CA Pratibha Goyal | Apr 8, 2023 |
GST applicable on one time premium received by applicant on allotment of completed commercial units: AAR
The applicant is engaged in the business relating to construction of immovable properties.
Government of Gujarat, acting through Gujarat State Road Transport Corporation [for short *’GSRTC’] decided to develop the area admeasuring 58370 sq. mtrs. of TP scheme no. 2 of Kankaria through private sector participant on commercial build, operate and transfer basis.
The applicant wishes to allot developed units to prospective buyers on a long term lease basis for a period of 90 years. The applicant in fact has received booking for the certain units before getting BU permission and he has charged the GST at the applicable rate on the entire amount of the consideration received for the booking done before BU permission.
The lessee shall pay a one-time premium of Rs. 13.00 lacs to the applicant [ie confirming party no. 2] as a consideration for allotment of the commercial unit on long term lease period of 90 years. Additionally, the lessee shall pay to the lessor ie GSRTC, advance annual lease rental of Re 1/- per square metre for the built up area of the leased premises for the first three years and thereafter the same shall be enhanced by 200% for every subsequent block of 10 years or part thereof.
The lease deed inter alia also provides that the lessee shall be entitled to sublet or transfer/assign holding rights in the leased premises in favour of a third party in the manner set out in clause 8 of the said deed.
In view of the foregoing, the applicant has filed this application seeking advance ruling on the below-mentioned questions vz
(i) Whether one time premium received by the applicant on allotment of completed building would be treated as taxable supply or not?
(ii) In case the supply is treated as taxable supply, what will be the applicable rate of tax.
(i) The one time premium received by the applicant on allotment of completed commercial units/building is taxable supply in terms of section 7 of the CGST/GGST Act, 2017.
(ii) The supply of the applicant is classified under SAC 9972 and would be leviable to tax at the rate of 18% (i.e. 9% CGST and 9% SGST) in terms of notification No. 11/2017-CT(Rate) dated 28.6.2017.
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