The Allahabad High Court has determined that the premium paid for land allocated for hospitals under leases extending for 30 years or more is considered an “amount paid upfront” and is therefore exempt from Goods and Service Tax.
In a ruling that nullified the demand letter sent by the Yamuna Expressway Industrial Development Authority to the petitioner, a panel of judges including Justices Saumitra Dayal Singh and Vinod Diwakar noted that YEIDA did not provide evidence of any unmet conditions outlined in the exemption notifications by the petitioner.
An Overview of the Facts
The petitioner contested a letter from the Advisor to the Yamuna Expressway Industrial Development Authority (YEIDA), which mandated the petitioner to remit an 18% Goods and Services Tax (GST) on a premium of Rs. 3.80 crores charged by YEIDA for the allocation of an Institutional Plot H-02, Sector 22-A, YEIDA, measuring 4,000 square meters.
The petitioner’s counsel argued that the Central Government had granted an exemption under Section 11 of the Goods and Services Tax Act, 2017, as per Notification No. 12/2017 dated 28th June 2017, in conjunction with Notification No. 32/2017 dated 13th October 2017, which applied to the petitioner. Furthermore, there had been no tax demand issued by the Revenue Authorities, neither to YEIDA nor to the petitioner, as YEIDA had sought an Advance Ruling, and this decision had not been contested by the revenue, thus achieving finality.
In addition, it was contended that YEIDA, considered a State under Article 12 of the Constitution of India, was duty-bound to act justly and reasonably. The demand letter was deemed entirely unlawful, as there was no legal requirement for the imposition of any GST on the premium paid by the petitioner to YEIDA for the allocation of an Institutional Plot for the establishment of a hospital.
The counsel representing the Revenue/State acknowledged that no tax demand had been made in this case, and they did not dispute the applicability of the exemption notifications. Conversely, the counsel for YEIDA alleged that the petitioner had not fulfilled the requisite conditions, and, therefore, the exemption notifications did not apply to the petitioner.
High Court Judgement
The Court noted that the allotment was made in 2015, and GST provisions applied only to instalments paid on or after 01.07.2017. It further recognized that the Central Government, through notifications, had granted specific exemptions for upfront payments related to long-term leases of 30 years or more for industrial plots by Development Corporations/Undertakings, and other such entities.
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The Court’s ruling stated that although YEIDA acknowledged the lease’s 30 years or more, it disputed the applicability of the exemption notifications to the petitioner. This dispute contradicted the Authority for Advance Ruling’s previous order, which, in response to YEIDA’s query, had declared that “GST is not applicable, i.e., exempted on the upfront amount, provided the conditions specified in Serial No. 41 of Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017, as amended by Notification No. 32/2017-Central Tax (Rate) dated 13.10.2017, are met.”
The Court also addressed YEIDA’s query regarding whether the premium charged for a plot allocated for a hospital fell under the exemption notification. The Authority had already answered this question. Given that the premium charged by YEIDA met the definition of ‘upfront amount’ under the exemption notifications, there was no valid reason for YEIDA to issue the demand order.
“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.”
As the Court mentioned the legislature consciously decided to grant unconditional exemption concerning 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.”
After that, the Writ Petition was permitted and YEIDA was rendered to reimburse the amount (if any) that the petitioner has deposited under the impugned demand.
| Case Title | Ms Ram Kamal Healthcare Pvt. Ltd. Vs Union Of India |
| Citation | WRIT TAX No. – 1435 of 2018 |
| Date | 05.10.2023 |
| Petitioner | Nishant Mishra, Suyash Agarwal, Vipin Kumar Kushwaha |
| Respondent | A.S.G.I.,Aditya Bhushan Singhal,C.S.C.,Om Prakash Srivastava |
| Allahabad High Court | Read Order |