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THE UNION TERRITORY GOODS AND SERVICES TAX ACT, 2017 ( ADVANCE RULING)
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Body whether ancillary services (Transfer fees, Extension fees , Conversion fees etc.) provided by them are exempt? HELD The said services are taxable at 18%

Chandigarh Advance Ruling No. CT/01/A.R./CHD/2018/8042, Dated 8th November, 2018

Office of the Commissioner of Central Goods & Services Tax

Commissionerate, Central Revenue Building, Plot No. 19,

Sector -17-C, Chandigarh.

U.T. Chandigarh Authority for Advance Ruling

(Constituted under section 96 of Central Goods and Service Tax Act, 2017)

Before the Bench of

1. Kumar Gaurav Dhawan, Additional Commissioner of Central Goods & Services Tax Commissionerate, Chandigarh.

2. Rakesh Kumar Popli, Additional Commissioner, Excise & Taxation Department, Chandigarh (U.T)

GSTN No. 04AABCP1602M3ZP
Legal Name of Applicant M/s Punjab Small Industries & Export Corporation Limited

Registered Address/Address provided while obtaining user id 3rd to 6th Floor, Udyog Bhawan, Himalaya Marg, Sector 17-A Chandigarh
Details of application GST ARA-01 dated 05.04.2018
Nature of activity(s) (proposed/present) in respect of which advance ruling sough  
A. Category Service Provision
B. Description The Applicant is engaged in providing (30 years or more) lease of Industrial Plots against one time upfront amount (Called as premium, salami, cost, price, development charges or by any other name) to the industrial units.
Issue/s on which advance ruling required (v) determination of the liability to pay tax on any goods or services or both

Question(s) on which advance ruling is required As specified in the proceedings below

PROCEEDINGS

(under section 98 of the CGST Act, 2017 & UTGST Act, 2017)

Present application has been filed u/s 97 of the Central Goods & Services Tax Act, 2017 & similar provisions under Union Territory Goods and Services Tax Act, 2017 (herein after referred to as CGST Act, 2017 & UTGST Act, 2017). The Applicant M/s Punjab Small Industries & Export Corporation Limited is state Government owned Industrial Development undertaking which is mainly engaged in providing (30 years or more) lease of Industrial Plots against one time upfront amount (Called as premium, salami, cost, price, development charges or by any other name) to the industrial units, which by virtue of Point No. 41 of the Notification No. 12/2017 - Central Tax (Rate), dated 28.06.2017 is exempt from GST.

The Authority for Advance Ruling in the Union Territory of Chandigarh was constituted vide Notification No. 14/2018-Union Territory Tax dated 8tn October, 2018 issued by the Under Secretary to the Govt, of India.

For admission & hearing u/s 98 of the CGST Act, 2017 & UTGST Act, 2017, notice was issued to the Applicant on 11.10.2018 directing to appear on 17.10.2018. On 17.10.2018, Sh. Salil Yadav, CA for the Applicant along with Sh. Sanjay Jain, Deputy Manager (F&A) of the Applicant taxpayer M/s Punjab Small Industries & Export Corporation Limited appeared. On scrutiny of the application, it was observed that the Applicant has deposited an amount of Rs. 10,000/- (i.e. Rs. 5000/- against fee under CGST & Rs. 5000/- as fee against UTGST) vide CPIN No. 18030400016093 dated 26.03.2018. Further, the Applicant in his letter dated 30.10.2018 has specified in para 17 that the question raised in his application is neither pending in any proceedings nor decided in any proceedings in the Applicant's case under any of the provision of the Act. Also as per para 13 of the applicant, the question on which the Advance Ruling is sought in respect of "determination of the liability to pay tax on any goods or services or both" which is specified under clause (e) of subsection (2) of Section 97 of the Act. So, in view of the above, the Application was admitted. The arguments of the Applicant were heard on dated 17.10.2018 & ruling was reserved which is released today i.e. on dated 08.11.2018.

Statements of Facts

The Applicant is state Government owned Industrial Development undertaking which is mainly engaged in providing (30 years or more) lease of Industrial Plots against one time upfront amount (Called as premium, salami, cost, price, development charges or by any other name) to the industrial units, which by virtue of Point No. 41 of the Notification No. 12/2017 - Central Tax (Rate), dated 28.06.2017 is exempt from GST.

Further, the Applicant also provides ancillary services relating to the Industrial Plots by the following names:-

    • Transfer Fees - Fees charged for the purpose of transfer of Industrial Plot from one person to another.

    • Extension Fees - Fees charged for delay in the commencement of construction and production.

    • Conversion Fees- Fees charged for the conversion of leasehold plot into freehold.

    • Processing Fees - Fees charged for the purpose of transfer of Industrial Plots within the family, change in constitution of ownership/shareholding pattern permission for sale of freehold plot.

    • Bifurcation Fees - Fees charged for the permission to sub divide the industrial plot in to 2 or more numbers.

    • Tower Charges - Fees charged from the plot-holder for the permission to install Telecommunication Tower on the Industrial, plots.

Question on which Advance Ruling is required:-

The Applicant wants the advance ruling on the issue that a company duly registered under the Companies Act, 2013 which is owned by State Government of Punjab and is mainly engaged in the business of developing and providing Industrial Plots on long term lease to the industrialists by virtue of Point No. 41 of the Notification No. 12/2017 - Central Tax (Rate), dated 28.06.2017 is exempt from GST- whether the following ancillary services provided by it are also exempt:-

    • Transfer Fees - Fees charged for the purpose of transfer of Industrial Plot from one person to another.

    • Extension Fees - Fees charged for delay in the commencement' of construction and production.

    • Conversion Fees - Fees charged for the conversion of leasehold plot into freehold.

    • Processing Fees - Fees charged for the purpose of transfer of Industrial Plots within the family, change in constitution of ownership/shareholding pattern permission for sale of freehold plot.

    • Bifurcation Fees - Fees charged for the permission to sub divide the industrial plot in to 2 or more numbers.

    • Tower Charges - Fees charged from the plot-holder for the permission to install Telecommunication Tower on the Industrial plots.

Interpretation of the Applicant:-

As per applicant, these ancillary services are inter-linked with the service of providing lease of Industrial Plots against one time upfront amount (Called as premium, salami, cost, price, development charges or by any other name) to the industrial units, which by virtue of Point No. 41 of the Notification No. 12/2017 -Central Tax (Rate), dated 28.06.2017 is exempt from GST. Therefore these ancillary services should also be exempt from GST.

Observation:-

The "Description of Goods" in entry No. 41 in Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017 was substituted vide Notification No. 32/2017-Central Tax (Rate) dated 13.10.2017 and the text of the same is reproduced below:

"One time upfront amount (called as premium, salami, cost, price, development charges or by any other name) leviable in respect of the service, by way of granting long term (thirty years, or more) lease of industrial plots, provided by the State Government Industrial Development Corporations or Undertakings to industrial units." [Entry before replacement]

"Upfront amount (called as premium, salami, cost, price, development charges or by any other name) payable in respect of service by way of granting of long term lease of thirty years, or more) of industrial plots or plots for development of infrastructure for financial business, provided by the State Government Industrial Development Corporations or Undertakings or by any other entity having 50 per cent, or more ownership of Central Government, State Government, Union territory to the industrial units or the developers in any industrial or financial business area." [Entry after replacement]

The additional services provided by the applicant, as enumerated at serial No. 14 of their application, though are in respect of the same plots but the entry No. 41 ibid, does not provide exemption to all services related to the plots covered there as is evident from the description of service which grants exemption only to the Upfront amount (called as premium, salami, cost, price, development charges or by any other name) payable in respect of service by way of granting of long term lease of thirty years, or more. Therefore, the other subsequent services rendered by the applicant as enumerated by them in their application (Sr. No. 14) are not mentioned therein and thus, appear to be not covered under the said exemption entry or any other entry in Notification No. 12/2017-CT(R) for that matter and thus appear to be liable for payment of CGST and UTGST. These services are, therefore, covered under "Other Miscellaneous services"-Group 99979 [scheme of classification of services in the Annexure to Notification No.11/2017- Tax (Rate) dated 28.06.2017] with CGST rate of 9% as provided at Sr. No. 35 of Notification No. 11/2017-Central Tax (Rate) dated 28.06.2017 (as amended) with equal rate (9%) of UTGST as per entry No. 35 in' Notification No. 11/2017-Union Territory Tax (Rate) dated 28.06.2017 (as amended).

Advance Ruling u/s 98 of the Act

In view of the above observations, it is ruled that

The said services are taxable services in terms of sub-section (21) of section 2 read with section 9 of the CGST Act, 2017. The services are not specifically exempted in terms of Notifications issued under section 11 of the GGST Act, 2017. For the purpose of charging the tax, the services are covered under "Other Miscellaneous services"-Group 99979, Service Code 999799-'Other" services nowhere else classified' as per the scheme of classification of services in the Annexure to Notification No.11/2017- Tax (Rate) dated 28.06.2017 with CGST rate of 9% as provided at Sr. No. 35 of Notification No. 11/2017-Central Tax (Rate) dated 28.06.2017 (as amended) with equal rate (9%) of UTGST as per entry No. 35 in Notification No. 11/2017 - Union Territory Tax (Rate) dated 28.06.2017 (as amended).

Pronounced  

08.11.2018

 
   
Kumar Gaurav Dhawan Rakesh Kumar Popli
Member, CGST, Chandigarh Member, UTGST, Chandigarh