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TMI Blog2021 (8) TMI 731X X X X Extracts X X X X X X X X Extracts X X X X ..... and measuring 5.00 acres. In the case at hand, it is seen that IPL had been allocated a certain land originally by SIPCOT for lease of 99 years. IPL had taken possession of the land for the purposes meant for allotment - The applicant while entitled to use the land for the purposes agreed upon, i.e., setting up manufacturing facility, is restrained to sub-let or transfer or permit occupation of any other person in the land allotted to them. However, the applicant can part with its interest in the leasehold held by them with the approval of SIPCOT, who may or may not grant the request with or without any further conditions. From the above facts of the case, it is evident that SIPCOT who owns the land has leased the allocated land to IPL for a period of 99 years. IPL by virtue of the lease conditions, do not possess the right to sub-let any part or whole of the property leased to them. However, IPL may transfer the leasehold rights to any other person with the approval of SIPCOT, who may or may not grant such approval. Thus, it is clear that the applicant holds the leasehold rights which he may agree to transfer to any other person but the applicant cannot per-se transfer the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ods and Service Tax Act and the Tamil Nadu Goods and Service Tax Act are the same except for certain provisions. Therefore, unless a mention is specifically made to such dissimilar provisions, a reference to the Central Goods and Service Tax Act would also mean a reference to the same provisions under the Tamil Nadu Goods and Service Tax Act. M/s. India Pistons Limited, Huzur Gardens, Sembiam, Chennai (hereinafter called the Applicant) are registered under GST with GSTIN 33AAACI1439E1Z4. The applicant has sought Advance Ruling on:- 1. As to whether GST is payable on the transfer of leasehold rights in respect of the consideration of ₹ 15 Crores received by them from M/s. INOX Air products Private Limited for the land allotted by SIPCOT? 2. Whether the Subsequent transfer of SIPCOTs allotted land from the Applicant to M/s. Inox Air Products Private Limited would fall within the ambit of 'Supply' as defined under Section 7 of the Goods and Services Act 2017? The Applicant has submitted the copy of application in Form GST ARA - 01 and also submitted a copy of Challan evidencing payment of application fees of ₹ 5,000/- each under sub-rule (1) of Rul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... osed by SIPCOT and subject to the approval by SIPCOT, the third party. They have further stated that the compensation received under the said MOU will not fall within the definition of Consideration as defined under Section 2(31) of the CGST Act 2017. They have submitted that the definition of Consideration as defined under Section 2(31) of the CGST Act, 2017 read with Section 2(d) of the Indian Contract Act, 1872 states that when at the desire of the promisor, promise or any other person has done or abstained from doing or does or abstains from doing or promises to do or to abstain from doing something, such act or abstinence, or promise is called a consideration for the promise. That in the instant case although the transfer of allotment is agreed to be made, the same is contingent on the approval, acceptance and subject to such terms and conditions that may be imposed by the SIPCOT. Further, they have stated that the second stem of submissions relates to Schedule-II to the CGST Act 2017.; that the said transfer of leasehold rights are effected only at the approval of the SIPCOT, being subjected to certain conditions imposed by them, it cannot be said that there is an obligat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... INOX with a proposal to set up a state of art Ultra High Purity Cryogenic Liquid and Medical and Industrial Oxygen Plant had approached them for transferring the unutilised portion of land measuring 5.00 acres held by them for a sum of ₹ 15 Crores. The ruling sought is on the following questions:- 1. As to whether GST is payable on the transfer of leasehold rights in respect of the consideration of ₹ 15 Crores received by them from M/s. INOX Air products Private Limited for the land allotted by SIPCOT? 2. Whether the Subsequent transfer of SIPCOTs allotted land from the Applicant to M/s. Inox Air Products Private Limited would fall within the ambit of 'Supply' as defined under Section 7 of the Goods and Services Act 2017? The questions raised as above requires ruling as to whether the activity undertaken by them is a 'Supply' under GST and whether tax is payable on the 'Consideration' received. The questions raised are within the ambit of this authority as per Section 95/97(2) of GST Act and therefore the application is admitted. 7.1 From the facts of the case as available before us, it is seen that IPL was allotted and were hold ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Second part shall not sub-let or transfer or in any other manner permit the occupation of any other person of the whole or part of the plot. The above clauses are seen as clause 30 and 33 in the Memorandum of lease deed dated 30th December 1994 entered into between SIPCOT and the applicant. It is seen that SIPCOT is the Owner of the Land and SIPCOT had given on lease the marked land to the applicant for a period of 99 years. The applicant while entitled to use the land for the purposes agreed upon, i.e., setting up manufacturing facility, is restrained to sub-let or transfer or permit occupation of any other person in the land allotted to them. However, the applicant can part with its interest in the leasehold held by them with the approval of SIPCOT, who may or may not grant the request with or without any further conditions. 7.3 The applicant has stated to have entered into a Memorandum of Understanding with INOX dated 20.11.2020. From the said MOU, the following are seen:- MOU is executed to formalize the terms agreed between them for transfer of the remainder of the leasehold rights in the Schedule property by IPL in favour of INOX, subject to approvals being gra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CGST/TNGST Act and it states as under: 7. (1) for the purposes of this Act, the expression supply includes,- (a) all forms of supply of goods or services or both such as sale, transfer, barter, exchange, license, rental, lease or disposal made or agreed to be made for a consideration by a person in the course or furtherance of business; (b) import of services for a consideration whether or not in the course or furtherance of business; and (c) the activities specified in Schedule I, made or agreed to be made without a consideration; (1A) where certain activities or transactions constitute a supply in accordance with the provisions of sub-section (1), they shall be treated either as supply of goods or supply of services as referred to in Schedule II.; The definition is an 'inclusive' definition. An activity to be considered as a 'Supply' should satisfy the following:- all forms such as sale, transfer, etc are supply such supply should be for a consideration and made by a person in the course or furtherance of business. 'business' for the purposes of GST is defined under 2 (17) of the act as:- (17) busines ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ovider and recipient. The compensation for parting with the interests is definitely a consideration for agreeing to part with the interests held by IPL in the leasehold. The transaction is not a transfer of leasehold as IPL by the clauses of Lease deed executed with SIPCOT is not permitted to sub-lease. The activity of IPL as seen from the Memorandum of Understanding executed between IPL and INOX and the approval letter of SIPCOT, is only a transaction in which IPL agrees to part with the leasehold interests it possess for the remaining lease period in favour of INOX with the approval of SIPCOT in respect of the land required by INOX. Therefore the activity is not transfer of leasehold rights by IPL to INOX but is an activity of agreeing to part with the leasehold interests IPL hold on the land to be leased to INOX by SIPCOT. If it were a transfer of leasehold rights, there should be an agreement for such transfer between IPL and INOX. It is stated by IPL that apart from the Memorandum of Understanding, there is no agreement between IPL and INOX. The modified lease deed is also executed by IPL and INOX independently with SIPCOT and INOX is to pay the differential cost of lease rent ..... X X X X Extracts X X X X X X X X Extracts X X X X
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