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TMI Blog2018 (7) TMI 227X X X X Extracts X X X X X X X X Extracts X X X X ..... loper/owner? At the outset, we would like to make it clear that the provisions of both the CGST Act and the MGST Act are the same except for certain provisions. Therefore, unless a mention is specifically made to such dissimilar provisions, a reference to the CGST Act would also mean a reference to the same provision under the MGST Act. Further to the earlier, henceforth for the purposes of this Advance Ruling, a reference to such a similar provision under the CGST Act / MGST Act would be mentioned as being under the "GST Act". 02. FACTS AND CONTENTION - AS PER THE APPLICANT The submission (Brief facts of the case), as reproduced verbatim, could be seen thus- "M/s Future Communications Limited are the owners of a plot of land bearing C.T.S. No. 837 (S.No. 5, H. No. 1, 2, 3, 5, 7, 8. 9 of Village Mohili) admeasuring 4898.61 sq.mtrs. and C.T.S. No. 837 (S.NO. 5. H. No. 6 of Village Mohili) admeasuring 497.89 sq.mtrs. and the commercial building thereon. I, Zaver Bhanushali, am a tenant of the second floor of commercial building mentioned above. The total Area of the said tenanted premises is 2600 sq. ft. carpet area with terrace. M/s Future Communications Limited (the owner), h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... M/s Spenta Residency Private Ltd (Developer) and Shri Zaver Bhanushali (tenant of the old building,), the applicant has to vacate the rented premises occupied by him for minimum of 2 years and maximum as agreed by them. For doing the said act (i.e. for vacating the premises), Shri Zaver Bhanushali will get compensation/consideration of Rs. 2,05,000/- per month for the period of first two years or Rs, 2,25,000/- or Rs. 2,47,000/- or Rs. 5.00,000/- per month as the case may be. Section 9 of the Central Goods and Service Tax Act 2017 explains levy and collection of the tax. The extract of Section 9 of CGST Act, 2017 quoted below: " Section 9. (1) Subject to the provisions of sub-section (2), there shall be levied a tax called the central goods and services tax on all intra-State supplies of goods or services or both, except on the supply of alcoholic liquor for human consumption, on the value determined under section 15 and at such rates, not exceeding twenty per cent., as may be notified by the Government on the recommendations of the Council and collected in such manner as may be prescribed and shall be paid by the taxable person. (2) The central tax on the supply of petroleum cru ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dule-ll at sr. No. 5(e) it has been specified as under : "agreeing to the obligation to refrain from an act, or to tolerate an act or a situation, or to do an act: and" will be treated as supply of services. In view of the above legal provisions, for levy of tax in GST regime: following requirements are to be fulfilled. (i) There should be 'goods' or 'services' or 'goods & services' (ii) There should be supply of goods, or services or goods & Services. (iii) The supply should be in the course of furtherance of business'. In the instant case, it is seen that the applicant viz. Shri Zaver Bhanushali is supplying services to M/s Spenta Residency Private Ltd (Developer) in as much as doing the act of vacating the premises which was rented by M/s Future Communications Ltd. In addition to that he will get permanent alternate accommodation, shop admeasuring 4200 Sq ft. carpet area in the new building to be constructed by the developer. Thus this transaction of vacating the premises for re-development and also getting compensation for alternative accommodation is in furtherance of business and therefore it is taxable. In the instant case, it is also seen t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... MITED (PAN AAMPS22I0H),a company registered under the Companies Act, 1956 and having it's registered office at Rajabahadur Mansion. 1st floor, 20, Ambalal Doshi Marg, Fort, Mumbai - 400023 hereinafter referred to as the 'DEVELOPERS' (which expression shall unless repugnant to the context or meaning thereof mean and include it's successors and assigns) of the Second Part represented by its Directors (1) SHRI FARSHID ASPAN COOPER (PAN : ADVPC59 76F) of Mumbai. Indian Inhabitant residing at 501, Aventa, 16A, Allamount Road. Mumbai - 400036 and (2) SHRI GAGANDEEP SINGH MANGAT, (PAN AA VPM7257L) of Mumbai, Indian Inhabitant residing at 1901, Spenta Towers. 55-57, Forjet Street, Mumbai - 400036., the present directors of the Company hereinafter referred to as the PARTIES OF THE SECOND PART (which expression shall unless repugnant to the context or meaning thereof mean and include their respective heirs, executors and administrators ) AND (1) SMT. ZAVER alias ZAVERBEN SHANKAR BHANUSHALI (PAN AAFPB0292C) and (2) SHRI SIDDHARTH SHANKAR BHANUSHALI (PAN AHYPB63I6M) both of Mumbai, Indian Inhabitants carrying business at on 2ndfloor of the Building Anuradha Compound, Plot No.83 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in pursuance of the said Agreement for Joint Development dated 15th February, 2010, it is necessary to execute the Agreement for alternate Accommodation with the Tenants in respect of the new premises to be provided to the Tenants in the new building and for obtaining from the Tenant the possession of the said Old Premises in their occupation and to obtain nay other facility from the Tenants for development of the said Property. (l) ......Finally the Owners and the Developers have agreed to provide to the Tenants the shops admeasuring 4200 sq. ft. carpet area in the new building free of cost on ownership basis as permanent alternate accommodation upon the terms and conditions agreed by and between the parties hereto which are now recorded in writing by executing this Agreement. NOW THIS AGREEMENT WITNESSETH AND IT IS AGREED BY AND BETWEEN THE PARTIES HERETO AS UNDER - 2. The Tenants are in use, occupation and possession of the office premises being admeasuring 2600 sq. ft. carpet area (approx.) on the Second floor of the said Building standing on the portion of the said Property shown by................. colour wash/.........................colour boundary line on the plan here ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... centre, hotel, restaurant, subject however to the Rules and Regulations of the MCGM, State Government and other concerned authorities. (ii) The Tenants shall be entitled to give the said New Premises or any part thereof on leave and licence basis, on lease, on franchise basis or any other basis to any person or party of their choice as the Tenants may deem fit and proper; (iii) The Tenants shall be entitled to use the said New Premises or any part thereof for carrying on nay business therein partnership or on any other basis with any person or party as the Tenants may deem fit and proper; (iv) The Tenants shall be entitled to deal with the said New Premises as the Tenants may deem fit and proper. 17. It is agreed between the parties hereto that during the period of construction of the new building the Tenants shall make their own arrangement for temporary alternate accommodation and the Owners/the Developers shall pay to the Tenants the rent/compensation for the temporary alternate accommodation to be arranged by the Tenants at the rate of Rs. 2,05, 000/-(Rupees Two Lacs Five Thousand only) per month for the period of first 24 months. It is agreed and confirmed that on the exec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) the Developers shall provide to the said New Premises the amenities and specifications as specified in the Second Schedule hereunder written and (ii) the Developers at their own cost shall provide the electric connection and water connection in the said New Premises. 22. The Owners and the Developers shall also provide to the Tenants 4 Car Parking Spaces in the basement free of cost of the New Building to be constructed on the said Property on ownership basis. The Owners and the Developers while handing over the charge to the Society or any other organization formed or registered of the said parkings in the basement. 23. The Owners shall pay to the Tenants Rs. 25,00,000/- (Rupees Twenty Five Lacs only) as compensation/corpus fund to enable the Tenants to pay the taxes and outgoings of the said New Premises at a higher rate as compared to the said Old Premises at the time of entering into this Agreement. 24. The Owners and the Developers hereby specifically confirm that till the time the Tenant is given the new premises, the Tenancy rights of the Tenant shall be subsisting subject to the Tenant paying the monthly rent to the Owners/Developers. " It can be seen that the transac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thousand rupees in value in a financial year by an employer to an employee shall not be treated as supply of goods or services or both. 3. Supply of goods- (a) by a principal to his agent where the agent undertakes to supply such goods on behalf of the principal; or (b) by an agent to his principal where the agent undertakes to receive such goods on behalf of the principal. 4. Import of services by a taxable person from a related person or from any of his other establishments outside India, in the course or furtherance of business. SCHEDULE II /See section 7/ ACTIVITIES TO BE TREATED AS SUPPLY OF GOODS OR SUPPLY OF SER VICES 1. Transfer (a) any transfer of the title in goods is a supply of goods; (b) any transfer of right in goods or of undivided share in goods without the transfer of title thereof, is a supply of services; (c) any transfer of title in goods under an agreement which stipulates that property in goods shall pass at a future date upon payment of full consideration as agreed, is a supply of goods. 2. Land and Building (a) any lease, tenancy, easement, licence to occupy land is a supply of services; (b) any lease or letting out of the building including a c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he respective local body of the city or town or village or development or planning authority: (2) the expression "construction" includes additions, alterations, replacements or remodelling of any existing civil structure: (c) temporary transfer or permitting the use or enjoyment of any intellectual property right: (d) development, design, programming, customisation, adaptation, upgradation, enhancement, implementation of information technology software: (e) agreeing to the obligation to refrain from an act, or to tolerate an act or a situation, or to do an act; and (f) transfer of the right to use any goods for any purpose (whether or not for a specified period) for cash, deferred payment or other valuable consideration. 6. Composite supply The following composite supplies shall be treated as a supply of services, namely: (a) works contract as defined in clause (119) of section 2: and (b) supply, by way of or as part of any service or in any other manner whatsoever, of goods, being food or any other article for human consumption or any drink (other than alcoholic liquor for human consumption), where such supply or service is for cash, deferred payment or other valuable con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... developer. * In the process the applicant has agreed to do an act (vacating the premises) to facilitate the supply of service by the developer to the owner, as per conditions reiterated below 1. The Tenant shall continue to pay to the Owners the rent In respect of the said Old Premises at the rate of Rs. 5000/- per month till the date on which the Owners and the Developers handover to the Tenants the possession of the said New Premises as provided in this Agreement. 2. However for vacating the said premises, During the period of construction of the new building the Tenants shall make their own arrangement for temporary alternate accommodation and the Owners/the Developers shall pay to the Tenants the rent/compensation for the temporary alternate accommodation to be arranged by the Tenants at the rate of Rs. 2,05, 000/- (Rupees Two Lacs Five Thousand only) per month for the period of first 24 months and against the same the Tenant will be paid Rs. 48,00,000/- (Rupees Forty Eight Lacs Only) at a time by a single cheque for the said period of 24 months, the rent/compensation as mentioned above. 3. Further, we also find the condition that in the event the Developers are unable to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as and by way of permanent alternate accommodation an area admeasuring 4200 sq. ft. carpet area (consisting of 2600 sq. ft. area presently occupied by the Tenants and 650 sq. ft. area being additional 25% of 2600 sq. ft. and 950 sq.ft, additional area in lieu of the new premises being 9 feels 6 inches instead off 14 feet height) by having three partition walls, free of cost on ownership basis on the ground floor of the New Building to be named as to be constructed by the Developers on the portion of the said Property and delineated on the draft typical floor plan annexed hereto and marked as Annexure : 'B' and thereon shown surrounded by red colour boundary line (hereinafter referred to as 'said New Premises ') ". Thus, the act of vacating premises for facilitating the developer implies that the applicant has agreed to do an act and such act, of vacating the premises, by the applicant, squarely falls under clause 5(e) of the Schedule II mentioned above and therefore the amounts received by the applicant for having agreed to do such an act, would attract tax liability. Thus from the above referred terms of the agreement for redevelopment of the premises referred a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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