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2022 (12) TMI 513 - AAR - GSTLevy of GST - Supply or not - assignment/transfer of leasehold rights in land structures standing there by the applicant to M/s. Greenscape IT Park LLP - time of supply of services - HELD THAT - As per the provisions of Section 13 (2) of GST Act, the time of supply of services in the instant case is the date of receipt of payment by the applicant and as per the submissions made by the applicant, the date of receipt of payment against the impugned supply of services is much prior to the date of filing of the subject application. In view of the same we find that the supply has been completed prior to the date of filing of the subject application. It is found that on the date on the filing of the subject application the subject supply was already completed (in all respects) and was neither being undertaken, nor was proposed to be undertaken - the applicant/application does not satisfy the conditions of Section 95 of the CGST Act, 2017 and the application is, therefore, rejected as being not maintainable. Application dismissed.
Issues Involved:
1. Whether the assignment/transfer of leasehold rights in land and structures qualifies as 'supply' and is liable to GST. 2. Under which section of the GST Act the assignment/transfer of leasehold rights falls. Detailed Analysis: 1. Whether the assignment/transfer of leasehold rights in land and structures qualifies as 'supply' and is liable to GST: The applicant, M/s. United Breweries Limited, engaged in the manufacture of beer and bottled drinking water, held a leasehold land measuring 24,300 Sq. Mtrs. leased from Maharashtra Industrial Development Corporation (MIDC). They constructed industrial structures on this land after obtaining necessary approvals and a building completion certificate from MIDC. The applicant entered into a "Deed of Assignment Cum Transfer" with M/s. Greenscape IT Park LLP to transfer its rights over the land and structures for an unexpired lease period of more than 30 years for a consideration of Rs. 72,90,00,000/-. The applicant argued that the transaction does not qualify as a supply of goods or services under GST laws, as it pertains to the transfer of immovable property rights, akin to the sale of land and buildings, which is outside the purview of GST. They cited the definitions of 'goods' and 'services' under Sections 2(52) and 2(102) of the CGST Act, 2017, and argued that the assignment of leasehold rights should be treated as a transfer of immovable property, not subject to GST. The concerned officer, however, contended that the transaction is a supply of service as per Paragraph 2 of Schedule II of the GST Act, which treats any lease, tenancy, or license to occupy land as a supply of services. The officer highlighted that the applicant can only transfer leasehold rights with MIDC's approval, making the transaction an agreement to transfer leasehold interests, classifiable under "Other Miscellaneous Services" (SAC 999792) and taxable at 18%. 2. Under which section of the GST Act the assignment/transfer of leasehold rights falls: The applicant maintained that the assignment of leasehold rights should be exempt from GST under Schedule III of the CGST Act, which includes activities not treated as a supply of goods or services, specifically the sale of land and post-completion certificate buildings. They argued that the transaction is covered under Notification No. 41/2017-GST, which exempts upfront amounts for long-term leases of industrial plots by State Government Industrial Development Corporations. The concerned officer disagreed, asserting that the transaction is a taxable supply of service under Section 7(1A) read with Schedule II of the GST Act. The officer noted that the applicant's rights are extinguished upon assignment, and the transaction is essentially an agreement to transfer leasehold interests, taxable under "Other Miscellaneous Services" (SAC 999792) at 18%. Observations and Findings: The Authority for Advance Ruling (AAR) observed that the applicant had received the consideration amount prior to filing the application, making the supply a completed transaction. As per Section 13 of the CGST Act, the time of supply of services is the date of receipt of payment, which in this case, occurred before the application date. Therefore, the AAR concluded that the application does not satisfy the conditions of Section 95 of the CGST Act, which requires the supply to be undertaken or proposed to be undertaken by the applicant. Order: The AAR rejected the application as non-maintainable under Section 95 of the CGST Act, 2017, because the questions raised pertained to a past and completed supply, not an ongoing or proposed supply.
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