TMI Blog2021 (4) TMI 933X X X X Extracts X X X X X X X X Extracts X X X X ..... hing or to prevent and continue to prevent something being done on such land, on parting of the said other land. Thus easement' is a right a person holds on the land which is not his but a necessity for enjoyment of his property and is not granted but acquired. In the case at hand the appellant had acquired the land of the landowner and compensated monetarily along with agreeing to grant the shared access to the pathway for a specific period on payment of lease rentals. In respect of right-to-way as easement, it is the right of the landowner, held with him on account of sale of the land appurtenant to the pathway and such right flows automatically on sale. In the case at hand, however based on the Memorandum of Understanding, the landowner is granted shared-access of the pathway from the acquired land for a specific period of 35 years on payment of lease rentals and is also termed as 'lease' in the said MOU. Therefore, the shared access granted by the appellant to the land owner against lease rentals is not 'easement' acquired/held by the landowner on account of the sale of land. Once it is held that the nature of shared access is not an easement held by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ned officer or the jurisdictional officer in respect of the applicant. 3. Under Section 103 (2) of the Act, this advance ruling shall be binding unless the law, facts or circumstances supporting the said advance ruling have changed. 4. Under Section 104 (1) of the Act, where the Appellate Authority finds that advance ruling pronounced by it under sub-section (1) of Section 101 has been obtained by the appellant by fraud or suppression of material facts or misrepresentation of facts, it may, by order, declare such ruling to be void sb-initio and thereupon all the provisions of this Act or the rules made thereunder shall apply to the appellant as if such advance ruling has never been made. At the outset, we would like to make it clear that the provisions of both the Central Goods and Service Tax Act and the Tamil Nadu Goods and Service Tax Act are the same except for certain provisions. Therefore, unless a mention is specifically made to such dissimilar provisions, a reference to the Central Goods and Service Tax Act would also mean a reference to the same provisions under the Tamil Nadu Goods and Service Tax Act. The subject appeal is filed under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any leasing in connection with residential property was exempted therein. 2.2 The Appellant made an application to ORIGINAL AUTHORITY on the following question: Whether leasing of pathway to a person to her/his dwelling unit by CMRL is taxable under GST? 3. The Original Authority has ruled as follows: The leasing of pathway by the appellant to Dr. Prema (lessee) by way of shared access of the Non-residential property held by the appellant is taxable under GST. 4.1 Aggrieved by the above decision, the Appellant has filed the present appeal. In the grounds of appeal, they have inter-alia, stated that: The Authority for Advance Ruling (AAR, for short) has failed to consider and recognize that the grant of access to pathway to connect with the outside world was a covenant running with the land and inseparable from the sale and purchase of the land which was not a supply to be taxed under GST. The AAR have admitted vide para no 7.1 of the Ruling that the consideration for the access to pathway was deducted from the price of the land. Therefore, the AAR ought to have considered that the grant of access to pathway was an integral and inseparable part and par ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d in the application to seek their willingness to participate in a virtual Personal Hearing in Digital mode vide e-mail dated 23rd December 2020. The appellant provided their consent to be heard through virtual mode. They were extended the opportunity to be heard virtually on 22nd January 2021 and the appellant sought adjournment as their advocate was not available on the said date. They were extended an opportunity to be heard on 5Th February and the hearing was held virtually on 5th February 2021. The Authorized representative appeared for the hearing virtually. They furnished written submission (vide email) which was taken on record. They stated that: 1. Easement is not contemplated in Schedule II of the CGST/TNGST Act 2017. 2. The purchase and acquisition is a composite supply with 'Supply of Land' being 'Principal Supply' and grant of pathway access 'Ancillary Supply'. They stated that they will furnish the minutes of the Lok Adalat settling the land acquisition proceedings. 5.2 The applicant vide their email dated 08.02.2021 submitted the following points put forth in the Virtual Hearing and requested to record in the minutes. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... subsidiary supply of easement was integrally bundled in the sale of land and would be synonymous with the principal supply of land for GST purposes and so tax free. Without prejudice to any of the grounds pleaded in the appeal, it is submitted that even if easement were to be considered a taxable service in a narrow sense, not every type of easement is covered in serial no 2 (a) of schedule II of the GST Act. The statutory entry puts easement in the company of lease, tenancy and license to 'occupy land. Lease., tenancy and license to occupy denote possession and occupation by the lessee, tenant and licensee respectively. Hence only easements where there is a possession and occupation of the space by the owner of the dominant heritage would be liable to tax if at all. In the case of the appellant, the easement at issue is only a grant of access to reach the road and there is admittedly no grant of right of occupation and possession unlike lease, tenancy or license to occupy. In other words, the appellant didn't grant any easement in the nature of right of occupation or possession of the land by the landlady. Hence such easements not involving right of occupation and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ey No. T.S. 5/3 under an Award No. 21 dated 07.09.2012 on payment of compensation to the Owner of the said Land(hereinafter referred to as the 'Land Owner'). The Land Owner had filed LAOP No. 28/12 and 67/13 claiming enhanced compensation before the Civil Court and had also desired to take the land measuring 452 Sq. ft. on lease, for access to main road. As per the Minutes of the Directors Level Committee meeting held on 5 Day of August 2019 to recommend maximum additional compensation that can be paid to claimant to settle the LAOPs, it had been recommended that a lumpsum additional compensation of ₹ 4,00,00,000(Rupees Four Crores Only) inclusive of all, can be paid to settle the above 2 LAOP cases with grant of shared access to the pathway on payment of lease rent for 35 years extendable on payment of lease rent at 1% of GLV prevailing at that time, against the claim of an additional compensation of ₹ 4.34 Crores along with the lease of land for access to road. A Memorandum of Understanding dated 21st August 2019 has been signed by the appellant with the land owner wherein it has been agreed by the appellant to pay ₹ 4,00,00,000/-(Rupees Four Cro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e-II to the Act; easement is ancillary to sale of land in the composite supply of land and therefore the easement in the case at hand is not taxable under GST. 7.4 Section 4 of Indian Easement Act, 1882 defines Easement as follows: 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. From the above definition, easement is a right one possesses over certain other land for the beneficial enjoyment of his land, to do and continue to do something or to prevent and continue to prevent something being done on such land, on parting of the said other land. Thus easement' is a right a person holds on the land which is not his but a necessity for enjoyment of his property and is not granted but acquired. In the case at hand the appellant had acquired the land of the landowner and compensated monetarily along with agreeing to grant the shared access to the pathway for a specific period on payment of lease rentals. In respect of right-to-way as e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd by the land owner but a right granted by the appellant by way of MOU on payment of rentals. In the absence of such right, the usage of the pathway by the landowner is not legal and therefore, the activity is a 'License' as defined under Section 52 of the Indian Easement Act 1882 above, granted by the appellant to the land owner. The appellant is the owner of the pathway and holds the right to use the pathway for its purposes, while the land owner is also allowed to use the pathway. The appellant is a company and had acquired the land for its business purpose; The land once acquired for business purposes becomes a non-residential property. The Landowner has been granted the right of shared access enabling the land owner access to the road. This right to use the pathway being common to both the appellant and the landowner, the pathway cannot be termed as land appurtenant to the residential dwelling as claimed by the appellant. 7.7 The appellant has contended that the easement at hand is not one where there is transfer of space, occupied by the easement taker and not in the nature of lease, tenancy, licence to occupy which are declared as services under Schedule-II of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... njunction by the service provider to the recipient. In the case at hand, land is supplied by the land owner to the appellant and the access to the pathway is granted by the appellant to the land owner. The recipient and the supplier are not the same in these supplies and therefore the same is not a 'Composite supply' 7.9 To sum up, it is clear that the entire land had been acquired by the appellant and the same had been acquired for business purposes only. The appellant after acquisition of the land had granted shared- access to the pathway with no grant of right of occupation and possession and the activity is in the genre of licence extended for a specific period against payment of rentals. In the case of renting or leasing of the property, the owner (appellant in this case) will not have the right to use the land/pathway involved as 'renting/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 rights are granted to the land owner by the appellant for the shared access. It is seen that the gran ..... X X X X Extracts X X X X X X X X Extracts X X X X
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