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2025 (3) TMI 161 - AAR - GSTLevy of GST on reimbursement of municipal property tax by the lessee/occupier - HELD THAT - In terms of sub-section (1) of section 9 of the GST Act tax in levied inter alia on the value determined under section 15 of the said Act. It has already been submitted by the applicant himself that section 15 of the GST Act deals with value of taxable supply - In this case the municipal property tax levied under the Kolkata Municipal Corporation Act 1980 being a tax other than the CGST Act/ WBGST Act/ UTGST Act/ GST (Compensation to States) Act shall therefore form a part of the value of supply on which GST will be levied. In the instant case value of supply would be inclusive of municipal property tax and tax under the GST Act is payable on such value.
The Authority for Advance Ruling, West Bengal considered an application seeking an advance ruling on the applicability of GST on the reimbursement of municipal property tax by a lessee/occupier. The key issues presented and considered in the judgment are as follows:1. **Issues Presented and Considered**: - Whether GST is applicable on the reimbursement of municipal property tax by the lessee/occupier?2. **Issue-Wise Detailed Analysis**: **Relevant Legal Framework and Precedents**: - The applicant entered into a lease agreement with Andhra Bank and sought clarification on the tax implications of the reimbursement of municipal property tax. **Court's Interpretation and Reasoning**: - The Authority analyzed Section 15 of the GST Act, which deals with the value of taxable supply. It noted that under Section 15(2)(a), the value of supply includes any taxes, duties, cesses, fees, and charges levied under any law other than the GST Act, if charged separately by the supplier. **Key Evidence and Findings**: - The applicant argued that the property tax charged by the Kolkata Municipal Corporation falls within the ambit of Section 15(2)(a) of the CGST Act as it is levied under a law other than the GST Act. **Application of Law to Facts**: - The Revenue contended that property tax is a statutory levy imposed by local authorities and is not classified as a supply of goods or services under GST. However, services related to property management or maintenance may be subject to GST. **Treatment of Competing Arguments**: - The applicant emphasized that the value of supply is the lease rent paid by the lessee/occupier, which includes the reimbursement of municipal property tax. The Revenue argued that property tax should be considered part of the taxable value. **Conclusions**: - The Authority ruled that the value of supply, including municipal property tax, is subject to GST. It held that the municipal property tax, being a tax under a law other than the GST Act, forms part of the taxable value on which GST will be levied.3. **Significant Holdings**: - The core principle established is that the reimbursement of municipal property tax by the lessee/occupier forms part of the value of supply subject to GST. - The final determination by the Authority is that GST is applicable on the value of supply inclusive of municipal property tax.In summary, the judgment clarifies that GST is applicable on the reimbursement of municipal property tax by a lessee/occupier as it forms part of the taxable value of supply under the GST Act.
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