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2023 (12) TMI 1269 - AAR - GSTScope of Advance Ruling - Liability of service tax - Reverse Charge Mechanism - upfront amount charged by the NOIDA Authority (as lease premium) in respect of allotment of plots to the Applicant by way of granting of long term lease of ninety years, for development of commercial infrastructure in an industrial township - scope of supply - long-term lease is in the nature of sale of land - scope of supply under the provisions of CGST Act. HELD THAT - The activities of the taxpayer being a recipient, are not related to the supply being undertaken or proposed to be undertaken by him. The Applicant M/s Lavish Buildmart Pvt. Ltd. is receiver of the Goods/Services provided by the M/s New Okhla Industrial Development Authority and has admitted in the application dated 28.03.2023 that it falls under category of Service recipient. In light of point provided under Section 95 of CGST Act 2017, only supplier of the services can file Application for Advance Ruling. Accordingly, the application for consideration/ruling not admitted on merits as applicant does not fall under the definition of supplier under Advance Ruling and cannot get the Advance Ruling under the Act.
Issues Involved:
1. Liability to pay tax under Reverse Charge Mechanism (RCM) on the upfront amount charged by NOIDA Authority. 2. Whether long-term lease is in the nature of sale of land and outside the scope of supply under CGST Act. Summary: Issue 1: Liability to pay tax under Reverse Charge Mechanism (RCM) The applicant, M/s Lavish Buildmart Pvt. Ltd., sought an advance ruling on whether they are liable to pay tax under RCM on the upfront amount charged by NOIDA Authority as lease premium for a long-term lease of ninety years for commercial infrastructure development. The applicant argued that NOIDA Authority does not qualify as a Central/State Government, Union Territory, or local authority under the CGST Act. They cited various judgments and statutory provisions to support their claim that NOIDA Authority is not a 'Government' or 'Local Authority' and thus, services provided by NOIDA Authority should not fall under RCM Notification SI No 5 and 5A. They also claimed that the transaction of long-term lease is a sale of land, which is not taxable under GST. Issue 2: Nature of Long-term LeaseThe applicant contended that the long-term lease is a transaction for the sale of land and should not be treated as a supply of service under GST. They referred to Schedule III of the CGST Act, which states that the sale of land is neither a supply of goods nor services and thus not taxable under GST. They also cited CBIC Circular No 101/20/2019-GST, which clarifies that upfront amounts payable for long-term leases are exempt from GST if determined upfront. Discussion and Finding:The Authority for Advance Ruling examined whether the issues raised fall under Section 97(2) of the CGST Act. It was found that the applicant, being a recipient of services, does not qualify to seek an advance ruling as per Section 95 of the CGST Act, which implies that only suppliers of goods or services can apply for advance rulings. The authority concluded that M/s Lavish Buildmart Pvt. Ltd., as a service recipient, does not fall under the definition of a supplier and thus cannot seek an advance ruling. Ruling:No ruling can be given in the matter as the applicant does not qualify as a supplier under the Advance Ruling provisions. Validity:This ruling is valid within the jurisdiction of the Authority for Advance Ruling Uttar Pradesh and subject to the provisions under Section 103(2) of the CGST Act, 2017 until declared void under Section 104(1) of the Act.
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