In re Vaniampara Rubber Company Limited (GST AAR Kerala)
The case of In re Vaniampara Rubber Company Limited before the GST Authority for Advance Ruling (AAR), Kerala, centered on the Goods and Services Tax (GST) classification and taxability of “quit rent” or “lease rent” paid to the Government of Kerala. The Vaniampara Rubber Company, which holds a perpetual lease on 356.1232 hectares of land from the government, uses the land exclusively for cultivating rubber plantations. The company sought a ruling after the Forest Department, prompted by an audit objection from the Accountant General, demanded GST at an 18% rate on the rent paid for the period from 2017-18 to 2023-24. The audit objection had proposed classifying the service under SAC 997212, which relates to real estate services.
The applicant, Vaniampara Rubber Company, argued that the land was used for agricultural purposes, and therefore, the lease rent should be exempt from GST. They contended that the correct classification for their service was SAC 9986, which covers support services to agriculture. The company relied on Entry No. 54 of Notification No. 12/2017-Central Tax (Rate), which provides a GST exemption for services relating to the cultivation of plants, including the leasing of vacant land with or without a structure incidental to its use. The company also pointed to an earlier ruling by the same AAR (Order No. KER/11/2018 dated 20.10.2018), which had already clarified that quit rent paid for agricultural land falls under SAC 9986 and is eligible for an exemption.
