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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 ..... d handover of possession of the new premises to be paid to me (the tenant of the old building) by the developer/owner? - Even during the period of redevelopment, the applicant remains a tenant of the owners of the old premises and continues to pay them due rent @ ₹ 5,000/- per month. However in lieu of they vacating the rented premises for redevelopment as per the agreement of redevelopment as referred above, the applicant is agreeing to the obligation to the obligation to refrain from an act or tolerating an act or situation of redevelopment in place of old premises and of not causing hindrance or creating obstacle in the same - the receipt of amounts towards alternate accommodation or delayed possession of premises would be receipt of amounts for doing an act i.e. vacating the premises for redevelopment as well as tolerating the construction cum redevelopment work till possession of new redeveloped premises as per agreement and further for tolerating an act i.e the act of not having completed the redevelopment work within 36 months. In view thereof, the same would definitely be a 'supply' under the GST Act and therefore, there arises an occasion to levy lax under the GST Ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... emises is 2600 sq. ft. carpet area with terrace. M/s Future Communications Limited (the owner), have entered into an agreement with M/s Spenta Residency Private Limited, the Developers, to develop a new building in place of the old building and thereby they have entered into an agreement with me (tenant) for new premises to be allotted to me in lieu of giving up the possession of the old above mentioned premises. The Owners are to provide me with a permanent alternate accommodation, shops admeasuring 4200 sq. ft. carpet area in the new building to be constructed by the developers. It has been agreed with the developers and the owners that, during the construction period. I am to make arrangements for accommodation elsewhere on my own and the Owner/Developer shall pay an amount of ₹ 2,05,000/- per month as compensation for alternate accommodation. If the construction period extends beyond 2 years the compensation for alternate accommodation is to increase to ₹ 2,25.000/- per month for the first 6 months (granted as grace over and above two years) and ₹ 2,47,000/- for further 6 months (additional Grace Period). In case, the construction period goes be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... endations 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 crude, high speed diesel, motor spirit (commonly known as petrol), natural gas and aviation turbine fuel shall be levied with effect from such date as may be notified by the Government on the recommendations of the Council. (3) The Government may, on the recommendations of the Council, by notification, specify categories of supply of goods or services or both, the tax on which shall be paid on reverse charge basis by the recipient of such goods or services or both and all the provisions of this Act shall apply to such recipient as if he is the person liable for paying the tax in relation to the supply of such goods or services or both. Scope of supply. Tax liability on composite and mixed supplies. Levy and collection. 14 THE GAZETTE OF INDIA EXTRA ORDINA RY [PART II- (4) The central tax in respect of the supply of taxable goods or services or both by a supplier, who is not registered, to a registered person shall be paid by such person on reverse charge basis as the recipient and all the provisions of this Act shall appl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction 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 that the applicant viz. Shri Zaver Bhanushali is receiver of construction services from Spenta Residency Private Ltd (Developer) Other than the compensation/consideration, the applicant will also get free flat/constructed premises from the developer i.e. M/s Spenta Residency Private Ltd. M/s Spenta Residency Private Ltd would be liable to pay tax on the construction services for permanent alternate accommodation, shop admeasuring 4200 sq. ft. provided to the applicant and the GST paid by the applicant on compensation would be available as input tax credit to the developer. In view of the above this office is of the view that the applicant should take GST registration for compensation received and pay appropriate GST on the same, in respect of consideration received for alternate accommodation. 04. HEARING The case was taken up for preliminary hearing on dt.27.03.2018 with respect to admission or rejection of the application when Sh. Harshit Kadhi, Chartered ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (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.837, Anuradha Mill Compound, Andheri-Kurla Road, Saki Naka, Mumbai-400072, hereinafter referred to as the 'TENANT' (which expression shall unless it be repugnant to the context or meaning thereof mean and include their respective heirs, executors and administrators) of the PARTIES OF THE THIRD PART. WHEREAS: (b) The Owners have purchased the said property from Aditya Textile Industries Private Limited under (i) Deed of Conveyance dated 16/4/2007... (c) By an Agreement for Joint Development dated 15th February, 2010 registered with .....made between the Owners (therein referred to as the Owners) of the One Part and the Developers (therein referred to as the Developers) of the Second Part, the Owners have granted to the Developers the development rights in respect of the said Property for the consideration and upon the terms and conditions therein mentioned. (e) The existing building standing on the plot of land bearing C. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion 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 hereto annexed and marked Annexure : A (hereinafter referred to as the said Old Premises'). 4. The floor height of the said old Premises on second floor is 14 feet. Under the said letter dated 10/07/2011 the Owners and the Developers have agreed to provide to the Tenants the new premises admeasuring 3250 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.). However now as the height of the new premises shall be 9 feet 6 inches only instead of 14 feet the Owners and the Developers have agreed to provide to the Tenants 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 in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 ₹ 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 execution of this Agreement within 15 days from the date hereof. The Tenant shall hand over quiet, vacant and peaceful possession of the old premises to the Owner and Developers and against the same the Tenant will be paid ₹ 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. 18. The Owners and the Developers hereby agree and confirm that the Developers shall complete the construction of the new building as per sanctioned plans within 24 months from the date of issuance off Commencement Certificate subject to the usual force majeur clause as applicable in which case the time shall be extended automatically and to which the Tenant shall have no objection. The Developer shall endeavor to get the Commencement Certificate within 6 months from the date hereof, In the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r 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 transaction is about the receipt by the applicant, of certain sums towards - a . Compensation for alternate accommodation for the period of first 24 months. b . Compensation for alternate accommodation for the further period from 25th month to 36th month and damages for delayed handover of possession after the period of 36 months. Section 9 of the GST Act says that there shall be levied a tax on supplies of goods or services or both. So we need to understand as to whether the aforesaid receipt of amounts would be for a supply made by the applicant. A 'supply' defined under Section 7 of the GST Act is as follows - 7. (1) For the purposes of this Act. the expression supply includes - (a) alt forms of supply of goods or services or both such as sale, transfer, barter, exchange, licence ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (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 commercial, industrial or residential complex for business or commerce, either wholly or partly, is a supply of services. 3. Treatment or process Any treatment or process which is applied to another person's goods is a supply of services. 4. Transfer of business assets (a) where goods forming part of the assets of a business are transferred or disposed of by or under the directions of the person carrying on the business so as no longer to form part of those assets, whether or not for a consideration, such transfer or disposal is a supply of goods by the person; (b) where, by or under the direction of a person carrying on a business, goods held or used for the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o 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 consideration. 7. Supply of Goods The following shall be treated as supply of goods, namely:- Supply of goods by any unincorporated association or body of persons to a member thereof for cash, deferred payment or other valuable consideration. From the above, we find that under sub-section (1) of Section 7 - 'Supply' as per clause (a) is for supply of goods or services or both. It is for a consideration AND has to be in the course or furtherance of business. 'Supply' as per clause (b) is for import of services. It is for a consideration A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g 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 ₹ 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 ₹ 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 complete the construction of the new building within 24 months and handover the possession of the said New Premises to the Tenants with Occupation Certificate due to reasons beyond their control the Developers will be entitled to a grace period of 6 months and additional grace period of further 6 months i.e. in all 12 months subject however to the Owners und/or the Developers paying to the Tenants the rent/compensation for the temporary alternate accommodation at the rate of ₹ 2,25,000/-per month f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... opers 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 above we find that even during the period of redevelopment, the applicant remains a tenant of the owners of the old premises and continues to pay them due rent @ ₹ 5,000/- per month. However in lieu of they vacating the rented premises for redevelopment as per the agreement of redevelopment as referred above, the applicant is agreeing to the obligation to the obligation to refrain from an act or tolerating an act or situation of redevelopment in place of old premises ..... X X X X Extracts X X X X X X X X Extracts X X X X
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