Ram Kamal Healthcare Pvt. Ltd Vs Union of India (Allahabad High Court)
Allahabad High Court held that GST is not chargeable on premium and lease rent on plots allotted to hospital against lease granted for more than 30 years. Accordingly, communication demanding deposit of GST liable to be quashed.
Facts- The present petition has been filed to quash the letter/communication dated 24.08.2018 issued by the Advisor to Yamuna Expressway Industrial Development Authority (‘YEIDA’) requiring the petitioner to deposit GST at the rate of 18% on the premium Rs. 3.80 crores charged by the YEIDA against Institutional Plot H-02, Sector 22-A, YEIDA admeasuring 4,000 square meters, allotted to the petitioner on 28.04.2015.
Conclusion- Held the exemption made available to the petitioner by virtue of the original Notification issued under Section 11 read with order of the Authority for Advance Ruling, is unconditional. Consequently, the letter dated 24.08.2018 issued on behalf of YEIDA is wholly unfounded in law and also in facts. Besides absence of conditions imposed by the legislature while granting exemption, no fact allegation has been made in the said communication of any specific condition having been violated by the petitioner. Consequently, the writ petition is allowed. The impugned communication dated 24.08.2018 is quashed.
FULL TEXT OF THE JUDGMENT/ORDER OF ALLAHABAD HIGH COURT
1. Heard Shri Suyash Agarwal, learned counsel for the petitioner, Shri Ankur Agarwal, learned Standing Counsel for the State and Shri Aditya Bhushan Singhal, learned counsel for respondent no. 3.
2. Upon earlier order passed, the matter was listed in top ten cases to ensure that this five year old tax matter could be heard and decided. Today, upon the matter being taken up, first a request for adjournment was pressed by Shri Singhal stating that his client has authorized another panel counsel to appear in this matter. The request made has been declined.
3. The present petition has been filed to quash the letter/communication dated 24.08.2018 issued by the Advisor to Yamuna Expressway Industrial Development Authority (hereinafter referred to as ‘YEIDA’) requiring the petitioner to deposit GST at the rate of 18% on the premium Rs. 3.80 crores charged by the YEIDA against Institutional Plot H-02, Sector 22-A, YEIDA admeasuring 4,000 square meters, allotted to the petitioner on 28.04.2015.
4. Submission of the learned counsel for the petitioner is, the case of the petitioner falls squarely within the exemption granted by the Central Government under Section 11 of the Goods and Services Tax Act, 2017 (hereinafter referred to as the ‘Act’), vide Notification No. 12/2017, dated 28th June, 2017 read with Notification No. 32/2017, dated 13th October, 2017. In any case, at present there exists no doubt as to the availability of exemption. Earlier YEIDA had entertained such doubt. It applied to the Authority for Advance Ruling under Section 97 of the Act vide application dated 9th March, 2018. That application was allowed by the Authority for Advance Ruling vide its order dated 06.06.2018. It has attained finality. Even otherwise, no demand of tax has been raised by the Revenue Authorities, either on YEIDA or on the petitioner.
5. As to the status of YEIDA, it has been stated that the same is an authority in State within the meaning of article 12 of the Constitution of India. It is obligated to act fairly and reasonably. Inasmuch as there is no legal mandate for demand of any GST on premium paid by the petitioner to YEIDA for allotment of Institutional Plot to set up a Hospital, the demand letter dated 24.08.2018 is wholly illegal and without authority of law and arbitrary.
6. In reply, learned Standing Counsel would submit, as on date the revenue authority has not intervened. Thus, it has neither demanded any tax nor it has taken any view over the matter. At the same time, in all fairness, learned Standing Counsel would submit that there exist Exemption Notifications referred to by the learned counsel for the petitioner and also there is no doubt that the order of the Authority for Advance Ruling dated 06.06.2018 has attained finality.
7. Shri Singhal would however contend that the YEIDA has demanded the tax as the petitioner does not fulfil the conditions of the Exemption Notification. However, as to the condition not complied by the petitioner, Shri Singhal could not satisfy the Court either as to any specific condition existing under the Exemption Notification or the compliance that may not have been made by the petitioner. Last, it has been submitted that demand of tax made by the YEIDA is only provisional. The petitioner after depositing that amount may seek its refund from the revenue authorities.
8. Having heard learned counsel for the parties and perused the record, there is no doubt that the petitioner was allotted Institutional Plot H-02 at Sector 22-A, YEIDA, by the YEIDA on 28.04.2015. On 01.07.2017, the Act was enforced. Thus GST provisions became relevant to the allotment made to the petitioner with respect to instalments that were required to be paid by the petitioner, after 30.06.2017. Here, it may be noted, the entire premium amount Rs. 3.80 crores was required to be paid by the petitioner in 12 instalments carrying 12% interest.
9. Section 11 (1) of the Act reads as below:
“11. Power of grant exemption from tax.- (1) where the Government is satisfied that it is necessary in the public interest so to do, it may, on the recommendations of the Council, by notification, exempt generally, either absolutely or subject to such conditions as may be specified therein, goods or services or both of any specified description from the whole or any part of the tax leviable thereon with effect from such date as may be specified in such notification.”
10. It is also not in doubt that the Central Government issued Notification No. 12/2017, dated 28th June, 2017 under Section 11 (1) of the Act. The relevant extract of the said Notification reads as below:
“Notification No. 12/2017-Central Tax (Rate)
New Delhi, the 28th June, 2017
G.S.R……… (E).- In exercise of the powers conferred by sub-section (1) of section 11 of the Central Goods and Services Tax Act, 2017 (12 of 2017), the Central Government, on being satisfied that it is necessary in the public interest so to do, on the recommendations of the Council, hereby exempts the intra-State supply of services of description as specified in column (3) of the Table below from so much of the central tax leviable thereon under sub-section (1) of section 9 of the sid Act, as is in excess of the said tax calculated at the rate as specified in the corresponding entry in column (4) of the said Table, unless specified otherwise, subject to the relevant conditions as specified in the corresponding entry in column (5) of the said Table, namely:-
Table
