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TMI Blog2021 (11) TMI 1199X X X X Extracts X X X X X X X X Extracts X X X X ..... lthough the agreement was executed on 9.12.2016. The GST Act, 2017 came into effect on 01.07.2017. Hence, the provisions of GST Act, 2017, would apply as the GST Act, 2017, came into force prior to the commencement of the concession period. In the instant case, the Upfront Concession Fee is a consideration received by the Applicant for provision of service and it fits into the definition of 'consideration' as envisaged under sub-section 31 of Section 2 of the GST Act, 2017. The liability to pay tax on services shall arise at the time of supply, as determined in accordance with the provisions of Section 13 of GST Act 2017. It is evident that, if tax was leviable on services under Chapter V of the Finance Act, 1994 (32 of 1994), then no tax shall be payable under the GST Act - in the instant case the provisions of Section 142 (11) (b) would not apply as the concesssion period commenced from 16.01.2018 although the agreement was executed on 9.12.2016. In the instant case, the subject transaction of the Applicant does not fulfill the requirements of exemption Notification No. 41/2016-S.T dated 22.9.2016 and hence was not eligible for the benefit of Notification No. 41/2016-S.T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... before 'The Goa Appellate Authority for Advance Ruling for Goods and Service Tax', on 06.11.2018. The Appellate Authority for Advance Ruling, vide order No. GOA/AAAR/01/263/2018-19/4591 dated 22.03.2019 upheld the Ruling given by AAR-Goa and rejected the appeal. 5. As the Applicant couldn't file the rectification application before the Appellate Authority for Advance Ruling, Goa, within the stipulated time period, as prescribed under Section 102 of GST Act, 2017, they approached the Hon'ble Bombay High Court, Goa Bench for condonation of delay and filed Writ Petition No. 1094 of 2019. Hon'ble Bombay High Court, vide order dated 18.12.2019, granted leave and ordered as under:- In case such an application under Section 102 is made by the Petitioner within 10 days from today, then the concerned authority may consider that the Petitioner was bona fide pursuing this matter before the Court . 6. Accordingly, Applicant filed the present rectification application before this Appellate Authority, on 27.12.2019, under Section 102 of the CGST Act, 2017 and Goa GST Act, 2017 Grounds of Rectification 7. In the application, the Applicant inter-alia avers that:- (i) The issue ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on the annual revenue share, to be computed @ 5% quarterly i.e. @ 20% annually on the gross revenue earned by M/s Myrayash Hotel Pvt. Ltd.. This revenue is part of yearly charges that will be received by the Applicant. However, this is not part of the AAR application (iii) That the Advance Ruling Authority invoked Section 142 (10) of the GST Act, 2017 instead of Section 142 (11b) of the Act. 9. The Applicant was requested to submit the following documents to the Appellate Authority:- (i) Copy of the agreement dated 09.12.2016, executed between M/s Goa Tourism Development Corporation Limited and M/s Myrayash Hotels Pvt. Ltd., (ii) Copy of invoice issued by the Applicant to M/s Myrayash Hotels Pvt. Ltd for payment of first instalment of upfront fee of Rs. 2,80,00,000/, (iii) Copy of invoice issued by the Applicant to M/s Myrayash Hotels Pvt. Ltd for payment of second instalment of upfront fee of Rs. 25,20,00,000/-, (iv) Copy of ledger of the Applicant showing receipt of the aforesaid amounts. 9.1. The above cited documents were submitted by the Applicant vide e-mails dated 14.10.2021 and 20.10.2021. Discussion and Findings: 10. The application and appeal filed by the Applicant before ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 41 of GST notification no. 12/2017-Central Tax (Rate) dated 28th June 2017 which says that 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 term (thirty years, or more) lease of industrial plots, provided by the State Government Industrial Development Corporations or Undertakings to industrial units. Similarly, the above mentioned GST notification was further amended vide notification no. 32/2017-Central Tax (Rate) dated 13th October 2017 wherein the entry at serial number 41 was substituted as under:- 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. ; 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of service and is subject to Goods and Services Tax. 11. Reliance may also be place on the decision of Hon'ble High Court Allahabad in the case of Greater Noida Industrial Development Authority v. Commissioner of Customs, Central Excise[2015 (40) S.T.R. 95 (All.)], wherein the Hon'ble High Court while considering the demand, though not arising out of GST, but under the Finance Act, 1994 In relation to the services of renting of immovable property of Greater Noida, has arrived at the conclusion that the same was a taxable service and on the consideration received, the service tax could have been levied and demanded. 12. In their submission dated 24-9-2018 the applicant has submitted that as per Section 142 (10) of the GST Act, the provisions of GST shall apply only in cases where the supply of service has been after the appointed date i.e. introduction of levy of GST. Thus in case services are provided prior to appointed date, the provisions of GST shall not apply. On this count we would like to draw the attention to the provisions of Section 142 (10) of GST Act, 2017 which reads as - Save as otherwise provided in this Chapter, the goods or services or both supplied on or af ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts Annexures) i.e. 'Appeal to the Appellate Authority for Advance Ruling', of the Applicant before the 'Goa Appellate Authority for Advance Ruling for Goods and Service Tax', it is observed as under:- (i) On page 7 of the appeal the Applicant had stated as under:- . We have collected amount of Rs. 28,00,00,000/- as a onetime upfront Concession Fees. In our application before the AAR it was inadvertently mentioned as -for a term of 60 years @Rs. 42,00,000/- per annum-such is not the case. This amount was received in two parts. First 10% of the amount of Rs. 2,80,00,000/- and the second installment was of Rs. 25,20,00,000/-. This is an upfront fees for granting concession of our Anjuna property through Private Investment mode on DBFOT basis (Design, Build, Finance, Operate and Transfer) towards this we attach the financial bid copy / Resolution which proves that the amount is an upfront fee towards granting concession. The Financial Bid was called for during the hearing which has been duly submitted. In addition to our upfront fees, annual revenue share shall be computed at 20% (5% per quarter) of the Gross revenues. This revenue share is part of our yearly charges th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .No. 41 of the exemption Notification No. 12/2017-Central Tax (Rate), dated 28-6-2017 as amended by notification no. 32/2017-Central Tax-(Rate) dated 13.10.2017. 17. On perusal of the order dated 22.03.2019 of the Appellate Authority for Advance Ruling (AAAR), it is observed that the AAAR had dealt with the issue of coverage under the notification no. 12/2017-Central Tax (Rate), dated 28-6-2017 as amended by notification no. 32/201-Central Tax-(Rate) dated 13.10.2017, in detail. On perusal of Para 9 to 25 of the said order dated 22.03.2019, it is observed that, the AAAR had carefully examined the content of the notification no. 12/2017-Central Tax (Rate), dated 28-6-2017 as amended by notification no. 32/2017-Central Tax-(Rate) dated 13.10.2017, vis-a-vis the legislative intent of the same. The AAAR has examined each and every condition of the notifications in detail and whether the same had been fulfilled by the Applicant or not. 17.1 While passing the said order dated 22.3.2019, the AAAR had taken into account (i) the submissions of the Applicant before the AAR, (ii) order dated 02.10.2018 of AAR, (iii) the written submissions of the Applicant before the AAAR, (iv) submissions ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e in the Financial Proposal. (v) The clause 4.4.1 on page 41 of the concession agreement reads as under:- Notwithstanding anything to the contrary contained in this Agreement in the event that the Conditions Precedent are not met, for any reason whatsoever, within the period set forth in Clause 4.1.324.1.1, all rights, privileges, claims and entitlements of the Concessionaire under or arising out of this Agreement shall be deemed to have been waived by, and to have ceased with the concurrence of the Concessionaire, and the Concession Agreement shall be deemed to have been terminated by mutual agreement of the parties. On perusal of the above clause, it is evident that it is a non obstante clause that declares that it supersedes anything forthcoming that might contradict it. In other words, if any of the conditions precedent is not fulfilled then, the concession agreement shall be deemed to have been terminated. (vi) Appointed dated has been defined on page 17 of the concession agreement as under:- Appointed date means the date on which Financial Close is achieved or an earlier date that the Parties may by mutual consent determine, and shall be deemed to be the date of commencement ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3,60,000/- [Up-front concession fee-Rs. 25,20,00,000/- plus 9% CGST Rs. 2,26,80,000/- plus 9% SGST Rs. 2,26,80,000/-]. 20. From the above facts it is evident that, the concession period was to commence from the Appointed Date and Appointed Date shall be deemed to occur only when each and every Condition Precedent is either satisfied or waived. The second installment of upfront concession Fee along with applicable taxes, was credited in ledger of the 'Applicant on 16.01.2018. Hence, the condition precedent to pay Upfront Concession Fee with applicable taxes was fulfilled only on 16.01.2018. The Applicant has not submitted any document to show that other conditions precedent have not been fulfilled, hence, it is presumed that they are fulfilled. Thus, Appointed Date shall be deemed to occur on 16.01.2018. Accordingly, the concession period commenced from 16.01.2018 although the agreement was executed on 9.12.2016. 21. The GST Act, 2017 came into effect on 01.07.2017. Hence, the provisions of GST Act, 2017, would apply as the GST Act, 2017, came into force prior to the commencement of the concession period. In the instant case, the Upfront Concession Fee is a consideration receive ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ever, now, in the rectification application they have submitted that, the provisions of Section 142 (11b) of GST Act, 2017, will apply in their case. In other words, the tax was payable by them under Chapter V of the Finance Act, 1994 (32 of 1994). The two submissions of the Applicant are inherently self-contradictory. 25. Even if for the sake of academic interest, it is assumed without admitting that, the provisions of Section 142 (11) (b) of GST Act, 2017, will apply in the instant case, then also there is no doubt that, lump sum payment was liable to service tax. In this regard this authority places reliance on the judgement dated 11.11.2019 of Hon'ble CESTAT, Mumbai in the case of Starcity Entertainment Pvt. Ltd. Versus Commissioner of S.T., Mumbai-2020 (39) G.S.T.L. 266 (Tri. - Mumbai). The relevant para 11 i.e. para 11 of the said judgement reads as under:- 11. Accordingly, the lump sum payment becomes liable to tax under Finance Act, 1994 in addition to the periodic payments. For this reason, we find no merit in the appeal which is dismissed . 25.1 The lump sum payment in service tax regime was not taxable if the transaction was eligible for the benefit of Notification N ..... X X X X Extracts X X X X X X X X Extracts X X X X
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