TMI Blog2018 (4) TMI 461X X X X Extracts X X X X X X X X Extracts X X X X ..... , either wholly or partly is a supply of service. It is settled law that such provisions in a taxing statute would have to be read together and harmoniously in order to understand the nature of the levy, the object and purpose of its imposition. No activity of the nature mentioned in the inclusive provision can thus be left out of the net of the tax. Once this law, in terms of the substantive provisions and the Schedule, treats the activity as supply of goods or supply of services, particularly in relation to land and building and includes a lease, then, the consideration therefor as a premium/one-time premium is a measure on which the tax is levied, assessed and recovered. We cannot then probe into the legislation any further. The demand for payment of GST is in accordance with law. The said demand cannot be said to be vitiated by any error of law apparent on the face of the record. In these circumstances, we do not find any merit in the writ petition. - Decided in favor of revenue. - WRIT PETITION NO. 12194 OF 2017 - - - Dated:- 28-3-2018 - S. C. DHARMADHIKARI PRAKASH. D. NAIK, JJ. Mr. Vikram Nankani-Senior Advocate with Mr. Chirag Mody, Mr. Aman Kacheria i/b. M/s. D ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in para 6 of this petition, state as under:- 6. Respondent No. 4 was incorporated on 17th March, 1970 with the specific aim for creating a new planned, self-sufficient and sustainable city on the main land across Thane Creek adjoining the Mumbai City and it disposes of the land for development for 60 years to various builders and developers under the Navi Mumbai Land Disposal (Amendment) Regulation, 2008 by charging them a onetime lease premium. In addition to this one-time lease premium a separate lease rental is charged annually for the period of lease. Respondent No. 4 is a special planning authority for the areas of Navi Mumbai. The multidimensional activity undertaken by Respondent No. 4 under the supervision of the Government of Maharashtra are classified under three broad concepts as enumerated from the website of Respondent No. 4, (i) Planning and development of new towns; (ii) Consultancy, project management and designing; and (iii) Development of new towns, setting up of industrial face of the city with the help of planned urban development with the social economic facility. In other words, Respondent No. 4 is acting as a special planning authority on behalf of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nsel is that such a tax, as is demanded, cannot be levied, assessed and recovered. A long term lease of 60 years tantamounts to sale of the immovable property, since the lessor is deprived of, by the allotment the right to use, enjoy and possess the property. Our attention is invited to section 105 of the Transfer of Property Act, 1882. The one-time premium amount is the lumpsum consideration paid for entering into the lease. Our attention is also invited to the fact that the lease of 60 years and with a statutory authority is based on the position and status of that authority. In that regard, our attention is invited to section 113 and particularly sub-section (3A) of the MRTP Act. A new town is set up by the fourth respondent. It is a planning authority. It is a creature of the statute. Our attention is also invited to subsections (1) to (3) of section 118 of the MRTP Act. Mr. Nankani would submit that the CIDCO discharges a Government function and duty. In any event, it discharges a statutory obligation. The argument of Mr. Nankani is that by virtue of Article 36, Schedule I to the Maharashtra Stamp Act, 1958, the present transaction is treated as a conveyance. Thus, such an ins ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t is submitted that the petitioners be granted the reliefs as prayed. 9. On the other hand, Mr. Jetly appearing for the Central Goods and Sales Tax Commissionerate and the Union of India would urge, based on the affidavit in reply, that this is a petition which seeks to pre-empt the levy assessment and recovery of GST. In any event, if the GST being now paid, then, the issue raised is purely academic. Apart therefrom, the law does not make any distinction between governmental and non-governmental agencies and supply of goods or services attracts GST. The CIDCO cannot be treated as Government. Its position as a new town planning authority is of no consequence. Once the legal provisions are clear, unambiguous and plain, then, regardless of the consequences, the tax is leviable. The whole edifice of Mr. Nankani's argument is based on the judgments delivered not in the context of the GST Act. The affidavit in reply at page 198 of the paper book and particularly paragraph no. 8 points out that the transaction is of supply of services. Once the Income Tax Act deals with a tax on income, then, the tests are different. The concepts are also different. It is, therefore, risky to read ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and then follows Chapter III, which is the charging section. Section 7 is heavily relied upon and therefore, we reproduce the same:- 7. (1) For the purposes of this Act, the expression supply includes- (a) all forms of supply of goods or services or both such as sale, transfer, barter, exchange, licence, rental, lease or disposal made or agreed to be made for a consideration by a person in the course or furtherance of business; (b) import of services for a consideration whether or not in the course or furtherance of business; (c) the activities specified in Schedule I, made or agreed to be made without a consideration; and (d) the activities to be treated as supply of goods or supply of services as referred to in Schedule II. (2) Notwithstanding anything contained in sub-section (1),- (a) activities or transactions specified in Schedule III; or (b) such activities or transactions undertaken by the Central Government, a State Government or any local authority in which they are engaged as public authorities, as may be notified by the Government on the recommendations of the Council, shall be treated neither as a supply of goods nor a suppl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted and designated as the New Town Development Authority. 14. On a plain reading of the GST Act, we do not see how we can agree with Mr. Nankani. Mr. Nankani also relies upon Schedule II, which is referable to section 7. These are the activities to be treated as supply of goods or services. The substantive provision section 7 in clearest terms says that the activities specified in Schedule I made or agreed to be made without a consideration and the activities to be treated as supply of goods or supply of services referred to in Schedule II would be included in the expression supply . However, clause (a) of sub-section (1) of section 7 includes all forms of supply of goods or services or both such as sale, transfer, barter, exchange, licence, rental, lease or disposal made or agreed to be made for a consideration by a person in the course or furtherance of business. We referred to the definitions simply to reinforce our conclusion that the CIDCO is a person and in the course or in furtherance of its business, it disposes of lands by leasing them out for a consideration styled as one-time premium. Therefore, if one refers to Schedule II, section 7, then, Item No. 2 styled as land ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he transaction or the nature thereof, but the income generated or derived from it. Its treatment, therefore, led to the Hon'ble Supreme Court referring to section 105 of the Transfer of Property Act, 1882. In these circumstances, the opinion rendered is that the income was treated rightly as a capital receipt. In the context, a lease of immovable property is a transfer of right to enjoy the property as termed by the Transfer of Property Act, 1882 for a price paid. That is how it being a transfer that the income derived in relation to lease of immovable property was treated as above. 16. Similarly, in the case of R. K. Palshikar (supra), the agricultural land of the assessee was diverted to non-agricultural purpose by developing it as housing site several years ago and it was not disputed that the land in question constitutes a capital asset within the meaning of section 2(4A) of the Income Tax Act, 1961. The question was whether section 12-B of that act can be brought in to play in this case as the transfer is of leasehold interest in immovable property for 99 years and not an outright sale or transfer of the complete interest of the transferor in the immovable property. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ore, enabled the Hon'ble Supreme Court to hold that the constitutional entries would not allow the power of competent legislature to make the law. This judgment is of no assistance. 18. In the case of Commissioner of Central Excise, Nashik (supra), the demand of service tax was in issue. The Finance Act, 1994 and particularly section 65 clause (64) was relied upon to urge that the service charges collected by the MIDC from the allottees of the plots are in relation to services provided by the MIDC to the plot holders and the same is covered by the category maintenance, management and repairs under clause (64) of section 65 of the Act. It is in relation to such a controversy that the Hon'ble Supreme Court's judgment in the case of Shri Ramtanu Co-operative Housing Society Ltd. (supra) outlining the legal position and the status of the Corporation is referred by the Division Bench. The issue raised related to collection of service charges, but whether the services rendered are taxable services or not. The Division Bench noted that this consideration is an amount received for the facilities and amenities provided. That is a statutory function. It is in these circu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... il Procedure Code would lie in respect of it. The State is immune from being sued, as the jurisdiction of the courts in such matter is impliedly barred. 24. But there the immunity ends. No civilised system can permit an executive to play with the people of its country and claim that it is entitled to act in any manner as it is sovereign. The concept of public interest has changed with structural change in the society. No legal or political system today can place the State above law as it is unjust and unfair for a citizen to be deprived of his property illegally by negligent act of officers of the State without any remedy. From sincerity, efficiency and dignity of State as a juristic person, propounded in nineteenth century as sound sociological basis for State immunity the circle has gone round and the emphasis now is more on liberty, equality and the rule of law. The modern social thinking of progressive societies and the judicial approach is to do away with archaic State protection and place the State or the Government on a par with any other juristic legal entity. Any watertight compartmentalization of the functions of the State as sovereign and non-sovereign or governm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... no reason to hold that it would not be maintainable against the State. 19. To the similar effect are the findings in the later judgment of the Hon'ble Supreme Court in the case of Agricultural Produce Market Committee vs. Ashok Hari Kuni (see paras 22 and 31 to 33) 20. In the passing, we are of the opinion that the High Court of Judicature of Allahabad, while considering the demand, not arising out of the GST, but under the Finance Act in relation to the services of renting of immovable property of Greater Noida, has rightly 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. Once we agree with the reasoning of the Division Bench, then, we do not feel it necessary to reproduce the paragraphs in the Division Bench judgment. We are not in agreement with the learned senior counsel appearing for the petitioners that the demand is contrary to law or unfair, unjust and unreasonable in any manner. 21. We are, therefore, of the clear view that the demand for payment of GST is in accordance with law. The said demand cannot be said to be vitiated by any error of law apparent o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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