Facts of the Case

The petitioner, M/s. Ram Kamal Healthcare Pvt. Ltd., had been allotted Institutional Plot H-02, Sector 22-A, Yamuna Expressway Industrial Development Authority (YEIDA), admeasuring 4,000 square metres, on 28.04.2015, with a premium of Rs. 3.80 crores payable in 12 instalments carrying 12% interest. After the Goods and Services Tax Act, 2017 came into force on 01.07.2017, YEIDA issued a communication dated 24.08.2018 demanding GST at 18% on the premium, despite having itself earlier obtained an Advance Ruling dated 06.06.2018 under Section 97 of the Act, confirming that such upfront premium on long-term leases of industrial plots by government development authorities was exempt under Notification No.12/2017-Central Tax (Rate), as amended by Notification No.32/2017-Central Tax (Rate). The petitioner challenged YEIDA's demand letter before the Allahabad High Court, in a matter that had remained pending for over five years before being taken up in the Court's top-ten case list.

Issues Involved

  1. Whether the premium charged by YEIDA for a long-term lease of an institutional plot to set up a hospital was exempt from GST under Notification No.12/2017-Central Tax (Rate), as amended.
  2. Whether YEIDA, having itself obtained a binding Advance Ruling confirming the exemption, could still demand GST on the premium.
  3. Whether the demand communication was without authority of law.

Petitioner's Arguments

  • The transaction squarely fell within the exemption granted under Section 11 of the GST Act via Notification No.12/2017 read with Notification No.32/2017, both of which exempt upfront premium on long-term (30 years or more) leases of industrial plots by state industrial development authorities.
  • YEIDA had itself obtained an Advance Ruling under Section 97, which conclusively answered the exemption question in the petitioner's favour and had attained finality without any challenge.
  • No demand had even been raised by the actual GST revenue authorities on either YEIDA or the petitioner, making YEIDA's own demand letter wholly without jurisdiction, arbitrary, and violative of its obligation to act fairly as a "state" instrumentality under Article 12.

Respondent's Arguments

  • Standing Counsel for the Revenue conceded that the exemption notifications existed and that the Advance Ruling dated 06.06.2018 had attained finality, and confirmed that the revenue authorities had themselves neither raised any demand nor taken any adverse view on the transaction.
  • Counsel for YEIDA contended the petitioner did not fulfil the conditions of the exemption notification but could not identify any specific unmet condition, and alternatively argued that the demand was only provisional and refundable later.

Court Order/Findings

  • The Court held that Entry 41 of Notification No.12/2017-Central Tax (Rate), as amended, grants an unconditional exemption on upfront premium for long-term leases of industrial plots by government development authorities, since Column 5 against that entry specifies "Nil" and the amending notification added no condition.
  • Since YEIDA's own Advance Ruling application under Section 97 had been conclusively answered in the petitioner's favour and had attained finality, YEIDA, not being the revenue authority, had no basis to reopen or contradict that ruling by issuing its own demand.
  • The demand communication dated 24.08.2018 was quashed as wholly unfounded in law and fact; any amount already deposited pursuant to it was directed to be refunded within one month, failing which it would carry interest at 8% per annum from the date of deposit till refund.

Important Clarification

A binding Advance Ruling obtained under Section 97 of the GST Act by a government lessor on the taxability of upfront lease premium operates conclusively once it attains finality, and the lessor cannot subsequently issue its own demand for GST contrary to that ruling. The exemption under Notification No.12/2017-Central Tax (Rate), as amended by Notification No.32/2017, for premium on long-term leases of industrial plots by government development authorities is unconditional wherever the entry specifies "Nil" against the conditions column.

Sections Involved

  • Section 11, GST Act, 2017 — power to grant exemption from tax by notification.
  • Section 97, GST Act, 2017 — application for advance ruling.
  • Section 95(a), GST Act, 2017 — definition of "advance ruling."
  • Notification No.12/2017-Central Tax (Rate) and Notification No.32/2017-Central Tax (Rate) — exemption for upfront lease premium on long-term industrial plots allotted by government development authorities.

Decision – In Favour of

The decision is clearly in favour of the Assessee. The Allahabad High Court quashed YEIDA's demand for GST on the premium, holding the exemption unconditional and binding by virtue of the finalised Advance Ruling, and directed refund with interest of any amount already collected.

Related Case Laws

No directly on-point case notes are currently published on this site.

Case Details

  • Court: Allahabad High Court
  • Case No.: WRIT TAX No. 1435 of 2018
  • CNR: Not available
  • Coram: Justice Saumitra Dayal Singh and Justice Vinod Diwakar
  • Decision Date: 05.10.2023
  • Disposal Nature: Allowed; demand communication quashed

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