In re TCG Urban Infrastructure Holdings Private Limited (GST AAR West Bengal)
The case concerns a remanded proceeding before the GST Authority for Advance Ruling, West Bengal, following directions from the Appellate Authority dated 13.05.2025. The matter relates to classification and taxability of services provided by the applicant, a real estate development and investment entity engaged in development, construction, leasing, and sale of commercial properties, including providing fit-outs and infrastructure support on hire to tenants in properties held by Bengal Intelligent Parks Private Limited (BIPPL). The applicant sought classification and applicable GST rate for supplying fitted assets on hire. The Appellate Authority instructed reconsideration of all relevant aspects, particularly examining whether the hired assets remain goods or become part of immovable property, noting also that the applicant was already paying GST at 28%.
The demised land, originally leased for 999 years by the State to WEBEL and subsequently subleased to BIPPL for 90 years, was developed into Bengal Intelligent Park. BIPPL constructed buildings and was authorized to grant sublease or licence of built-up spaces solely for electronics industries. The applicant, through an agreement dated 16.11.2005, undertook to provide and maintain high-standard infrastructure assets and was empowered to collect hire charges from occupants.
The applicant argued that hiring of infrastructure assets should be classified under Serial No. 17(viii) of Notification No. 11/2017-Central Tax (Rate) and taxed at 18%, instead of entries for transfer of right to use goods. The Authority examined agreements between BIPPL and the applicant and between the applicant and tenants. The applicant was required to install various systems such as ventilation, HVAC, landscaping, electrical distribution, power backup, water systems, fire-fighting systems and sewerage systems, with a comprehensive insurance requirement. Another agreement with a tenant showed hire of assets and fit-outs for nine years, retention of legal possession by the applicant, insurance obligations, and hire charges calculated at a fixed rate per sq. ft. Lists of assets for both subleased spaces and common areas showed integrated systems including electrical equipment, sprinkler systems, air conditioning systems, DG emergency power supply, and other fit-outs.
The Authority noted that services provided by the applicant could be viewed as leasing or renting, as the applicant legally owns the assets and provides access and use without transferring possession. However, the supply is not a composite supply because no naturally bundled principal supply exists; instead, multiple services are supplied for a single price, constituting a mixed supply.
The Authority examined the nature of the assets and concluded that items such as HVAC systems, fire-fighting systems, sewerage treatment plants, power backup systems, building water systems, and similar installations are integrated systems permanently attached to the building. Their installation requires extensive survey, design, civil work, electrical installations, integration of machines and equipment, and they become inseparable parts of the building. They cannot be removed or relocated without damage to the structure. Applying principles from judicial precedents, including tests of annexation, object, intention, functionality, permanency, and marketability, the Authority found that the assets qualify as immovable property and lose their character as goods.
Accordingly, the applicant is not supplying leasing or renting of goods. Instead, it provides leasing or rental services of benefits and utilities generated through immovable assets attached to the building, without transferring control or title. The hire charges tied to the super built-up area further indicate that charges are not linked to specific movable goods. The Authority concluded that the services fall under Heading 9973 (Leasing or rental services, without operator) and constitute a mixed supply attracting the highest applicable rate under Serial No. 17(viii) of Notification No. 11/2017-Central Tax (Rate), chargeable at 9% CGST and 9% SGST.
The ruling confirmed that the applicant’s services qualify as leasing or rental services covered under Heading 9973 and are taxable under Serial No. 17(viii) at 18% GST (9% CGST + 9% SGST).
FULL TEXT OF THE ORDER OF AUTHORITY FOR ADVANCE RULING, WEST BENGAL
