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AAR Diminishes GST Regulations Over Lease Rent Charged By Municipality on Land

calendar01 Sep, 2020
timeReading Time: 2 Minutes
GST Regulations Over Lease Rent Charged By Municipality on Land

The Kerala Authority of Advance Ruling has made an important announcement regarding the GST’s applicability to the land rented by the municipality. The recent decision clarifies that the applicant who uses the lease-based property of the municipality shall now be free from GST Regulations and tax liabilities. The decision has been taken in the view of disputes that have been created over a wetland, namely: Paruthi Thodu Water channel.

Facts of the Case

Reportedly, Goerge Jacobs,  an applicant, won the auction of the said wetland and then entered into an agreement with gram panchayat held accountable for managing such properties. Notably, the Paruthi Thodu Water channel is used for the purpose of fish farming and rearing other bread of mammals.

Facts of the Case

Issue over Payable on GST Regulations

Anyway, after entering into the agreement, the applicant gets notified from the gram panchayat that he has to pay the 18% GST Regulations along with a bid amount to close the deal as the property is not covered under tax[1] exemption according to to to the notification no. 12/2017 Central rate was released on 7/2017.

Amid the uncertainty, the applicant decided to drill down into the matter and approach the concerned authority for clarification. In response to the applicant’s complaint, the administration decided to send a joint commissioner of income tax and additional commissioner of the state tax at a disputed location. Upon reaching the site, both the official founds that site i:e canal is being used for the rearing of fish and crabs as per the regulation of the given law.

Read our article:Press Release: Tax liability to be followed for Calculation of Interest

Interpretation of Authority of Advance Ruling

After getting sure of the situation, the officials send their feedback to the concerned authority i:e Authority of Advance Ruling upon GST Regulations. Upon examining the fact and findings, the administration finally takes the decision in favor of the applicant through a notification declaring the said land cannot be treated under the GST Regulations & tax liabilities.

It is important to note down that this decision is drawn out by the authority by taking Central tax notification under the consideration that was released on 28 June 2017. The notification states that goods and services tax exemption is available for the services relating to the rearing of animals managed on vacant land under the lease agreement municipal corporation.


This is of the most important decision from the viewpoint of the persons who depends on such employment opportunities to make their earning. Tax authorities are taking every possible step for harmonizing the GST Regulations aiming to benefit underprivileged individuals. GST Regulations encloses a special provision for the land that is used for fish farming.

Read our article:Multiple Registration Under GST

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