GST is not applicable to premiums or lease payments for hospital-allotted plots
Fact and issue of the case
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.
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.
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.
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.
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.
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.
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.
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:
“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.”
Observation of the court
As has been extracted above, the Exemption Notification though does contain Column no. 5, to specify the condition for grant of exemption yet, against Entry no. 41 of that Notification there never existed any specification or condition for grant of exemption. In fact, the original Notification No. 12/2017, dated 28th June, 2017 mentions the word ‘Nil’ against Column no. 5, against Entry no. 41 thereto. Thus the legislature chose to grant unconditional exemption with respect to payment of upfront amounts. While amending that Notification, vide Notification No. 32/2017, dated 13th October, 2017 though other changes were made to add by way of an activity for which allotment of plots were made exempt from tax and certain Corporations were also sought to be included wherein ownership of the Central Government or the State Government etc. may exceed 50%, at the same time, no amendment was made to the original Notification to introduce any condition for grant of that exemption.
Seen in that light, we find, 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. Any amount that may have been deposited by the petitioner pursuant to the impugned communication may be refunded forthwith within a period of one month, failing which the same shall attract interest at the rate of 8% from the date of deposit till the date of refund.
No orders as to costs.
Order Date :– 5.10.2023
Read the full order from hereRam-Kamal-Healthcare-Pvt.-Ltd-Vs-Union-of-India-Allahabad-High-Court-2