The Kerala Authority of Advance Ruling (AAR) ruled that the lease rent charged by the municipality for land is eligible for GST exemption.
The applicant, George Jacob is the successful bidder of the auction of wetland namely; Paruthi Thodu water channel conducted by the Chellanam Grama Panchayat for fish farming in the canal for the period from April 2019 to March 2020.
In pursuance of the acceptance of the bid of the applicant in the auction, the applicant entered into an agreement with the Secretary, Chellanam Grama Panchayat. The Grama Panchayat informed the applicant that the applicant is also liable to pay GST at the rate of 18% of the bid amount along with the bid amount as the auction of the water channel is not covered by the exemption under Notification No. 12/2017 Central Tax (Rate) dated June 28, 2017.
The applicant has sought advance ruling on the issues that whether lease rent charged by the municipality for land i.e., water channel used for fish farming falls within the meaning of “services relating to the rearing of all life forms of animals, by way of renting or leasing of vacant land” eligible for GST exemption as per Sl.No.54 of Notification No.12/2017-Central Tax (Rate) dated June 28, 2017, and corresponding notification under Kerala GST.
The Authority consisting of Joint Commissioner of Central Tax, Shivprasad S. IRS and Additional Commissioner of State Tax, B.S. Thyagarajababu observed that the fish and crabs being reared by the applicant in the water channel taken on rent or lease are animals and the service of renting or leasing of the water channel has been availed by the applicant for the rearing of the animals.
Therefore, AAR ruled that the activity of renting or leasing the water channel by the Grama Panchayat to the applicant for fish farming for a consideration determined through auction is squarely covered under the exemption entry at Sl No. 54 of Notification No. 12/2017 Central Tax (Rate) dated June 28, 2017, as services relating to the rearing of all life forms of animals by way of renting or leasing of vacant land.
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