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2024 (2) TMI 708 - AAR - GSTExemption from GST - upfront amount charged by the Applicant (as lease premium) for granting long-term lease of ninety years, in respect of allotment of plots to the industrial units or the developers, for the development of industrial infrastructure in the notified industrial town of NOIDA, such as for residential, commercial, retail, hospital, logistics etc. - Applicability of Entry No 41 of Notification No 12/2017-CT (Rate) dated 28.06.2017 (as amended by Notification No 32/2017-CT (Rate) dated 13.10.2017) and Entry No 41 of Notification No KA NI-2-843/XI-9(47)/17 (UPGST-Rate) dated 30.06.2017 - Whether the upfront amount charged by the Applicant (as lease premium) for granting long-term lease of ninety years is in the nature of transaction for sale of land and therefore outside the scope of levy of GST? HELD THAT:- The infrastructure for financial business may include commercial/ mixed use. Thus, the commercial/ mixed use plot is exempted from GST as long as it is for development of infrastructure for financial business and other conditions as stipulated in the Notification 12/2017-CT(Rate) are satisfied - The model “lease deed” submitted by the applicant state that development of infrastructure for financial business. Hence, the leasing of industrial plots or plots for development of infrastructure for financial business by NOIDA to the industrial units or the developers in this notified area for commercial/ mixed use is exempted from the tax. In cases other than that, the applicable rate of Goods and Services Tax in case of leasing services is 18%. In Jharkhand Advance Ruling in the case of M/s. Ranchi Smart City Corporation Limited [2022 (1) TMI 1300 - AUTHORITY FOR ADVANCE RULING, JHARKHAND], the advanced ruling held the leasing of industrial plots or plots for development of infrastructure for financial business, a Government entity, to the industrial units or the developers in this Area Based Developed property for commercial/ mixed use is exempted from the tax. In cases other than that, the applicable rate of Goods & Services Tax in case of leasing services is 18%. Whether the long-term lease is in the nature of sale of land, hence outside the scope of supply under the provisions of CGST Act? - HELD THAT:- Para 2(a) of the Schedule II to the CGST Act stipulates that, ‘any lease, tenacy, easement, licence to occupy land is a supply of services’. There is no differentiation between long term or short-term lease. Further long-term lease cannot be equated to sale land since in the case of long term lease, the ownership of the leasehold land vests with the lessor. A lease deed is executed between both the parties. The relationship between both parties is that of Lessor and Lessee and not seller and buyer. Further Entry at SI No 5C of Notification 13/2017-CT (Rate) as amended, Entry at Sr No 41 of Notification 12/2017-CT (Rate) contain specific reference to the long term lease of land. Hence long-term lease of land is not outside the scope of supply under the provisions of CGST Act. The upfront amount charged by the Applicant (as lease premium) for granting long-term lease of ninety years, in respect of allotment of plots to the industrial units or the developers in the notified industrial town of NOIDA for development of infrastructure for financial business is exempt from payment of GST in terms of Entry No 41 of Notification No 12/.2017-CT (Rate) dated 28.06.2017 (as amended by Notification No 32/2017-CT (Rate) dated 13.10.2017) and Entry No 41 of Notification No KA.NI-2-843/XI-9(47)/17 (UPGST-Rate) dated 30.06.2017 - Further, the upfront amount charged by the Applicant (as lease premium) for granting long-term lease of ninety years is in not in the nature of transaction for sale of land and therefore the same is not outside the scope of levy of GST.
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