In Advance Ruling No. GUJ/GAAR/R/2023/15- AAR(GST)- Authority For Advance Rulings (GST) Gujarat rules that the lease of commercial units on payment of one-time lease premium and annual premium is ‘Supply' falling within the ambit of section 7(1) of CGST Act, 2017 and is liable to tax
Members Milind Kavatkar (SGST) And Amit Kumar Mishra (CGST) [31-03-2023]

Read Order: In Re: v. M/s. Kedaram Trade Centre

Chahat Varma

Mumbai, April 17, 2023: Observing that the agreement made between M/s. Kedaram Trade Centre (applicant), Gujarat State Road Transport Corporation, Hubtown Bus Terminal (Ahmedabad) P. Ltd and the lessee for 90 years can by no stretch of imagination be termed as a sale but in fact is a lease, the Authority for Advance Rulings (GST) Gujarat has ruled that lease of commercial units on payment of one-time lease premium and annual premium is a 'supply' falling within the ambit of section 7(1) of CGST Act, 2017.

The issue before the Authorities was whether the transaction wherein the applicant received one time premium from the lessee would fall within the ambit of the definition of Supply under GST or not.

The Authorities were are of the view that the lease of plot for 90 years by the applicant was not "sale of land", but is a “lease” and therefore, does not fall within the ambit of clause 5 of Schedule III of CGST Act, 2017.

By placing reliance on Builders Association of Navi Mumbai [Writ Petition No. 12194 of 2017] of the Bombay High Court, the Authorities concluded that the one time premium received by the applicant on allotment of completed commercial units/building is taxable supply in terms of section 7 of the CGST/GGST Act, 2017 and the supply of the applicant is classified under SAC 9972 and would be leviable to tax at the rate of l8%o (i.e. 9% GGST and 9% SGST) in terms of notification No. 1 I 0 I 7-CT(Rate) dated 28.6.2017.