The Allahabad High Court has allowed the petition seeking quashing the letter/communication dated 24.08.2018 issued by the Advisor to Yamuna Expressway Industrial Development Authority (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, YEIDA admeasuring 4,000 square meters, allotted to the petitioner on 28.04.2015.

The Division Bench of Justice Saumitra Dayal Singh and Justice Vinod Diwakar passed this order while hearing a petition filed by M/S Ram Kamal Healthcare Pvt Ltd.

Submission of the 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, vide Notification dated 28th June, 2017 read with Notification 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 the 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, the Standing Counsel submitted, 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, the Standing Counsel submitted that there exist Exemption Notifications referred to by the 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.

Aditya Bhushan Singhal, Counsel for respondent however contends 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, 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 the demand of tax made by the YEIDA is only provisional. The petitioner after depositing that amount may seek its refund from the revenue authorities.

The Court observed that,

Having heard 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.

Perusal of the said Notifications clearly reveals that the Central Government granted specific exemption to upfront amounts, by whatever name called, when paid with respect to service of grant of long term lease of 30 years or more of industrial plots, by the Development Corporations/ Undertakings etc.

We find the stand taken by the YEIDA to be wholly unfounded in law. Any doubt that may have arisen from the language of the Exemption Notification stood resolved by the Authority for Advance Ruling. A specific query had been raised by the YEIDA, if the premium charged on the plot allotted to set up a Hospital would be covered under the exemption notification.

The question posed by the YEIDA to the Authority for Advance Ruling clearly appears to be one that was covered under Section 97 (2) (b) and (e). Therefore, the order passed by the Authority for Advance Ruling does appear to be an order within the jurisdiction of the Authority for Advance Ruling as has been defined under Section 95(a) of the Act.

“In view of the above, we find, the Authority for Advance Ruling has answered the query of the YEIDA in unequivocal terms. It has specifically held that the premium amount described as upfront amount charged by the YEIDA was exempt from tax under serial Notification dated 28.06.2017 as amended by Notification dated 13.10.2017.

Therefore, as to the tax of exemption of the transaction in question, there could never arise any doubt as to its basic applicability. The only rider that was added by the Authority for Advance Ruling was that such exemption would be available subject to conditions as mentioned at serial of the above described Notifications.

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 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 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”, the Court further observed while allowing the petition.

“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”, the Court ordered.

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