GST Caselaw

#GSTCase-29-GST is applicable on Transfer Fees, Extension Fees, Conversion fees, Processing fees, Bifurcation Fees, Tower Charges collected in respect of Industrial Plots given on lease for a period 30 Years or more

Punjab Small Industries & Export Corporation Ltd. [2018] 99 293 (AAR- CHANDIGARH)


  1. Query:

Whether ancillary services provided by a State Government owned Industrial Development Undertaking in relation to lease service of Industrial plot as exempt vide Notification No. 12/2017 – Central Tax (Rate), dated 28-6-2017, are also exempt from GST?


  1. Facts:

 The applicant is a State Government owned Industrial Development Undertaking providing 30 years or more lease of industrial plots against one time upfront amount called as premium, salami, cost, price, development charges or by any other name to the industrial units. This service is exempt from GST virtue of Entry No. 41 of the Notification No. 12/2017 – Central Tax (Rate), dated 28-6-2017. Along with the lease service, applicant also provides some ancillary services on those industrial Plots which are as follows:

  • Transfer Fees – Fees charged for the purpose of transfer of Industrial Plot from one person to another.
  • Extension Fees – Fees charged for delay in the commencement’ of construction and production.
  • Conversion Fees – Fees charged for the conversion of leasehold plot into freehold.
  • Processing Fees – Fees charged for the purpose of transfer of Industrial Plots within the family, change in constitution of ownership/shareholding pattern permission for sale of freehold plot.
  • Bifurcation Fees – Fees charged for the permission to sub-divide the industrial plot in to 2 or more numbers.
  • Tower Charges – Fees charged from the plot-holder for the permission to install Telecommunication Tower on the Industrial plots.


  1. Observation by AAR:

Additional services though are in respect of same plots but entry No. 41 does not provide exemption to all services related to the plots covered but grants exemption only to the upfront amount payable in respect of service by way of granting of long term lease of thirty years, or more. Therefore, other subsequent services which are not mentioned in the notification are not covered under the said exemption entry or any other entry in Notification No. 12/2017-CT(R) and thus liable for payment of CGST and UTGST.


  1. Held:

 The other subsequent services which have not been specifically exempted under Entry 41 of Notification No. 12/2017 dated 28th June 2017 are covered under “Other Miscellaneous services”-Group 99979, taxable at the rate of 9% CGST and 9% SGST/UTGST.


  1. Comment

This judgement is helpful in cases where Industrial Land is taken on Long Term lease and charges of various kinds are recovered from lessor. There has been a confusion regarding leviability of tax on such amount recovered from lessor and whether the same are also exempted from levy of tax or leviable to tax. This judgement clears the scenario on taxability of such amounts and therefore is a welcome judgement.

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