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TMI Blog2024 (2) TMI 646X X X X Extracts X X X X X X X X Extracts X X X X ..... lding including a commercial, industrial or residential complex for business or commerce is the supply of services. In the instant case, the applicant had entered into lease deed with Noida Authority for 99 years. Subsequently, the applicant has entered into agreement with M/s S.K. Food Equipments Pvt. Ltd and has transferred the lease rights with the approval of Noida Authority. The moment the lease right has been transferred from the applicant to M/s S.K. Food Equipments Pvt. Ltd, the party has provided service of transferring the leasehold rights and thus action of the applicant is very well covered under Paragraph 2 of Schedule II of CGST Act 2017. The applicant, apart from the conditional possession of the Demised Premises enjoys no title or ownership, which is central to sale of any immovable property within the meaning of section 54 of the Transfer of Property Act, 1882. The applicant's interest in the benefits arising out of the Demised Premises is limited to sub-leasing in terms of the Deed, and he is capable of transferring the benefits only to that extent. The assignment, therefore, does not amount to transfer of any benefit other than leasehold rights in terms ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oned in question No 1 above. 4. The question is about applicable GST rate under the provisions of CGST Act and liability to pay GST, hence is admissible under Section 97(2)(a) of the CGST Act 2017. Further, as per declaration given by the applicant in Form ARA-01, the issue raised by the applicant is neither pending nor decided in any proceedings under any of the provisions of the Act, against the applicant. 5. Statement of relevant facts having a bearing on the question(s) raised,- 1. The applicant Fena Limited is a company registered under the Companies Act, 1956 having its office at New Delhi. The applicant's case is that it is engaged in the business of manufacturing and selling various consumer non-durables including detergent cakes powder, cleaning preparation, etc. 2. That there was an agreement to sell executed between applicant and M/s S.K. FOOD EQUIPMENTS PVT. LTD. on 09.11.2022 at Noida with total sale consideration of Rs. 6,60,00,000/- only in which regard the sale agreement was signed and notarized on 10 November, 2022. 3. That the applicant has leasehold land from the Noida Development Authority for establishing industrial unit for manufacture of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r providing different amenities is sale of land or supply of something other than land. The term Land has not been defined under the GST Law and therefore, in absence of any definition in a statute, the meaning has to be construed in most relevant and popular sense. Land is generally qualified by its use or nature like agricultural, urban, rural, industrial, commercial, residential etc but in all cases it remains land. The end result of any activity of development of land does not change it from being land. In general trade parlance, developed land is nothing but a land and is also known as a land. 10. That as per Schedule 11 of CGST Act, 2017, following activity is considered as Service: Land and Building (a) any lease, tenancy, easement, license to occupy land is a supply of services; According to Section 7(2) (a) of CGST Act 2017, as per Schedule III of CGST Act, 2017, following will not considered as supply: 5. Sale of land, subject to clause (b) of paragraph S of Schedule II, sale of building. Sale of land would be treated neither as supply of goods nor as supply of services. Sale of land and completed building is not a supply as per Schedule II ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o arise out of land and things attached to the earth or permanently fastened to anything attached to the earth and also shares in or charges on the revenue or rent of village or other defined portions of territory 14. That the above definitions clearly provide that land would include benefits arising of land. If the leasehold rights are treated as land itself, no tax would be applicable on its assignment same would. 15. Long term lease can be considered as Sale of Land? Whether long term lease can be treated to be equivalent to sale of land has been the question which the courts have examined long before GST was envisaged. The answer to this question may not be available from the GST law directly. Therefore, this question is being analysed from judgements under the erstwhile regime apart from GST also. 16. That in the case of RIICO Ltd. v. Commissioner of C. Ex. [2017] (New Delhi - CESTAT), the following was held: Admittedly, substantial part of the demand against the appellant in various proceedings, relate to their Service Tax liability on lump-sum premium amount, received by them from the allottees on allotment of land on long term basis. In view of the int ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... her as supply of goods nor as supply of services. Sale of freehold land and completed building is not a supply as per Schedule III of the CGST Act 2017. That Exemption Notification: Notification no. 12/2017-Central Tax (rate) dated 28th June 2017 is the mega exemption notification for services which provides for the list of all exempt supplies. Entry 41 - Upfront amount (called as premium, salami, cost, price, development charges or by any other name) payable in respect of service by way of granting of long term lease of thirty years, or more) of industrial plots or plots for development of infrastructure for financial business, provided by the State Government Industrial Development Corporations or Undertakings or by any other entity having 50 per cent or more ownership of Central Government, State Government, Union territory to the industrial units or the developers in any industrial or financial business area. Supply is defined under section 7 of the GST Law:. Section 7(1) contains an inclusive list of what constitutes a supply, while section 7(2) has listed out what does not constitute supply. Further, section 7(2) begins with a non obstante clause, thus o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t and observed that the applicant has ticked following issues on which advance ruling required,- (1) Admissibility of input tax credit of tax paid or deemed to have been paid. (2) Determination of the liability to pay tax on any goods or services or both. At the outset, we do not admit question no. 03 related to Admissibility of input tax credit of tax paid or deemed to have been paid , as it is related to recipient of the service. The issue raised in the application, as question no. land 2 related to Determination of the liability to pay tax on any goods or services or both is squarely covered under Section 97(2) of the CGST Act 2017. We therefore, admit the application (regarding question no. 1 and 2) for consideration on merits. 12. The applicant is a company registered under the Companies Act, 1956 having its office at New Delhi. The applicant's case is that it is engaged in the business of manufacturing and selling various consumer non-durables including detergent cakes powder, cleaning preparation, etc. 13. The applicant had signed a Deed for lease of land with Noida Authority for 99 years and subsequently has entered into an agreement with M/s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 13.4 It is evident from the above discussion that the applicant, apart from the conditional possession of the Demised Premises enjoys no title or ownership, which is central to sale of any immovable property within the meaning of section 54 of the Transfer of Property Act, 1882. The applicant's interest in the benefits arising out of the Demised Premises is limited to sub-leasing in terms of the Deed, and he is capable of transferring the benefits only to that extent. The assignment, therefore, does not amount to transfer of any benefit other than leasehold rights in terms of the Deed for the unexpired period of the lease and is no transfer of any immovable property in the context of the GST Act. 13.5 The applicant's reference to the case laws where joint development right is treated as the sale of an immovable property needs to be distinguished. None of those cases is decided in the context of the GST Act, where the provisions of paragraph 2 of Schedule II curve out certain benefits arising out of the land from the realm of immovable property and treat them as 'service' for the purpose of the GST Act. The reference to the above case laws is, therefore, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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