2018 (10) TMI 341 - AAR - GST

Levy of GST - services by way of granting Long Term Lease - upfront charges - Whether GST is applicable on upfront amount (called as premium/salami) payable in respect of services by way of granting of longterm lease of the thirty years or more for plots catering to public health care such as hospital, nursing home, diagnostic centres etc? Held that - From the plane reading of N/N. 12/2017-Central Tax (Rate), dated 28-6-2017, it can be concluded that contention of applicant is correct i.e. the above such services are exempted from the GST, if fulfil all the above conditions as mentioned in the notification. Ruling - GST is not applicable i.e. exempted on upfront amount, if the conditions are satisfied as mentioned at SI. No. 41 of Notification No. 12/2017-Central Tax (Rate), dated 28-6-2017 as amended by Notification No. 32/2017-Central Tax (Rate), dated 13-10-2017.

Summary

Issues:
Applicability of GST on upfront amount for long-term lease of plots for public healthcare services.

Analysis:
The case involved a query regarding the GST applicability on upfront amounts for services related to granting long-term leases for public healthcare facilities. The applicant sought clarification based on a memorandum from the Ministry of Finance and Notification No. 12/2017. The Authority for Advance Ruling examined the relevant notifications, specifically Sl. No. 41 of Notification No. 12/2017-Central Tax (Rate), and its amendment by Notification No. 32/2017. The notification exempts upfront amounts for services involving long-term leases of industrial or infrastructure plots provided by specified entities to industrial units or developers in designated areas. The ruling concluded that if the conditions specified in the notification are met, GST is not applicable on such upfront amounts.

In their detailed analysis, the Authority highlighted the specific language of the notification, emphasizing that services falling under the described criteria are exempt from GST. The ruling clarified that the exemption applies to upfront amounts termed as premium, salami, cost, price, or development charges for services related to long-term leases of industrial or infrastructure plots. The applicant's contention was deemed correct based on the plain reading of the notification, leading to the conclusion that if the conditions outlined in the notification are satisfied, GST exemption applies to the upfront amounts in question.

The ruling provided a clear directive, stating that GST is not applicable, and the upfront amount is exempted from taxation if the conditions specified in Sl. No. 41 of Notification No. 12/2017-Central Tax (Rate) and its subsequent amendment are duly fulfilled. This comprehensive analysis and ruling by the Authority for Advance Ruling in Uttar Pradesh provided clarity on the GST treatment of upfront amounts for long-term leases of plots catering to public healthcare services, based on the specific provisions outlined in the relevant notifications.