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TMI Blog2023 (11) TMI 869X X X X Extracts X X X X X X X X Extracts X X X X ..... , on the other hand, empowers Government to issue a notification to specify a class of registered persons who shall in respect of supply of specified categories of goods or services or both received from an unregistered supplier , pay tax on RCM basis - Hence, lease of land is to be treated as a supply of services chargeable to GST. In terms of Sr. No. 5 of notification No. 13/2017-CT(Rate) dated 28.6.2017, as amended, the applicant, [who as a recipient falls within the ambit of a business entity , in terms of the definition of business as per 2(17), ibid], becomes liable to discharge GST under RCM in terms of section 9(3) of the CGST Act, 2017 in respect of the services supplied by SMC, [a local authority in terms of Section 2(69), ibid]. Whether they are liable to pay GST under Reverse Charge Mechanism u/s 9(3) or 9(4) for premium on lease renewal amount payable to SMC? - whether circular No. 101/20/2019-GS 1 did 30.4.2019 grants them exemption from payment of GST? - HELD THAT:- In terms of Schedule II of GST Act, 2017, the activity i.e. lease of plot and payment of one time lease premium/salami/premium on lease renewal and annual premium paid by the applicant is a supply and is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mium, is a supply under section 7 of the CGST Act, 2017 and would be leviable to GST under forward charge. Whether the collection made from shareholders/shop owners by the applicant if held leviable to GST, then can the applicant s shareholder/shop owners who are reimbursing the lease and premium on lease renewal be eligible for ITC of the GST charged by the applicant? - HELD THAT:- A conjoint reading of the sections 95(a) and (c), 97 and 103 of the CGST Act, 2017, depicts that advance ruling means a decision by the AAR to an applicant on matters or on questions specified under 97(2) ibid in relation to the supply of goods or services or both being undertaken or proposed to be undertaken by the applicant; that an applicant, means any person registered or desirous of obtaining registration under this Act; that such an applicant, may make an application in the prescribed form with appropriate fee, stating the question on which the said ruling is sought. The questions on which the ruling is sought is however, restricted to the 7 [seven] issues listed in section 97(2), ibid. Further, in terms of section 103, such a ruling shall be binding only on the applicant and on the concerned offi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ease and lease premium amounts be considered as supply and GST under forward charge is applicable on the same? (iv) What will be the effect of circular no. 101/20/2019-GST dated 30.4.2019 on the transaction? Will it exempt the applicant from payment of tax under Reverse Charge Mechanism? (v) If answer to question no. (iii) is in affirmative, then will applicant s shareholder/shop owners who are reimbursing the lease and lease premium amount get ITC of the GST charged by the applicant? 6. Personal hearing was held on 29.8.2023 wherein Shri Abhishek Soni, CA, appeared and reiterated the facts as stated in the application. Discussion and findings 7. At the outset, we would like to state that the provisions of both the CGST Act and the GGST 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 provisions under the GGST Act. 8. We have considered the submissions and additional submission made by the Applicant in their application for advance ruling as well as the submissions made during the course of personal hearings. We have also considered the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on RCM basis. In this connection, we find that notification No. 13/2017-CT(Rate) has been issued viz [Notification No. 13/2017-Central Tax (Rate), dated 28-6-2017] Payment of CGST on specified services on Reverse Charge basis In exercise of the powers conferred by sub-section (3) of section 9 of the Central Goods and Services Tax Act, 2017 (12 of 2017), the Central Government on the recommendations of the Council hereby notifies that on categories of supply of services mentioned in column (2) of the Table below, supplied by a person as specified in column (3) of the said Table, the whole of central tax leviable under section 9 of the said Central Goods and Services Tax Act, shall be paid on reverse charge basis by the recipient of the such services as specified in column (4) of the said Table:- TABLE SI. No. Category of Supply of Services Supplier of service Recipient of Service (1) (2) (3) (4) 5 Services supplied by the Central Government, State Government, Union territory or local authority to a business entity excluding. (1) renting of immovable property, and (2) services specified below- (i) services by the Department of Posts by way of speed post, express parcel post, life in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der Reverse Charge Mechanism u/s 9(3) or 9(4) for premium on lease renewal amount payable to SMC. A related question [fourth issue| that has been raised is whether circular No. 101/20/2019-GS 1 did 30.4.2019 grants them exemption from payment of GST. The relevant extract of notification No. 12/2017-CT (Rate) dated 28.6.2017, amending not. No. 32/2017-CT (Rate) dated 13.10.2017 and circular dated 30.4.2019, is reproduced below for case of reference viz Notification No. 12/2017-CT (Rate) dated 28.6.2017 TABLE SI.No. Chapter, Section, Heading, Group or Service Code (Tariff) Description of Services Rate (per cent.) Condition (1) (2) (3) (4) (5) 41 Heading 9972 One time upfront amount (called as premium, salami, cost, price, development charges or by any other name) leviable in respect of the service, by way of granting long lean (thirty years, or more) lease of industrial plots, provided by the State Government Industrial Development Corporations or Undertakings to industrial units. Nil Nil [Notification No. 32/2017-C.T. (Rate), dated 13-10-2017] e) in serial number 41, for the entry in column (3), the following entry shall be substituted namely :- Upfront amount (called as premium, sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ble irrespective of whether such upfront amount is payable or paid in one or more instalments, provided the amount is determined upfront. 4. Difficulty if any, in implementation of this Circular may be brought to notice of the Board. 14. The term Lease is not defined under GST Act. However, Section 105 of the Transfer of Properly Act, 1882, states as follows:- 105. Lease defined. A lease of immoveable property is a transfer of a right to enjoy such property, made for a certain time, express or implied, or in perpetuity, in consideration of a price paid or promised, or of money, a share of crops, service or any other thing of value, to be rendered periodically or on specified occasions Io the transferor by the transferee, who accepts the transfer on such terms. A conjoint reading shows that in terms of Schedule II of GST Act, 2017, reproduced supra, the activity i.e. lease of plot and payment of one time lease premium/salami/premium on lease renewal and annual premium paid by the applicant is a supply and is covered under Section 7(1) of CGST Act, 2017. 15. The appellant however feels that the upfront concession fee received against the lease made for more than 30 years is exempted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n otherwise, the Constitution Bench of the Hon ble Supreme Court in the case of Dilip Kumar and Company [2018 (361) ELT 577 (SC)], held as follows:- 52. To sum up. we answer the reference holding as under - (1) Exemption notification should be interpreted strictly; the burden of proving applicability would be on the assessee to show that his case comes within the parameters of the exemption clause or exemption notification. (2) When there is ambiguity in exemption notification which is subject to strict interpretation, the benefit of such ambiguity cannot be claimed by the subject/assessee and it must be interpreted in favour of the revenue. (3) The ratio in Sun Export case (supra) is not correct and all the decisions which took similar view as in Sun Export case (supra) stands overruled. 18. We also find that the Hon ble High Court of Bombay in WP No. 12194/2017 [reported at 2018 (12) GSTL 232(Bom.)] in the case of Builders Association of Navi Mumbai, held that lease premium amount is a consideration against supply of service and is subject to Goods and Services Tax. The relevant portion of the said order is reproduced as follows:- 21. We are. therefore, of the clear view that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g on to Section 7(1)(aa), of the CGST Act, we find that the activities or transactions, by a person, other than an individual, to its members or constituents or vice-versa, for cash, deferred payment or other valuable consideration falls within the ambit of supply . Thereafter, an explanation further clarifies that notwithstanding anything contained in any other law the time being in force or any judgment, decree or order of any Court tribunal or authority, the person and its members or constituents shall be deemed to be two separate persons and the supply of activities or transactions inter se shall be deemed to take place from one such person to another. 22. Thus, in view of the foregoing, we hold that the collection made from shareholders/shop owners, who are members of the cooperative society, by the applicant, for making payment of lease and lease premium, is a supply under section 7 of the CGST Act, 2017 and would be leviable to GST under forward charge. 23. A corollary question , is next posed as to whether the collection made from shareholders/shop owners by the applicant if held leviable to GST, then can the applicant s shareholder/shop owners who are reimbursing the lease ..... X X X X Extracts X X X X X X X X Extracts X X X X
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