The Allahabad High Court has held that premium for plots allocated for hospitals under lease extending up to 30 years or more falls under the definition of ‘amount paid upfront’ and is exempt from Goods and Service Tax.
M/S Ram Kamal Healthcare Pvt. Ltd, the petitioner filed petition to quash the letter/communication dated 24.08.2018 issued by the Advisor to Yamuna Expressway Industrial Development Authority (‘YEIDA’) requiring the petitioner to deposit GST at the rate of 18% on the premium Rs. 3.80 crores charged by the YEIDA against Institutional Plot H-02, Sector 22-A, YEIDA admeasuring 4,000 square meters, allotted to the petitioner on 28.04.2015.
Shri Suyash Agarwal, counsel for the petitioner, Shri Ankur Agarwal, Standing Counsel for the State and Shri Aditya Bhushan Singhal, Counsel for respondent no. 3.
It was contended that the YEIDA has demanded the tax as the petitioner does not fulfil the conditions of the Exemption Notification. However, as to the condition not complied with by the petitioner, Shri Singhal could not satisfy the Court either as to any specific condition existing under the Exemption Notification or the compliance that may not have been made by the petitioner.
It was argued that the demand for tax made by the YEIDA is only provisional. The petitioner after depositing that amount may seek a refund from the revenue authorities.
The petitioner was allotted Institutional Plot H-02 at Sector 22-A, YEIDA, by the YEIDA on 28.04.2015. On 01.07.2017, the Act was enforced. Thus GST provisions became relevant to the allotment made to the petitioner concerning instalments that were required to be paid by the petitioner, after 30.06.2017. It was evident that the entire premium amount of Rs. 3.80 crores was required to be paid by the petitioner in 12 instalments carrying 12% interest.
While amending that Notification, vide Notification No. 32/2017, dated 13th October 2017 though other changes were made to add by way of an activity for which allotment of plots were made exempt from tax and certain Corporations were also sought to be included wherein ownership of the Central Government or the State Government etc. may exceed 50%, at the same time, no amendment was made to the original Notification to introduce any condition for grant of that exemption.
While quashing the demand letter by Yamuna Expressway Industrial Development Authority issued to the petitioner, the division bench comprising of Justice Saumitra Dayal Singh and Justice Vinod Diwakar observed that “the exemption made available to the petitioner by virtue of the original Notification issued under Section 11 read with order of the Authority for Advance Ruling, is unconditional. Consequently, the letter issued on behalf of YEIDA is wholly unfounded in law and also in facts. Besides absence of conditions imposed by the legislature while granting exemption, no fact allegation has been made in the said communication of any specific condition having been violated by the petitioner.”
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