Division Bench of Bombay High Court has held that GST is leviable on one-time lease premium paid by the allottee to acquire plots for business purposes on long term lease.

The Court in Builders Association Navi Mumbai v. Union of India noted that ‘supply’ includes supply of goods and services for consideration by a person in the course of business.

It was held that once the law treats the activity particularly in relation to land and building and includes a lease, as supply of goods or supply of services, then the consideration therefor as a premium/one-time premium is a measure on which the tax should be levied.

The allottee also sought exemption under Section 7(2) of the Central GST Act as activities performed were the in nature of statutory obligations, tenders being floated by sovereign authorities.

The Court however rejected the plea noting absence of notification and further held that merely going by the status of the CIDCO, it cannot be held that lease premium would not attract liability to pay GST.