Page 134 - GSTL_13th August 2020_Vol 39_Part 2

220 GST LAW TIMES [ Vol. 39
(11) that when the said amount is not a premium and only a security by
way of which the contract is confirmed it cannot attract the liability
of GST. The payment of premium would commence only after the
said agreement has been entered into and not prior to that. Any
amount paid before entering into the contract and where no services
are provided it cannot be considered as a premium. Such amount is
only for confirmation by the parties to enter into the Long term
lease Agreement. The said amount does not fall under the scope of
consideration as there was neither any contract between the parties
nor any services provided. Hence, such amount is beyond the scope
of GST;
(12) that in the alternate, without prejudice to the above contentions,
even if the said amount is considered as “lease premium” it is to be
pointed out here that the Government, Ministry of Finance by way
of Notification No. 4/2019-Central Tax (Rate), date 29-3-2019 has
exempted any upfront amount payable for grant of long term lease
of thirty years. Certain conditions have been prescribed in the said
Notification which have not been violated by the Applicant and
hence is squarely covered under the said Notification and is exempt
from any GST liability for the amount paid in lieu of the agreement
executed on 8-11-2019. The said entry is reproduced hereunder for
your kind perusal :

41B Heading Upfront amount Nil Provided that the promoter
9972 (called as premium, shall be liable to pay tax at
salami, cost, price, the applicable rate, on re-
development charges verse charge basis, on such
or by any other name) proportion of upfront
payable in respect of amount (called as premium,
service by way of salami, cost, price, devel-
granting of long term opment charges or by any
lease of thirty years, other name) paid for long
or more, on or after 1- term lease of land, as is at-
4-2019, for construc- tributable to the residential
tion of residential apartments, which remain
apartments by a un-booked on the date of
promoter in a pro- issuance of completion cer-
ject, intended for tificate, or first occupation
sale to a buyer, of the project, as the case
wholly or partly, may be, in the following
except where the manner -
entire consideration [GST payable on upfront
has been received amount (called as premium,
after issuance of
completion certifi- salami, cost, price, devel-
cate, where re- opment charges or by any
quired, by the com- other name) payable for
petent authority or long term lease of land for
after its first occu- construction of the residen-
pation, whichever is tial apartments in the pro-
earlier. ject but for the exemption
contained herein) x (carpet
GST LAW TIMES  13th August 2020  134