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TMI Blog2018 (4) TMI 461X X X X Extracts X X X X X X X X Extracts X X X X ..... tion in the nature thereof directing the respondents not to collect the Central Goods and Service Tax on the long term lease granted by respondent no. 4 to the members of petitioner no. 1, including respondent no. 2. 3. Before us is the first petitioner styled as Builders' Association of Navi Mumbai, which is a registered public charitable trust governed by the Bombay, now Maharashtra Public Trust Act, 1950 and the Societies Registration Act, 1860. The second petitioner is a partnership firm carrying on business as Builder and Developer. The first, second and the third respondents are the Union of India, through the Secretary, Ministry of Finance, Department of Revenue, the Commissioner of Goods and Service Tax, Thane District and the Commissioner of Goods and Service Tax, Central Business District (CBD), Belapur. Respondent no. 4 is the City Industrial and Development Corporation of Maharashtra Limited (CIDCO), whereas, the sixth respondent is the Commissioner of Goods and Service Tax, Maharashtra. 4. The argument of the petitioners is that their members are reputed Builders and Developers of Navi Mumbai and areas surrounding it. They have contributed to the growth and devel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rer/bidder is required to make an offer by quoting a rate per square meter on account of payment of lease premium. The plots are to be allotted on long term lease of 60 years. A base price is already fixed for the plot in the annexure to the tender for the payment of one-time lease premium amount and the tenderer is required to quote a price above the base price per square meter of the plot which the tenderer is interested in acquiring. After the offers are scrutinised, respondent no. 4 usually allots plots on lease basis to the bidder quoting the highest rate per square meter of the one-time lease premium amount provided such a bidder is eligible as far as the remaining terms and conditions of the tender document. 6. Thus, the petitioners have obtained plots in the above areas, but what they are questioning is that when the allotment letter was issued, the allottee was called upon to pay, on the one-time lease premium amount, the GST separately by a Demand Draft drawn in the name of the fourth respondent payable at Mumbai/Navi Mumbai. The fourth respondent collected GST on the total one-time lease premium amount payable by the successful allottee at the rate of 18%. The details o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Mr. Nankani attempted to point out that one-time lease premium is different and distinct from lease rent. It is not a periodical payment, but a one time. It is not, therefore, conceivable that on such a premium, the tax could be levied, assessed and recovered. The premium is akin to Salami and our attention is invited to its plain dictionary meaning as set out in the legal dictionary. Our attention is also invited to a judgment of the Hon'ble Supreme Court in the case of Commissioner of Income Tax Assam, Tripura and Manipur vs. Panbari Tea Co. Ltd. AIR 1965 SC 1871. Then, our attention is invited to a judgment of the Hon'ble Supreme Court in the case of R. K. Palshikar (HUF) vs. Commissioner of Income Tax, M. P., Nagpur (1988) 3 SCC 594. Finally, Mr. Nankani would heavily rely upon an order passed by this court on 23rd August, 2017 in the case of Commissioner of Central Excise, Nashik vs. Maharashtra Industrial Development Corporation Central Excise Appeal No. 164 of 2015. He would submit that this judgment and order dealt with a similar issue concerning the Maharashtra Industrial and Development Corporation. Hence, we should abide by the same. 8. In any event, the argum ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essions and words. The term "business" is defined in inclusive manner in section 2(17). The expression includes any trade, commerce, manufacture, profession, vocation, adventure, wager or any other similar activity, whether or not it is for a pecuniary benefit. It also includes any activity or transaction undertaken by the Central Government or State Government or any local authority in which they are engaged as public authorities. The other definition, which is material and relevant is to be found in section 2(31) is of the word "consideration". Section 2(31) reads as under:- "2(31) "Consideration" in relation to the supply of goods or services or both includes- (a) any payment made or to be made, whether in money or otherwise, in respect of, in response to, or for the inducement of, the supply of goods or services or both, whether by the recipient or by any other person but shall not include any subsidy given by the Central Government or a State Government; (b) the monetary value of any act or forbearance, in respect of, in response to, or for the inducement of, the supply of goods or services or both, whether by the recipient or by any other person but shall not include an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ken by the Central Government, a State Government or any local authority in which they are engaged as public authorities, as may be notified by the Government on the recommendations of the Council, shall be treated neither as a supply of goods nor a supply of services. Equally, subject to the provisions of sub-sections (1) and (2), the Government may, on the recommendation of the Council, specify, by notification, the transactions that are to be treated as a supply of goods and not as a supply of services or a supply of services and not as a supply of goods. Pertinently, no notification and traceable to sub-section (2) of section 7 has been brought to our notice. 13. What is heavily relied upon before us is the position of CIDCO. The CIDCO relies upon a notification issued under the MRTP Act. It may be designated as a New Town Development Authority for the purpose of the MRTP Act. For designation of a site as a new town and for development of any area as a site for the new town, sub-section (3A) of section 113 enables the State Government to require the work of developing and disposing of land in the area of new town by any such Corporation, company or subsidiary company as referr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ium is a measure on which the tax is levied, assessed and recovered. We cannot then probe into the legislation any further. 15. The reliance placed on the judgment of the Hon'ble Supreme Court in the case of Panbari Tea Co. Ltd. (supra) is entirely misplaced. There, a registered lease deed by the assessee, under which two estates were leased out to a firm for a period of 10 years, was in issue. The lease was executed for a consideration as and by way of premium and annual rent to be paid by the lessee to Panbari. The premium was made payable as noted in the Hon'ble Supreme Court's judgment. What went before the Income Tax Officer is the issue of treatment to the installment paid towards the premium in the relevant accounting year. The Income Tax Officer treated this as a revenue receipt of the assessee. On appeal, this order was confirmed. On further appeal, the tribunal also held that the premium was really the rent payable under the lease deed and, therefore, it was chargeable to income tax. After the matter was carried to the High Court, the assessee succeeded because the question posed for the High Court's consideration was answered by holding that this receipt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he objective of the planning authority is not to earn money, but to develop the area so that the purpose of setting up a township is achieved by more people wanting to live in the area in lieu of the various amenities provided in the area. The CIDCO is one such authority. It is entirely for the legislature, therefore, to exercise the powers conferred by sub-section (2) of section 7 of the GST Act and issue the requisite notification. Absent that notification, merely going by the status of the CIDCO, we cannot hold that the lease premium would not attract or invite the liability to pay tax in terms of the GST Act. 17. Even the judgment in the case of Shri Ramtanu Co-operative Housing Society Ltd. (supra) is of no assistance. There, the constitutional validity of the Maharashtra Industrial Development Act, 1962 was challenged. The argument was that this is not an enactment and in pith and substance referable to the constitutional entry, namely, Schedule VI List I, Entries 7 and 52, List II Entry 24 within the meaning of Article 246 of the Constitution of India. It is in this context that the functions and powers of the Maharashtra Industrial Development Corporation (MIDC) were refer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... elevant. These paragraphs read as under:- "23. In the modem sense the distinction between sovereign or non-sovereign power thus does not exist. It all depends on the nature of power and manner of its exercise. Legislative supremacy under the Constitution arises out of constitutional provisions. The legislature is free to legislate on topics and subjects carved out for it. Similarly, the executive is free to implement and administer the law. A law made by a legislature may be bad or may be ultra vires, but since it is an exercise of legislative power, a person affected by it may challenge its validity but he cannot approach a court of law for negligence in making the law. Nor can the Government in exercise of its executive action be sued for its decision on political or policy matters. It is in public interest that for acts performed by the State either in its legislative or executive capacity it should not be answerable in torts. That would be illogical and impractical. It would be in conflict with even modem notions of sovereignty. One of the tests to determine if the legislative or executive function is sovereign in nature is whether the State is answerable for such actions in c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cal ground", or that "there could be no legal right as against the State which made the law" gradually gave way to the movement from, "State irresponsibility to State responsibility". In Welfare State, functions of the State are not only defence of the country or administration of justice or maintaining law and order but it extends to regulating and controlling the activities of people in almost every sphere, educational, commercial, social, economic, political and even marital. The demarcating line between sovereign and non-sovereign powers for which no rational basis survives has largely disappeared. Therefore, barring functions such as administration of justice, maintenance of law and order and repression of crime etc. which are among the primary and inalienable functions of a constitutional Government, the State cannot claim any immunity. The determination of vicarious liability of the State being linked with negligence of its officers, if they can be sued personally for which there is no dearth of authority and the law of misfeasance in discharge of public duty having marched ahead, there is no rationale for the proposition that even if the officer is liable the State cannot b ..... X X X X Extracts X X X X X X X X Extracts X X X X
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