Applicability of GST on sale of running private railway siding

[BipadBhanjan dixit]

Dear sir(s),

I would request you all experts to please reply to this query.

A company 'X' has a private railway siding on land partly given by state government on lease basis and partly falls under the mining lease areas ,which has become operational since last three years and the said siding is used for transporting mineral ore from mining lease areas to out side. Owing to transfer to mining lease under the due process of mining auction, the new lease holder say Y is interested to take the said private railway siding constructed by previous lease holder X. The company X wants to salesuch railways siding on lump sum basis.

The company X has made following capital expenditure on such private railway siding

Working building, subgrade work and permanent way material ,Electricity connection, approach road, weigh bridge and weighbridge houses, check gates, level crossing gates, gate lodges, platform/ station, tippler or any other bulk handling system, retarder, alike working building, subgrade work and permanent way material,Electricity connection. All the expenditures are capitalised in B/s under railway siding and deprecation is charged on such capital expenditure. These expenses are made under pre and post GST period with payment of Excise duty,Sr.Tax and GST to venders as applicable from time to time.No ITC is being availed of such expenses in either period.

Now the question arises , whether the sale of such private railway siding by X to Y is a goods under the GST Act, and if it meets suppply under Section 7 of the CGST Act,2017,

What is the due procedure to be adopted for supply of such assets as a whole.

Thanks .

[Shilpi Jain]

It can be examined whether this sale can be said to be a going concern sale to be out of levy of GST.

AI Summary

Going concern exemption may determine GST liability on sale of private railway siding by lessee. Whether GST applies to a lump sum transfer of a privately constructed railway siding partly on leased land and partly within mining lease areas hinges on characterization of the transaction as a sale of goods, transfer of an asset, or a going concern. The transferor capitalised significant capital expenditure, paid taxes on inputs without availing ITC, and depreciated the asset; these facts inform the GST treatment and procedural steps for effecting the supply of the asset as a whole.