In re Anmol Industries Limited (GST AAAR West Bengal)
The West Bengal Appellate Authority for Advance Ruling (WBAAR) upheld a ruling denying M/s. Anmol Industries Limited an exemption on the upfront premium paid for a long-term land lease from Shyama Prasad Mookerjee Port, Kolkata (SMPK). Anmol Industries argued the premium was exempt under Entry 41 of Notification No. 12/2017-Central Tax (Rate), which covers long-term leases of industrial plots. The WBAAR, however, found that Anmol Industries did not meet the necessary conditions for the exemption.
The notification specifies that the leased plot must be used for “industrial or financial activity in an industrial or financial business area.” While Anmol Industries intended to build a commercial office complex, the WBAAR determined this did not qualify as either industrial or financial activity. The authority emphasized the distinction between general business activities, which often involve financial transactions, and actual “financial activity” like rendering financial services. They consulted definitions of “financial service” from other acts, such as the Insolvency and Bankruptcy Code (IBC), and pointed to the specific SAC codes for financial services under GST law, to illustrate this distinction. The WBAAR also noted Anmol Industries’ GST registration details, which identify their primary business as manufacturing and export of food products, further supporting their conclusion.
Another key condition for the exemption is that the service provider (in this case, SMPK) must be a State Government Industrial Development Corporation or an entity with at least 20% ownership by the Central/State/Union Territory government. While Anmol Industries argued that SMPK met this criterion because its accounts are audited by the Comptroller and Auditor General of India (CAG), the WBAAR, after requesting clarification from SMPK, found that the Central Government does not hold ownership in SMPK. SMPK clarified that ownership rests with a Board appointed under the Major Port Authorities Act, 2021. The WBAAR acknowledged the CAG audit but stated that this alone doesn’t establish the required government ownership for the exemption.
The WBAAR’s decision clarifies the interpretation of “industrial or financial activity” in the context of the exemption notification. It highlights the need for a clear distinction between general business operations and specifically defined financial activities. The ruling also underscores the importance of fulfilling all prescribed conditions, including ownership criteria, to avail of the exemption. While the WBAAR upheld the original ruling, they modified it by providing a more detailed discussion of the conditions of the notification.
FULL TEXT OF THE ORDER OF AUTHORITY FOR ADVANCE RULING, WEST BENGAL
