2026-VIL-82-AAR
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SGST Advance Ruling Authority

GST – Odisha AAR – Transfer of leasehold land and partially constructed property as capital contribution to LLP, Non-monetary consideration – Applicant proposes to enter into a Limited Liability Partnership (LLP) with another party for operating the hotel business. As its capital contribution to the LLP, the applicant intends to transfer the developed leasehold land and the constructed hotel portion of the building - Whether contribution of developed leasehold land and constructed structure to the LLP constitutes a "supply" under GST law and attracts GST liability – HELD - The proposed transaction would be treated as a supply of service under the GST Act and not a mere capital contribution. The applicant has undertaken the construction and development of the hotel project with the clear intention of commercially exploiting it through a pre-planned LLP arrangement. The contribution of the developed leasehold rights and associated commercial infrastructure to the LLP is not a passive or incidental capital restructuring but a structured commercial transaction undertaken with a clear commercial objective of transferring the developed leasehold rights and associated commercial infrastructure to the LLP for the purpose of operating a hotel business - Under the GST framework, the true nature of a transaction must be determined based on its economic substance rather than the nomenclature adopted by the parties. Where a transaction is structured as part of a pre-arranged commercial arrangement resulting in the transfer of valuable business rights to another taxable person, the same would fall within the scope of 'supply' under Section 7 read with Schedule II of the CGST Act, 2017 - The proposed transaction by the applicant of transferring the developed leasehold land and constructed hotel property as capital contribution to the LLP would be treated as a supply of service under the GST framework and attract the levy of GST – Ordered accordingly
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