Case Law Details
In re Hazari Bagh Builders Pvt. Ltd. (GST AAR Rajasthan)
The Applicant Company is registered in the State of Rajasthan and having GSTIN in State of Rajasthan. The Applicant company has entered into a long term Lease Agreement of 99 years with RLDA for undertaking residential & commercial development along with development of financial infrastructure as on 08.11.2019. The Applicant Company paid a sum of Rs. 158657105.00 in parts by way of RTGS on separate days in the month of February, 2019 as Security deposit which, in case of breach is refundable after forfeiting the bid security deposited separately for both the Plots as per the terms of the lease agreement which is Rs. 3300000.00 for Plot A and of Rs. 5200000.00 for Plot B. The issue to be examined in the present case is whether the amount paid prior to 29.03.2019 in pursuance to the lease agreement of 99 years executed on 08.11.2019 are exempt from levy of GST or not;
Held by AAR
We observe that, RLDA being the statutory authority of Government of India is providing services by way of renting of immovable property to a registered person (i.e. the applicant), and renting of immovable property includes leasing also, therefore the said services are falling under the purview of Reverse Charge Mechanism. The applicant being the recipient of service of leasing or renting of immovable property is liable to pay GST under RCM.
The applicant has further made a contention that leasing services provides by RLDA to them is exempt from GST as provided under Serial No. 4IB of Notification 12/2017- Central Tax (Rate) dated 28.06.2017 as amended vide Notification 04/2019-Central Tax (Rate) date 29.03.2019.
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