In re Manappuram Finance Ltd. (GST AAAR Kerala)
In this case, the Kerala Appellate Authority for Advance Ruling (AAAR) examined whether the fee paid by a non-banking financial company (NBFC) to the Kerala Government for converting land classified as wetland into dry land under Section 27A of the Kerala Conservation of Paddy Land and Wetland Act, 2008, was liable to GST under the reverse charge mechanism (RCM).
The appellant owned land classified as wetland and sought permission to change its classification to dry land for construction purposes. For obtaining this approval, the appellant paid the prescribed statutory fee to the Government. The appellant contended that GST was not applicable because there was no supply of service, no consideration, and the activity was covered by Notification No. 14/2017-Central Tax (Rate), which excludes certain government functions relating to Panchayats from the scope of supply. The appellant also argued that the Government was performing a statutory and sovereign function and that the payment was merely a statutory fee rather than consideration for a service.
The Authority first observed that the fee had already been paid and the land conversion process had been completed before the advance ruling application was filed. It held that the advance ruling mechanism is intended to provide certainty regarding proposed or ongoing transactions and not to determine taxability of completed transactions. Therefore, the application itself was considered not admissible.
