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2024 (1) TMI 1091 - AAR - GSTExemption form GST - upfront premium payable by the applicant towards the services of leasing of the land for industrial purposes by SMPK - entry 41 of Notification No. 12/2017 Central Tax (Rate) dated 28.06.2017 - HELD THAT - On due consideration of the reply given by SMPK and in light of the discussions detailed herein above including scope of audit of CAG, it cannot be concluded that SMPK may be regarded as an entity having 20 percent or more ownership of Central Government merely on the ground that its books of accounts are audited by CAG - it cannot be held that being registered as a deductor of tax at source under section 51 of the GST Act can be equated with the supplier of services specified in entry number 41 of Notification No. 12/2017- Central Tax (Rate) dated 28.06.2017 i.e., an entity having 20 percent or more ownership of Central Government. The services of leasing of the land for industrial purposes by SMPK to the applicant is found not to be covered under entry 41 of Notification No. 12/2017 Central Tax (Rate) dated 28.06.2017 and therefore cannot be treated as an exempt supply.
Issues Involved:
1. Whether the upfront premium payable by the applicant towards the services of leasing of the land for industrial purposes by SMPK is exempted under entry 41 of Notification No. 12/2017 Central Tax (Rate) dated 28.06.2017? Summary: Issue 1: Exemption of Upfront Premium under GST Notification The applicant entered into a leasing agreement with SMPK for an industrial plot for 30 years, paying an upfront lease premium of Rs. 39,00,11,000/-. The applicant contended that this upfront lease premium should be exempt from GST under entry 41 of Notification No. 12/2017 Central Tax (Rate) dated 28.06.2017. The applicant argued that all conditions for exemption were met: the lease period is 30 years, the property is an industrial plot, SMPK is a government-controlled entity, and the applicant is an industrial unit. Revenue's Submission: Revenue acknowledged the lease period and SMPK's status but emphasized that the land must be used for industrial or financial activities in an industrial or financial business area. The applicant failed to provide evidence that the leased plot was in such an area or that the commercial office complex would involve industrial activities. Authority's Observations and Findings: The Authority examined whether SMPK qualifies as a supplier under the relevant GST notification. SMPK clarified that it is an autonomous body under the Ministry of Ports, Shipping, and Waterways, with no direct ownership by the Central Government. SMPK's books are audited by the CAG, but this does not equate to government ownership. The Authority concluded that SMPK does not meet the criteria of having 20% or more ownership by the Central Government as required by the notification. Ruling: The upfront premium payable by the applicant for leasing the land from SMPK is not exempt under entry 41 of Notification No. 12/2017 Central Tax (Rate) dated 28.06.2017. Therefore, the supply cannot be treated as an exempt supply.
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