TMI Blog2023 (11) TMI 869X X X X Extracts X X X X X X X X Extracts X X X X ..... t to issue a notification to specify a class of registered persons who shall in respect of supply of specified categories of goods or services or both received from an unregistered supplier , pay tax on RCM basis - Hence, lease of land is to be treated as a supply of services chargeable to GST. In terms of Sr. No. 5 of notification No. 13/2017-CT(Rate) dated 28.6.2017, as amended, the applicant, [who as a recipient falls within the ambit of a business entity , in terms of the definition of business as per 2(17), ibid], becomes liable to discharge GST under RCM in terms of section 9(3) of the CGST Act, 2017 in respect of the services supplied by SMC, [a local authority in terms of Section 2(69), ibid]. Whether they are liable to pay GST under Reverse Charge Mechanism u/s 9(3) or 9(4) for premium on lease renewal amount payable to SMC? - whether circular No. 101/20/2019-GS 1 did 30.4.2019 grants them exemption from payment of GST? - HELD THAT:- In terms of Schedule II of GST Act, 2017, the activity i.e. lease of plot and payment of one time lease premium/salami/premium on lease renewal and annual premium paid by the applicant is a supply and is covered under Section 7(1) of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... supply under section 7 of the CGST Act, 2017 and would be leviable to GST under forward charge. Whether the collection made from shareholders/shop owners by the applicant if held leviable to GST, then can the applicant s shareholder/shop owners who are reimbursing the lease and premium on lease renewal be eligible for ITC of the GST charged by the applicant? - HELD THAT:- A conjoint reading of the sections 95(a) and (c), 97 and 103 of the CGST Act, 2017, depicts that advance ruling means a decision by the AAR to an applicant on matters or on questions specified under 97(2) ibid in relation to the supply of goods or services or both being undertaken or proposed to be undertaken by the applicant; that an applicant, means any person registered or desirous of obtaining registration under this Act; that such an applicant, may make an application in the prescribed form with appropriate fee, stating the question on which the said ruling is sought. The questions on which the ruling is sought is however, restricted to the 7 [seven] issues listed in section 97(2), ibid. Further, in terms of section 103, such a ruling shall be binding only on the applicant and on the concerned officer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ollection made from shareholders/shop owners for making payment of lease and lease premium amounts be considered as supply and GST under forward charge is applicable on the same? (iv) What will be the effect of circular no. 101/20/2019-GST dated 30.4.2019 on the transaction? Will it exempt the applicant from payment of tax under Reverse Charge Mechanism? (v) If answer to question no. (iii) is in affirmative, then will applicant s shareholder/shop owners who are reimbursing the lease and lease premium amount get ITC of the GST charged by the applicant? 6. Personal hearing was held on 29.8.2023 wherein Shri Abhishek Soni, CA, appeared and reiterated the facts as stated in the application. Discussion and findings 7. At the outset, we would like to state that the provisions of both the CGST Act and the GGST Act are the same except for certain provisions. Therefore, unless a mention is specifically made to such dissimilar provisions, a reference to the CGST Act would also mean a reference to the same provisions under the GGST Act. 8. We have considered the submissions and additional submission made by the Applicant in their application for advance ruling as we ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fy a class of registered persons who shall in respect of supply of specified categories of goods or services or both received from an unregistered supplier , pay tax on RCM basis. In this connection, we find that notification No. 13/2017-CT(Rate) has been issued viz [Notification No. 13/2017-Central Tax (Rate), dated 28-6-2017] Payment of CGST on specified services on Reverse Charge basis In exercise of the powers conferred by sub-section (3) of section 9 of the Central Goods and Services Tax Act, 2017 (12 of 2017), the Central Government on the recommendations of the Council hereby notifies that on categories of supply of services mentioned in column (2) of the Table below, supplied by a person as specified in column (3) of the said Table, the whole of central tax leviable under section 9 of the said Central Goods and Services Tax Act, shall be paid on reverse charge basis by the recipient of the such services as specified in column (4) of the said Table:- TABLE SI. No. Category of Supply of Services Supplier of service Recipient of Service (1) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of services chargeable to GST. In terms of Sr. No. 5 of notification No. 13/2017-CT(Rate) dated 28.6.2017, as amended, the applicant, [who as a recipient falls within the ambit of a business entity , in terms of the definition of business as per 2(17), ibid], becomes liable to discharge GST under RCM in terms of section 9(3) of the CGST Act, 2017 in respect of the services supplied by SMC, [a local authority in terms of Section 2(69), ibid]. 13. The second issue on which the ruling is sought is whether they are liable to pay GST under Reverse Charge Mechanism u/s 9(3) or 9(4) for premium on lease renewal amount payable to SMC. A related question [fourth issue| that has been raised is whether circular No. 101/20/2019-GS 1 did 30.4.2019 grants them exemption from payment of GST. The relevant extract of notification No. 12/2017-CT (Rate) dated 28.6.2017, amending not. No. 32/2017-CT (Rate) dated 13.10.2017 and circular dated 30.4.2019, is reproduced below for case of reference viz Notification No. 12/2017-CT (Rate) dated 28.6.2017 TABLE SI.No. Chapter, Section, Heading, Group or Service Code (Tariff) D ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Condition (1) (2) (3) (4) (5) 41 Heading 9972 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. Nil Nil 3. It is hereby clarified that GST exemption on the upfront amount (called as premium, salami, cost, price, development charges or by any other name) payable for long-term lease (of thirty years, or more) of industrial plots or plots for development of infrastructure for financial business under Entry No. 41 of Exemption Notification 12/2017-Ce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... more ownership of Central Government, State Government, Union Territory but a local authority i.e. Surat Municipal Corporation. Further, the said Notification or GST Act, 2017, does not define the industrial or financial business area . Therefore, we refer to the definition of industrial or financial business area from Gujarat Industrial Development Act, 1962. As per section 2(g) of the Gujarat Industrial Development Act, 1962, Industrial Area means - any area declared to be an industrial area by the State Government by Notification in the Official Gazette, which is to be developed and where industries are to be accommodated . Thus, for considering any area as industrial or financial business area, it is necessary that the area must be declared as industrial or financial business area by the state government by notification. In the instant matter, we find that no such Notification declaring the area consisting of Sural Municipal Corporation proposed to be leased out to the applicant, as industrial/financial business area, is on record. Therefore, the area cannot be treated as industrial or financial business area in absence of any evidence in support. Thus, the benefits of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to whether the applicant is liable to pay GST under RCM under Section 9(3) of CGST Act, 2017, we find that in Further, in terms of Sr. No. 5 of notification No. 13/2017-CT(Rate) dated 28.6.2017, as amended, the applicant, [who as a recipient falls within the ambit of a business entity , in terms of the definition of business as per 2(17), ibid], becomes liable to discharge GST under RCM in terms of section 9(3) of the CGST Act, 2017 in respect of the services supplied by SMC, [a local authority in terms of Section 2(69), ibid]. This view stands substantiated in terms of the Advance Ruling no. GUJ/GAAR/R/64/2020 dated 17.9.2020 in the case of M/s Jinmagal Corporation. 21. The next question posed before us is whether collection made from shareholders/shop owners for making payment of lease and lease premium amounts be considered as supply and whether GST under forward charge is applicable on it. The applicant in the facts of the case, has briefly explained its constitution, mentioning that they are a cooperative society formed primarily for the purpose of maintenance and service of Surat s most reputed and iconic textile market The Surat Textile Market ; that there are more ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... id. Further, in terms of section 103, such a ruling shall be binding only on the applicant and on the concerned officer or the jurisdictional officer, in respect of the applicant. 26. We find that [a] the applicant before us is not the person who intends to avail the ITC and [b] that the ruling is sought on behalf of their members and shareholders who are distinct persons. This being the factual matrix, we find that the applicant before us has no locus standi in seeking a ruling in the facts of the present case on this question to be precise. 27. In the light of the above, we rule as under: RULING (i) The applicant is liable to pay GST under Reverse Charge Mechanism in terms of section 9(3) of the CGST Act, 2017, for lease renewal amount payable to SMC. (ii) The applicant is liable to pay GST under Reverse Charge Mechanism in terms of section 9(3) of the CGST Act. 2017, for premium on lease renewal amount payable to SMC. (iii) The applicant is liable to pay GST under forward charge in respect of collection made from shareholders/shop owners, for making payment of lease and lease premium. (iv) The applicant is not entitled for exemption under Sr. No. 41 of n ..... X X X X Extracts X X X X X X X X Extracts X X X X
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