2025-VIL-43-AAR
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SGST Advance Ruling Authority

GST – Maharashtra AAR - Scope of Supply, Transfer of leasehold rights on account of discontinuation of business activities, Transfer Plant and machinery - Applicant had stopped manufacturing activities at its facility - Applicant proposed to sell certain identified assets at its manufacturing facility, including leasehold rights in land, buildings, plant and machinery, to Hyundai Motor India Limited (HMI) on an itemized-asset sale basis - Whether the assignment of leasehold rights in land by the applicant qualifies as a taxable supply of services under GST laws and whether GST would apply on the price agreed for the transfer of leasehold rights – HELD - The activity of assignment is in the nature of agreeing to transfer one’s leasehold rights. It does not amount to further sub-leasing, as the applicant’s rights as per the Deed stands extinguished. Neither does it create fresh benefit from land other than the leasehold right. It is like a compensation for agreeing to do the transfer of the applicant’s rights in favour of the assignee - As per the provisions of the CGST Act, 2017 read with Schedule II, any lease, tenancy, easement, or license to occupy land is treated as a supply of services. Further, the applicant held only leasehold rights in the land and not the ownership, and the assignment of such leasehold rights to HMI would be a supply of service, classifiable under "Other miscellaneous service" (SAC 999792) and taxable at 18% under the applicable GST notification - The assignment of leasehold rights in land by applicant to HMI qualifies as a taxable supply of services under the GST laws and GST would apply on the price agreed for the transfer of leasehold rights – Ordered accordingly - Whether the transfer of buildings by applicant to HMI qualifies as 'neither a supply of goods nor a supply of services' under the GST laws – HELD - The transfer of buildings by applicant to HMI does not qualify as 'neither a supply of goods nor a supply of services' under the GST laws. As per the lease deed between GM India and the MIDC, the lease included the land as well as the buildings, both existing and future, constructed on the land. Therefore, the transfer of buildings by applicant to HMI does not qualify as 'neither a supply of goods nor a supply of services' under the GST laws, and the transfer is part of the assignment of leasehold rights, which is a taxable supply of services - Whether the sale of plant and machinery by applicant to HMI qualifies as a taxable supply of individual goods under the GST laws, and whether GST would apply on the price agreed between the parties for the sale of each item of plant and machinery – HELD - the sale of each item of plant and machinery by applicant to HMI qualifies as a taxable supply of individual goods under the GST laws. The plant and machinery are goods and their sale by applicant to HMI would be a taxable supply under the GST Act. Further, the GST would apply on the price agreed between the parties for the sale of each item of plant and machinery, or the amount of input tax credit availed on such capital goods reduced by the prescribed percentage, whichever is higher, as provided under the GST Act.
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