The applicant won an auction for a water channel for fish farming and entered into an agreement with the Grama Panchayat. The Panchayat informed the applicant of the requirement to pay GST at 18% on the bid amount as the auction was not exempt under Notification No. 12/2017 Central Tax (Rate) dated 28.06.2017. 2. The applicant sought an advance ruling on whether the lease rent charged by the municipality for the water channel used for fish farming falls under the GST exemption for "services relating to rearing of all life forms of animals - by way of renting or leasing of vacant land" as per the said notification. 3. The applicant's authorized representative argued that the lease rent was for the water channel used for fish farming and pointed out the GST implications as per relevant notifications. The GST on services supplied by a local authority by renting immovable property to a registered person is to be paid on a reverse charge basis by the recipient. 4. The applicant claimed that the lease rent should be exempt from GST under Heading 9986 of the notification, which covers services related to rearing animals by renting or leasing vacant land. The conditions for exemption include the activity being related to cultivation or rearing of animals and conforming to the descriptions listed. 5. The term "rearing" was defined as caring for animals until they are fully grown, which the applicant did for fish and crabs on the leased wetland. The land was provided on an annual lease, satisfying the conditions for exemption under the notification regarding renting of immovable property. 6. The nature of the transaction between the applicant and the Grama Panchayat was identified as renting or leasing the water channel for fish farming. The issue was whether this activity fell under the exemption at Sl No. 54 of the notification, which covers services related to rearing animals by renting or leasing vacant land. 7. The ruling clarified that the activity of renting or leasing the water channel for fish farming by the Grama Panchayat to the applicant was exempt under the notification. The exemption applied to services related to rearing animals by renting or leasing vacant land, which was the case in this scenario. 8. Based on the analysis, it was concluded that the lease rent charged by the municipality for the water channel used for fish farming fell within the meaning of "services relating to rearing of all life forms of animals - by way of renting or leasing of vacant land" and was eligible for GST exemption under the relevant notification.
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