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TMI Blog2020 (8) TMI 251X X X X Extracts X X X X X X X X Extracts X X X X ..... e a compensation for agreeing to do the transfer of the applicant s rights in favour of the assignee. It is a service classifiable under Other miscellaneous service (SAC 999792) and taxable @ 18% under Sl No. 35 of Notification No. 11/2017 CT (Rate) dated 28/06/2017 (State Notification No. 1135-FT dated 28/06/2017), as amended from time to time (hereinafter collectively called the Rate Notification). Similarly, the transfer fee charged by the Sub-lessor is in the nature of a consideration for tolerating an act that the applicant is otherwise refrained from doing in terms of clause 12.28 of the Deed. 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 consideration payable to the Sub-lessor for providing a service in the course or furtherance of business, more specifically because business includes supply or acquisition of goods or services in connection with the closure of a business in terms of section 2 (17) (d) of the GST Act. The GST to be paid on such transfer fee is, therefore, admissible as input tax credit. - Case Number 06 of 2020, Order number 05/WBAAR/2020-21 - - ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mium of ₹ 5.07 crore and monthly lease rental of ₹ 21,000/-. According to clause 12.28 of the Deed, the applicant, after the expiry of at least five years from the date of the Deed coming into force, is entitled to assign to another person the unexpired residual period of the sub-lease after taking written approval of the Sub-lessor and on payment of transfer fee, being 10% of the prevailing market value of the property as assessed by the Registering Authority of the State Government. 1.3 The Liquidator wants to know whether GST is payable on the consideration receivable on such assignment. If so, what should be the SAC and the rate applicable? He also seeks clarity on whether he can claim input tax credit for the GST paid on the transfer fee. Both the questions are admissible under section 97 (2) (a), (b), (d) (e) of the GST Act. 1.4 The applicant declares that the questions raised are not pending before or disposed of by any authority in any proceedings under the GST Act. The concerned officer from the revenue does not object to the admission of the application. The application is, therefore, admitted. 2. Submissions of the Applicant 2.1The applicant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . According to the applicant, such transfer fee is the consideration payable to the Sub-lessor for rendering service in the course or furtherance of business, more specifically because business includes in terms of section 2 (17) (d) of the GST Act supply or acquisition of goods or services in connection with the closure of a business. The applicant, therefore, argues that GST to be paid on such transfer fee is admissible as input tax credit in the event it is ruled that the assignment of leasehold right is a supply of taxable service. 3. Submissions of the concerned officer from the revenue 3.1 The applicant s argument described in paragraphs 2.1 to 2.3 above is not discussed in the submissions of the concerned officer from the revenue. He submits that the assigning of the sub-lease is a service classifiable under the heading Other Miscellaneous Services (SAC 99979) and taxed accordingly. 4. Observations and findings of the Authority 4.1 Section 3(26) of the General Clauses Act, 1897 defines immovable property as to include land, benefits to arise out of the land, and things attached to the earth, or permanently fastened to anything attached to the earth. App ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al to sale of any immovable property within the meaning of section 54 of the Transfer of Property Act, 1882. The applicant s interest in the benefits arising out of the Demised Premises is limited to sub-leasing in terms of the Deed, and he is capable of transferring the benefits only to that extent. The assignment, therefore, does not amount to transfer of any benefit other than leasehold rights in terms of the Deed for the unexpired period of the lease and is no transfer of any immovable property in the context of the GST Act. 4.5 The applicant s reference to the case laws where joint development right is treated as the sale of an immovable property (refer to para 2.1 above) needs to be distinguished. None of those cases is decided in the context of the GST Act, where the provisions of paragraph 2 of Schedule II curve out certain benefits arising out of the land from the realm of immovable property and treat them as service for the purpose of the GST Act. The reference to the above case laws is, therefore, not relevant. 4.6 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 applican ..... X X X X Extracts X X X X X X X X Extracts X X X X
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