Page 133 - GSTL_13th August 2020_Vol 39_Part 2

2020 ] IN RE : HAZARI BAGH BUILDERS PVT. LTD. 219
forfeiting the bid security deposited separately for both the Plots as
per the terms of the lease agreement which is Rs. 3300000.00 for Plot
A and of Rs. 5200000.00 for Plot B. The issue to be examined in the
present case is whether the amount paid prior to 29-3-2019 in pur-
suance to the lease agreement of 99 years executed on 8-11-2019 are
exempt from levy of GST or not;
(7) that the transaction in question is between RLDA and the applicant
company to whom the land is given for undertaking commercial
development and financial infrastructure on a long term lease of 99
years vide a lease agreement. A certain amount has been paid by the
Applicant Company before entering into the lease Agreement as Se-
curity Deposit. The Long term Lease Agreement has been entered
into between the Applicant Company and RLDA on 8-11-2019. It is
important to note here that the amount paid by the Applicant Com-
pany in the month of February, 2019 was neither an advance nor a
lease premium but is in the form of Security and if the Lease agree-
ment is not entered then as per clause 26 of the agreement such
amount is refundable in full. The said amount payable was paid af-
ter the bid was confirmed but before the execution of Contract of
lease;
(8) that on perusal of the Long term lease agreement dated 8-11-2019
(enclosed herewith and marked as Annexure-1) Clause 26 enlists cer-
tain, conditions on breach of which the contract would stand termi-
nated and the bid security paid by the Company would stand for-
feited. However, it is to be noted that the amount otherwise paid to
RLDA is fully refundable and the said arrangement is without prej-
udice to any other rights or remedies. It is quite clear that the
amount which is paid without even executing the agreement could
not possibly construct to be a premium paid for such lease agree-
ment. The amount so paid is only to secure and confirm the execu-
tion of the contract;
(9) that as per agreement clause 26 as mentioned at page 399 of lease
agreement the bidder whose bid is accepted shall be required to ful-
fill the mentioned point i.e. (a) to (e) in clause 26. As per clause 26.3
failure to fulfill any of the conditions specified therein shall consti-
tute a breach of bid submitted by the bidder in which case the full
value of only the bid security shall stands forfeited without preju-
dice to any other rights or remedies;
(10) that it can be stated that the payment against the lease agreement
paid before 31-3-2019 as additional security. In the present case it is
security on which no GST is applicable. As per clause 26.3 of the
tender bid and lease agreement page 400 the said amount is refund-
able after forfeiting the security bid submitted by bidder during the
bid in case of any default from (a) to (e) as mentioned on page 399
before execution of lease agreement. As agreement was executed on
8-11-2019 and paid amount before this date is totally refundable in
case of any default by bidder after only forfeiting the bids security it
should be exempted from GST;
GST LAW TIMES  13th August 2020  133