Case Law Details
In re Gwalior Development Authority (GST AAR Madhya Pradesh)
Q1. We are providing residential land on lease basis for which we are charging or receiving lease premium whether GST is leviable or not?
It is well accepted that in the case of ambiguity in a provision of law, the interpretation shall be liberal. However, in the case of an exemption notification, the interpretation shall be strict. In this case, the entry grants exemption to Services by way of renting of residential dwelling for use as residence. It does not refer to land whether as part of the residential dwelling or otherwise. There are many instances, where the legislature, where it intends a separate dispensation for land or specific treatment of land uses the phrase ‘building and land appurtenant thereto’. No such phrase has been found in Entry No. 12. In the case of a single unit built on a parcel of land, the land is part of the building and in the case of multiple residential units on a parcel of land, there is share of undivided land that is part of each flat. The land is part and parcel of the building and is not separately let out. However, in case of lease of land, on which construction of a building is permitted, it is always the lease of the land that is renewed. The building constructed is not considered while decided on the renewal of the lease. Thus, in the case of residential building constructed by the lessee on leased land, it is always the lease of; the land that is renewed. The building does not attain the character of a leasehold property.
Since the entry grants the exemption to a leased / rented residential dwelling, the benefit is therefore restricted to a residential building which has been let out and does not extend to a parcel of land which has been taken on lease for construction of a residential dwelling on the said land.
Q2. Please also clarify whether GST is leviable on the maintenance charges and lease rent received on such residential land?
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