TMI Blog2020 (10) TMI 767X X X X Extracts X X X X X X X X Extracts X X X X ..... tial property which is adjacent to the pathway. This is an easement right given by the applicant to the individual to enjoy her residential property for a period of time for a consideration. The applicant has agreed through a MOU to tolerate her use of this pathway for a period of time for consideration. Hence, this service of agreeing to grant easement rights is a service of agreeing to tolerate an act and is classifiable under SAC 999794 under other miscellaneous services / Agreeing to tolerate an act . Thus, the act of agreeing to grant easement rights of the pathway by the applicant to Dr.K.Prema by way of shared access is classifiable under SAC 999794 and taxable under @18%. - TN/26/AAR/2020 - - - Dated:- 12-5-2020 - MS. MANASA GANGOTRI KATA, I.R.S., AND THIRU KURINJI SELVAAN V.S., M.SC., (AGRI.), M.B.A. MEMBER Note: Any appeal against the Advance Ruling order shall be filed before the Tamil Nadu State Appellate Authority for Advance Ruling, Chennai under Sub-section (1) of Section 100 of CGST ACT/TNGST Act 2017 within 30 days from the date on which the ruling sought to be appealed against is communicated. At the outset, we would like to make it clear that t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t . The applicant has also stated that apparently, it may lead to an inference that only land has been leased out and not a dwelling unit and hence, the lease amount cannot be exempted from levy of GST. Whereas, a reading of Indian Easement Act, 1891 would establish that the land over which the lessee acquired the Easement right would form part of the dwelling unit owned by the lessee. They have stated that without the Easement right over the property belonging to CMRL, there would be no access to the house owned by the lessee and in such a scenario nobody can live in that house and therefore it cannot acquire the character of a dwelling unit . However, once the lessee or anybody gets a right over the land belonging to CMRL to have access to the house, the house acquires the character of dwelling unit and therefore, necessarily the definition or meaning of dwelling unit would include the land over which the lessee get the Easement right , 2.2 The applicant has stated that according to section 4 of the Indian Easements Act, 1882, Easement is defined as a right which the owner or occupier of certain land possesses, for the beneficial enjoyment of that land, in or upon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ft land, 452sq.ft is now leased out to the same individual to be used as common access road to be used by CMRL and the individual in terms of an MOU in which it was agreed that a net amount of ₹ 4,00,00,000/- along with lease right to use (Easement rights) the land of 452sq.ft as road will be given to the individual. The amount pertaining to this lease was decided in Minutes of meeting. They stated that as per Easement Act and Supreme Court Judgments (Copies given) a dwelling unit should include access road also and hence they should be eligible for exemption under Sl.No. 12 of Notification 12/2017 CT (Rate). They submitted copy of Minutes and requested a weeks time to give additional submissions and that an additional hearing is not required. The Central Jurisdictional officer appeared and gave a written submission that this lease is a supply under GST and this supply of easement right is not exempt under Notification 12/2017 as exemption is only for dwelling unit of residential purpose and not for accessing land. The applicant stated that the land was acquired for industrial use of Metro Rail Construction. 4.1 The applicant furnished written submission vide their letter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... asement The applicant had enclosed copies of decision of Hon ble Supreme Court in the case of Municipal Corporation of Delhi Vs. Rishi Raj Jain Anr, Decision of the High Court of Chancery Division[England] in the case of De La Cuona Vs. Big Apple Marketing Limited [2017] EWHC 3783 (Ch) and Land Sketch. 5. The applicant is under the administrative jurisdiction of Central Tax authorities and the Central Jurisdictional officer vide their letter dated 28.01.2020 has stated that The term lease is covered within scope of supply under CGST Act 2017. CMRL is a provider for outward supply for a pecuniary benefits and for furtherance of business as per Section 2(17) of CGST Act and the applicant is a taxable person for supply of land for pathway to his lessee under lease agreement for consideration is leviable to tax under Section 2(108) of CGST Act, 2017. As per Notification 12/2017 CT (R) dated 28.06.2017, exemption is provided for renting of residential dwelling to be used as residence. However, the said premise is not a residential dwelling and irrespective of other facts the exemption would not be applicable. Easement rights and Notification 12/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Section 4 of Indian Easement Act, 1882. Defines Easement as An easement is a right which the owner or occupier of certain land possesses, as such, for the beneficial enjoyment of that land, to do and continue to do something, or to prevent and continue to prevent something being done, in or upon, or in respect of certain other land not his own. Supply is defined under Section 7 of the CGST Act 2017 and the same is reproduced below for reference: 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; and (c) the activities specified in Schedule I, made or agreed to be made without a consideration; (1A) where certain activities or transactions constitute a supply in accordance with the provisions of sub-section (1), they shall be treated either as supply of goods or supply of services as referred to in Sched ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nsideration here. Hence, it is seen that this transaction of granting easement rights satisfies the conditions of Section 7(1) (a) as a supply under CGST/TNGST Act. Further, As per Section 7(1A) and Para 2(a) of Schedule II to the Act, activity of easement of land constitutes supply of service. 7.3 The applicant has sought to classify this service under SAC 9963 or SAC 9972. The Classification of SAC 9963 and 9972 as given in the Scheme of Classification of Services -Annexure to Notification No. 11/2017-C.T. (Rate) is as follows: 71 Heading 9963 Accommodation, food and beverage services 72 Group 99631 Accommodation services 73 996311 Room or unit accommodation services provided by Hotels, Inn, Guest House, Club and the like 74 996312 Camp site services 75 996313 Recreational and vacation cam ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ccepts the transfer on such terms. In this case, the pathway is owned by the applicant and both the applicant and the individual have the right to use pathway. In the case of renting or leasing of the property, the owner(applicant in this case) will not have the right to use the the land/pathway involved as leasing involves transfer of the right to enjoy the property to the lessee and the lessor does not retain right to enjoy the property during the lease period. In the instant case, it is not a lease of the pathway but only Easement rights are granted to the individual by the applicant. Therefore the classification of the service supplied is not covered under SAC 9972 which covers renting or leasing of property. 7.4 SAC 99979 of Classification of Services covers: 99979 Other miscellaneous services 999794 Agreeing to tolerate an act In the case at hand, the applicant owns the pathway but has agreed through an MOU with the individual to permit her to use the pathway to access the main road from her residential property which is adjacent to the pathway. As seen above, this is an easement right given by the applicant to the individual to enjoy her residential prop ..... X X X X Extracts X X X X X X X X Extracts X X X X
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