LI Network
Published on: October 16, 2023 at 17:08 IST
The Allahabad High Court has ruled that the premium paid upfront for plots allocated for hospitals under leases extending to 30 years or more falls under the definition of ‘amount paid upfront’ and is exempt from Goods and Service Tax (GST).
The court invalidated the demand letter issued by the Yamuna Expressway Industrial Development Authority (YEIDA) to the petitioner. The court found that YEIDA failed to demonstrate the unfulfilled conditions of the exemption notifications as claimed by the petitioner.
The petitioner contested a letter from the Advisor to YEIDA that required the payment of 18% GST on the Rs. 3.80 crore premium charged by YEIDA for the Institutional Plot H-02 in Sector 22-A, YEIDA, measuring 4,000 square meters, which was allotted to the petitioner.
The court noted that GST provisions were applicable only to installments paid on or after July 1, 2017, as the allotment was made in 2015. Specific exemption notifications from the Central Government covered the upfront amounts for the service of granting long-term leases of 30 years or more for industrial plots by Development Corporations/Undertakings, among others.
The court pointed out that YEIDA’s query regarding the exemption notification, which was answered by the Authority for Advance Ruling, indicated that GST did not apply to the upfront amount if the specified conditions were met. Therefore, once the premium charged by YEIDA qualified as an ‘upfront amount’ under the exemption notifications, there was no basis for YEIDA to issue the demand order.
The court also emphasized that the legislature intentionally chose to grant unconditional exemption for upfront payment amounts, as no amendments were made to introduce any conditions for granting the exemption.
Consequently, the writ petition was allowed, and YEIDA was directed to refund any amounts deposited by the petitioner in response to the disputed demand.
Case Title: M/S Ram Kamal Healthcare Pvt. Ltd. v. Union Of India And 3 Others [WRIT TAX No. – 1435 of 2018]