GST AAR: Cancellation of Lease Agreement Executed Pre-GST Regime Not Supply
The Indian Institute of Information Technology and Management (IIITMK) is the legal applicant in this case. The applicant is an institute with a registered address, IITMK Building, Technopark Campus, Kazhakuttom, Thiruvananthapuram, 695581.
The Indian Institute of Information Technology Management-Kerala, also known as IIITMK, is an autonomous, well-known, premier educational institution established in the year 2000 by the Government of Kerala. It is registered as a not-for-profit company under the Companies Act (first under Section 25 of the old Act and now under Section 8 of the new Companies Act, 2013).
To run its activities, IIITMK entered into two long-term land lease agreements with Technopark, which is a government-owned society:
1. First Lease (Land L1):
- Date: 21st January 2009
- Area: 96 cents of land inside Technopark
- Lease Period: 90 years (2009 to 2099)
- Lease Payment: Rs. 1 crore, paid upfront
- Later, as per a court order dated May 29, 2018, Technopark had to pay Rs. 36,025,636 to the original landowners as extra compensation. Technopark demanded this amount from IIITMK through a letter on December 04, 2018.
- IIITMK agreed but hasn’t paid it yet. However, they added this amount to the lease asset value in their accounts and are gradually amortising (spreading) it over the remaining lease period.
2. Second Lease (Land L2):
- Date: 15th March 2011
- Area: 10.33 acres in the Technocity campus
- Lease Period: 90 years
- Lease Payment: Rs. 38,645,256, paid upfront
- This amount was also treated as an asset and is being amortised similarly over the lease term.
IIITMK also constructed buildings on both plots. The costs of these buildings were capitalised and depreciated as per company accounting rules.