The Gujarat Authority of Advance ruling (AAR) ruled that Goods and Service Tax (GST) is applicable on one time long term lease premium payable by Jinmangal Corporation to Ahmedabad Urban Development Authority.
The Applicant, M/s. Jinmagal Corporation secured a bid for plot Chandkheda through e-auction conducted by the Ahmedabad Urban Development Authority (AUDA). They were required to pay a one-time lease premium of Rs. 35,65,85,940 as one-time long term lease premium as consideration for the said plot.
The applicant is also required to pay an annual lease premium of Rs. 5 per Sq. Meter each year for 99 years as per the tender document as annual lease premium paid.
The applicant sought the advance ruling on various issues.
Firstly, whether the one-time long term lease premium payable/paid by the Jinmangal Corporation to Ahmedabad Urban Development Authority is supply and thus liable to pay tax as per Section 7.
Secondly, whether Jinmagal Corporation is required to discharge pay tax under Reverse Charge Mechanism in accordance with Section 9(3) on a time lease premium payable to AUDA in light of notification No. 13/2017 as amended by 05/2019.
Thirdly, whether the annual lease premium payable/paid by the applicant is supply.
Lastly, whether Jinmangal Corporation is required to discharge/tax under Reverse Charge Mechanism in accordance with Section 9(3) on a time lease premium payable to AUDA in light of Notification No. 13/2017 as amended by Not. No. 05/2019.
The two-member bench of Rajeev Saxena and Mohit Agrawal ruled that the one-time long term lease premium payable/paid by the Jinmangal Corporation to Ahmedabad Urban Development Authority is supply and thus liable to pay tax as per Section7.
The AAR Jinmagal Corporation is required to discharge pay tax under Reverse Charge Mechanism in accordance with Section 9(3) on a time lease premium payable to AUDA in light of notification No. 13/2017 as amended by 05/2019.
The AAR further ruled that the annual lease premium payable/paid by the applicant is supply.
The Authority held that Jinmangal Corporation is required to discharge/tax under Reverse Charge Mechanism in accordance with Section 9(3) on a time lease premium payable to AUDA in light of Notification No. 13/2017 as amended by Not. No. 05/2019.
