TaxTMI 
TaxTMI 
TaxTMI 
2025 (11) TMI 175
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.... differ from each other only on a few specific provisions. Therefore, unless a mention is particularly made to such dissimilar provisions, a reference to the CGST Act, 2017 would also mean reference to the corresponding similar provisions in the APGST Act, 2017. 3. It is observed that the queries raised by the applicant fall within the ambit of Section 97 of the GST ACT. The applicant attached copies of challans as proof of payment of Rs.5,000 each for CGST and SGST through Electronic Cash Ledger Reference Nos. DC3705250015835 dated 08.05.2025, and DC3705250028170 dated 14.05.2025 respectively, towards the Advance Ruling fee. The Applicant has declared that the questions raised in the application have neither been decided by nor are pending before any authority under any provisions of the GST Act. 4. Brief Facts of the case: M/s Kobelco Construction Equipment India Pvt Ltd is engaged is a manufacturer of excavators that established its manufacturing unit in Sri City. It supplies the equipment pursuant to the orders that would be picked up by its respective branches. Sri City Private Limited has granted 9.3 acres of land on lease to Kobelco Construction Equipment India P....
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....rsuant to Clause 4(2) of the Lease Deed executed in respect of the Demised Premises, the Transferor has approached the Lessor, to exercise its first right of refusal concerning the leasehold rights. The Transferor has further expressed its intent to transfer the leasehold rights in favour of the India Metal One Steel Plate Processing Private Limited (Transferee) in the event the Lessor elects not to reacquire the Demised Premises. Upon discussions between the Lessor and the Transferor, the Lessor has further recommended the execution of MOU to outline the preliminary terms and conditions governing such transfer. F. The Transferor, desirous of divesting its leasehold rights, title, interest, and obligations in the Demised Premises, together with all rights, title, and interest in the Superstructure, has agreed to transfer the same in favour of the Transferee, subject to the terms and conditions set forth in MOU dated 13.06.2025, and with the express consent and approval of the Lessor. G. The Parties acknowledge and agree that the proposed transfer of leasehold rights shall include the transfer of the Superstructure on an "As is where is basis", "as is what is basis", "whatever....
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....the cost offered to the Lessor, with prior approval of the Lessor. In case of the transfer of leasehold rights in the Lease Land, to a third party the Transferee shall pay a transfer fee of 15% of the total consideration agreed with such transferee and documented for the Lease Land along with infrastructure thereof (which shall not include building, machinery, equipment and any other infrastructure put up by the Transferee within the Lease Land) proposed to be so transferred. Under section 7 taxing the lease hold rights transferred by the SEZ to Kobelco in turn transferred by the Kobelco to India Metal One Steel Plate Processing Private Limited (i.e. IMOP) is taxable under the GST Act, if so, whether Kobelco would get any input tax under section 16 and whether the Kobelco would get input tax on the commission on lease hold rights. 6. Questions raised before the authority: The applicant sought advance ruling on the following: 1. Whether assignment of leasehold rights of leasehold land would be covered by the scope of supply for levy of Goods and Service tax under Section 7 of Central Goods and Services Tax Act, 2017 ? if so whether Goods and Service Tax is applicable on ....
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....94; the Gujarat Land Revenue Code, 1879; the Andhra Pradesh Land Revenue Code, 1999; the Indian Registration Act, 1908; and the General Clauses Act, 1897, unanimously define "Land" or "immovable property" to include benefits arising out of land. 2.3 Since leasehold rights confer benefit over land for a certain period, it can constitute "benefits arising out of land" and thereby assignment or transfer of rights of leasehold land qualifies as "Sale of Land." 2.4 The Assignment or transfer of rights of Leasehold land should be seen as transfer of leasehold rights of immovable property deemed to be "Sale of Land." So it is exempt from Goods and Service tax under Schedule-III of Central Goods and Service Tax Act 2017. 3. Legal Precedents The Gujarat High Court's decision in Gujarat Chamber of Commerce and Industry & Ors. v. Union of India & Ors. provides much-needed clarity on the applicability of GST on the assignment of leasehold rights. The judgment holds that the assignment of leasehold rights in the land allotted by Gujarat Industrial Development Corporation ("GIDC") constitutes a transfer of immovable property, thus falling outside the purview of GST. 4. ABOUT T....
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....d to Sri City Private Limited which would come to approximately 3.06 million under section 16 of the Goods and Service tax Act 2017? G. If it is ruled that no input tax credit is available then what happens to the tax paid? The view of the applicant is that no tax can be levied on lease hold rights granted by the SEZ units to M/s Kobelco Construction Equipment India Pvt Ltd, which in turn transfers the lease to IMOP, as it is with regard to immovable property, the same cannot be taxed in view of the judgment rendered by the Hon'ble Apex Court in case of Safari retreats and the applicant is eligible to claim input tax credit on both the leasehold rights and also the Commission if the same is taxable. 8. Personal Hearing: The proceeding of Personal Hearing was conducted on 21.07.2025, for which the authorized representatives, Sri M.V.J.K. Kumar, Advocate and Santosh Kumar, Chartered Accountant have appeared and reiterated the facts narrated in their application. The Authorized Representative, Sri M.V.J.K. Kumar, Advocate, contended that M/s Kobelco Construction Equipment India Pvt Ltd is assigning lease hold rights to M/s India Metal One Steel Plate Processing Pvt ....
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....e CGST Act and APGST Act, 2017, regarding tax implications on assignment of leasehold rights and eligibility for Input Tax Credit (ITC) on incidental charges. The Acts being pari materia in nature, identical provisions apply unless specifically distinguished. The applicant is engaged in the manufacture and supply of earth-moving equipment, mainly excavators. The decision to establish operations in Sri City Industrial Township was based on a combination of policy incentives, promises of infrastructural support, and long-term leasing of land within the Domestic Tariff Zone (DTZ) of the said township. Sri City Private Limited, the developer of the township, allotted 9.3 acres of land on a 99-year lease to the applicant. The lease facilitated the setting up of a modern manufacturing facility that now proposes to exit the property and transfer the remaining leasehold interest. The applicant, as part of its business restructuring, has proposed to transfer the remaining leasehold interest-spanning 89 years-to M/s India Metal One Steel Plate Processing Pvt Ltd, a company engaged in allied manufacturing. The total consideration for the transaction is valued at Rs. 15.38 crore. This in....
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....d rights is generally treated as a supply of service, not a sale of land. Schedule II of the Act specifically classifies the grant of the right to use immovable property for consideration as a supply of services. Assignment of Leasehold rights do not amount to ownership; they merely provide the transferee with the right to use the property for a defined period under specified conditions. Therefore, equating such assignments with the outright sale of land, which is excluded from GST under Entry 5 of Schedule III, may be a misapplication of the law. Furthermore, the legislative intent behind GST is to create a broad and uniform tax base encompassing most forms of economic activity, including transfers of rights and interests in immovable property for consideration. The assignment of leasehold rights, especially when long-term and against substantial consideration, often functions as a de facto transfer of property for practical purposes. Ignoring the economic substance of such transactions in favour of a narrow legal interpretation could create loopholes and revenue loss for the exchequer. The following Advance Ruling Authorities (AARs) and circulars from the CBIC have confirme....
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....Credit of Goods and Service tax paid on the commission to be paid in relation of the transfer of leasehold land to Sri City Development Authority, under the provision of Goods and Service Tax Act 2017? The provisions relating to availment of Input Tax Credit under the Goods and Service Tax are extracted hereunder: "Section 16. Eligibility and conditions for taking input tax credit .- (1) Every registered person shall, subject to such conditions and restrictions as may be prescribed and in the manner specified in section 49, be entitled to take credit of input tax charged on any supply of goods or services or both to him which are used or intended to be used in the course or furtherance of his business and the said amount shall be credited to the electronic credit ledger of such person. The transfer fee charged by the Sri City Private Limited is in the nature of a consideration for tolerating an act that the applicant is otherwise refrained from doing in terms of clause 4(z) of the Lease Deed dated 29.5.2015. It is also a service classifiable under "Other miscellaneous service" (SAC 999794) and taxable @ 18% under Sl No. 35 of the Rate Notification. It is the....