The Maharashtra Authority of Advance Ruling (AAR) held that Mumbai Port Trust is eligible for GST Exemption on Way Leave fees and Lease rent to Mumbai Metropolitan Region Development Authority (MMRDA).
The applicant, Mumbai Port Trust is registered under CGST Act, 2017, is one of the major ports in India, established under the Bombay Port Trust Act, 1879 and governed by the provisions of Major Port Trust Act, 1963 (MPT Act). The authority for the appointment of port authorities for administration, control, and management of the port, is vested with the Central Government of India, acting through the Ministry of Shipping.
The applicant has entered into Memorandum of Understanding (MOU) with MMRDA, to grant MMRDA a lease and way leave permission of land and water areas belonging to it, for the MTHL project. As per the MOU, MMRDA agreed to make the certain payments namely Annual Lease Rent of Rs. 22.58,30,199 in respect of Area under permanent occupation (i.e. 30 years tease period) and Annual Lease Rentals of Rs. 33,23,36,835 in respect of (ii) Area under temporary occupation during the construction period (i.e. Temporary occupation). A compensation of Rs.24.48 crores in lieu of demolition of 4 existing sheds at STP yard situated on the said plot of land licensed to MMRDA and required to be demolished in order to render vacant possession of the said plot of land to MMRDA. A compensation of Rs.64 crores in lieu of decommissioning of Old Pir Pau Jetty / Berth situated on the said land licensed to MMRDA and required to be decommissioned by MbPT in order to render vacant possession of the said plot of land.
The advance ruling has been sought in respect of the issue that whether the Applicant is entitled to exemption from payment of GST in terms of Entry No.3 of the Notification No. 12/2012-CTR dtd.20-06-2012 on the certain considerations payable to it by MMRDA in terms of Memorandum of Understanding entered into between the MbPT and MMRDA.
The coram of Members Rajiv Mago and T.R.Ramnani ruled that the Applicant is entitled to exemption from payment of GST in terms of Entry No.3 of the Notification No. 12/2012-CTR dtd.20-06-2012 on the above listed considerations payable to it by Mumbai Metropolitan Region Development Authority in terms of Memorandum of Understanding entered into between the MBPT and MMRDA.
“We find that the security deposit taken by the applicant is to secure or to act as a guarantee as per the terms of the MOU against possible damages to the properties. The fact is that the amount of deposit taken by the applicant is till the time the work has not been completed by MMRDA. We find, as per the submissions made by the applicant and the facts of the matter as stated by them, that the applicant will not apply such deposit received, as consideration for the said supply and therefore the provision to Section 2 (31) will not be applicable to this matter. Thus we find that in the subject case, the deposit received by the applicant cannot be treated as consideration for the supply made by the applicant and therefore they will not be liable to pay GST on such deposit amount received by them,” the AAR noted.
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