Page 157 - GSTL_23rd April 2020_Vol 35_Part 4

2020 ] IN RE : KARNATAKA SOLAR POWER DEVELOPMENT CORPORATION LTD. 483
power generated for general public at reasonable cost; undertakes the said pro-
ject under the approval of Ministry of New & Renewable Energy (MNRE) and
functions as per the guidelines of the said MNRE.
7.4 The applicant, for the aforesaid project, obtained lands on lease
from the farmers of five villages for a period of 28 years and sub-leased the said
lands to the SPDs, as per their requirement on the basis of solar power generat-
ing capacity, for 28 years to instal the solar panels for generation of solar power.
The applicant collects rent along with the applicable GST from the said SPDs.
The applicant also required to collect an amount of Rs. 5,00,000/- per MW capac-
ity, from each SPD after commissioning of solar project, in five yearly instalments
of Rs. 1,00,000/- each, under the guidelines of MNRE, towards Local Area De-
velopment Fund, intended to rehabilitation of the affected area.
7.5 The LAD fund so collected by the applicant is kept in a separate ac-
count by the applicant and interest, if any, earned on such amounts also added to
the said fund. The LAD fund is used for development works of the said villages,
under village panchayats, by the Committee formed by the Government of Kar-
nataka, for the specific purpose of utilization of the said fund for local area de-
velopment with the Additional Chief Secretary, Energy Department, Govern-
ment of Karnataka as President, the Deputy Commissioner, Tumkur District as a
member and the CEO of the applicant as a co-convener, along with three more
other members. In view of the above, the applicant sought advance ruling in re-
spect of the questions mentioned at paras 5.1 & 6.1 supra. We take up one ques-
tion at a time and discuss the issue.
8. The first question is related to the collection of amount towards LAD
fund as to whether such collection amounts to supply as per the provisions of
CGST/KGST/IGST Act, 2017 and if so, whether it is taxable or not? It is an ad-
mitted fact that the applicant, being SPPD, has sub-leased the land to the SPDs
and is collecting the annual lease rent, which amounts to “Supply” in terms of
Section 7(1)(a) of the CGST Act, 2017 and is exigible to GST in terms of Section
9(1) of the said Act.
8.1 The applicant contends that the amount collected towards LAD
fund is not related to any supply made by them to the SPDs and is intended for
the local area development. The applicant endeavours to truncate and separate
the said amount from the rental income, to circumvent the tax liability on the
said income. We proceed to examine the relevance of the said amount to the
supply rendered by the applicant. Thus we invite reference to Section 15(2)(a) of
the CGST Act, 2017 which, is related to determination of value of supply & stipu-
lates that the value of supply shall include any taxes, duties, cesses, fees and charges
levied under any law for the time being in force other than this Act, the State Goods and
Services Tax Act, the Union Territory Goods and Services Tax Act and the Goods and
Services Tax (Compensation to States) Act, if charged separately by the supplier.
8.2 It is clearly evident from Section 15(2)(a) of the CGST Act, 2017 that
any amount of any taxes, duties, cesses, fees and charges levied under any law
for the time being in force other than the GST related Acts are includible in the
value of supply. In the instant case the amount is collected by the applicant from
the SPDs under guidelines, issued by Ministry of New & Renewable Energy,
Government of India. Further, there is no doubt that the amounts payable, by the
SPDs, towards LAD fund are on account of supply made by the applicant & are
directly linked to the rent/lease payable and thus are includable in the value of
the rental/lease service, being provided by the applicant.
GST LAW TIMES  23rd April 2020  277