TaxTMI 
TaxTMI 
TaxTMI 
2026 (4) TMI 279
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....d and constructed structure (the Hotel Project) as its capital contribution to the LLP? Q.2 The primary issue revolves around the nature of the transaction and the timing of the transfer-specifically, whether the transaction constitutes a sale of immovable property or supply of service under the GST framework? Q.3 Whether this transaction would be treated as a "supply" of goods or services made in the course or furtherance of business and, if so, whether it attracts GST, particularly in respect of the under-construction portion of the property. 1.1 At the outset, we would like to make it clear that the provisions of both the CGST Act and the OGST Act are the same except for certain provisions. Therefore, unless a mention is specifically made to such dissimilar provisions, a reference to the CGST Act would also mean a reference to the same provision under the OGST Act. The present application has been filed under Section 97(1) of the CGST Act, 2017 and OGST Act, 2017 seeking advance ruling on taxability of transactions propose to be undertaken by the applicant. The questions raised relate to determination of liability to pay tax on a proposed arrangement and fal....
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....rmation of the LLP, the applicant shall contribute the Hotel Project portion as capital contribution, with prior written consent of IDCO. 3.0 Submission of jurisdictional tax authority on Advance Ruling Application: The Jurisdictional Tax Authority vide letter dated 03.12.2025 has made following submissions: Q1. Whether GST liability would accrue, if at all, to the party of the First Part upon transferring the developed leasehold land and constructed structure (Hotel Project) as its capital contribution to the LLP? Reply: In the present case, transfer of completed developed leasehold land along with constructed and ready-for-use hotel building as capital contribution to the LLP does not constitute a supply under Section 7 of the CGST Act, 2017. Schedule III expressly provides that sale of land and sale of building after issuance of completion certificate or after first occupation shall be treated as activities which are neither supply of goods nor supply of services. Since the hotel building stands completed and no element of under-construction service is involved, the transaction retains the character of transfer of immovable property. The mode of transfer, na....
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....ative of the applicant appeared before the Advance Ruling Authority on 25.11.2025 wherein the Authorized representative led by Shri Biplab Roy has reiterated the facts made in their written submission. 5.0 Discussion& findings: Based on the facts placed before us, the core issues that has to be determined are: (i) Whether the proposed contribution of constructed hotel floors and associated infrastructure by the applicant to the LLP constitutes a "supply" under Section 7 of the CGST Act, 2017; (ii) Whether the consideration received by the Applicant from the proposed profit sharing ratio of 56:44 against their contribution by contributing the structure building (partially) for operation of Hotel Business has been made for furtherance of business? (iii) Whether the transaction can be regarded as a mere capital contribution outside the ambit of GST. Before proceed further, we have to analysis the nature of supply in the proposed transaction in consonance with the definition of prescribed in GST Act. Section 7 of CGST Act, 2017 prescribes: Scope of supply. 7. (1) For the purposes of this Act, the expression "supply" includes -- ....
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....bove inclusive definition of supply also includes rental, lease or disposal made or agreed to be made for a consideration by a person in the course or furtherance of business. It is a settled position of law that capital contribution in kind is not automatically excluded from GST. What is material is whether goods or services are provided by one distinct person to another for consideration. Section 2(84) of CGST Act, 2017 provides definition of person which reads as: (84) "person" includes- (a) an individual; (b) a Hindu Undivided Family; (c) a company; (d) a firm; (e) a Limited Liability Partnership; (f) an association of persons or a body of individuals, whether incorporated or not, in India or outside India; (g) any corporation established by or under any Central Act, State Act or Provincial Act or a Government company as defined in clause (45) of section 2 of the Companies Act, 2013 (18 of 2013); (h) any body corporate incorporated by or under the laws of a country outside India; (i) a co-operative society registered under any law relating to co-operative societies; (j) a lo....
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....ves economic benefit (profit share, development rights, etc.). Therefore, the benefit is given to induce the partner to transfer the asset to the firm. Therefore, the argument that capital contribution lacks consideration is untenable. The applicant does not transfer absolute ownership of land. What is transferred to the LLP is the right to use and enjoy the leasehold land and constructed structure for the duration of the lease. Schedule II, Entry 2(a) of the CGST Act, 2017 deems any lease, tenancy, easement or licence to occupy land as a supply of service. The contribution of developed leasehold land along with construction is therefore in substance a service of transferring leasehold rights coupled with construction-related services. Schedule III excludes sale of land and completed buildings from GST. However, the present transaction does not involve sale of land. What is transferred is a bundle of rights in leasehold land along with under-construction / commercially pre-arranged structures, which is specifically taxable under GST. Commercial Intent - Pre-arranged Commercial Exploitation From the factual matrix placed before this Authority, it is evident that the c....