Lease Agreement between Hazari Bagh Builders and RLDA is not exempted from GST: Rajasthan AAR [Read Order]

The Rajasthan Authority of Advance Ruling (AAR) ruled that the Lease Agreement between Hazari Bagh Builders and the Railway Land Development Authority (RLDA) is not exempted from Goods and Service Tax (GST).

The Applicant Company, Hazari Bagh Builders, and RLDA have entered into a long term Lease Agreement of 99 years with RLDA for undertaking residential and commercial development along with the development of financial infrastructure.

The Applicant Company paid the amount in parts by way of RTGS on separate days in the month of February 2019 as a Security deposit which, in case of breach is refundable after forfeiting the bid security deposited separately for both the Plots as per the terms of the lease agreement.

The applicant sought the advance ruling on the issue whether the Lease Agreement between the Applicant Company and RLDA for a period of 99 years is exempt from levy of GST in view of the Notification No. 04/2019-Central Tax (Rate) dated March 29, 2019, or Notification No. 12/2017-Central Tax (Rate) dated June 28, 2017.

The Authority consisting of members J.P. Meena and Hemant Jain ruled that the Lease Agreement between Hazari Bagh Builders and the Railway Land Development Authority (RLDA) is not exempted from Goods and Service Tax (GST).

Another issue raised was whether the amount which is transferred by the Applicant Company as Security Deposit in pursuance to the tender and lease agreement is exempt under GST in view of the Notification No. 04/2019-Central tax(rate) dated March 29, 2019, or Notification No. 12/2017-Central Tax(Rate) dated June 28, 2017.

“The amount of Rs. 158657105/- which is transferred by the Applicant/SPV in pursuance to the tender and lease agreement dated 08.11.2019 is not exempted under GST in view of the Notification No. 04/2019-Central tax (rate) dated 29.03.2019 or Notification No. 12/2017-Central Tax(Rate) dated 28.06.2017,” the Authority ruled.

Lastly, the applicant sought the advance ruling on the issue of whether the amount deposited during February 2019 is exempt.

“The amount of Rs. 158657105/- deposited during February 2019 is not exempted from GST vide Notification No. 04/2019-Central Tax (Rate) dated 29.03.2019 or Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017,” the Authority said.