A sub-lease agreement between two companies held on 2013 and sub-lessee had paid amount of Rs.7 Cr for one-time premium for a land situated in SEZ area in GIDC Gujarat. After couple of years , because of non-fulfillment of some Govt. condition, the company has to cancel the sub-lease and today getting Rs.4 Cr for cancellation of Sub-lease Deed.
My question is that when company is getting Rs.4 Cr for cancellation of Deed , then comapny has to levy GST amount on that amount and pay to govt or no GST implication.
My point is that GST implication will arise because the case will covered under transfer of right on immovable property and copnay is getting consideration for that.
Please suggest with respective section and case law.
"The parties hereto have decided to enter the deed of cancellation upon receipt by the Sub-lessee of Rs.4 Cr., being the one-time premium paid by the sub-lessor for cancelling the Deed of Sub-lease,as hereinafter appearing."
From this wording, i think it is separate consideration not out of Rs.7 Cr.
17 January 2019
GST applicable on such premium. See the link. https://www.lakshmisri.com/News-and-Publications/News/Tax/gst-payable-on-one-time-lease-premium-when-specific-exemption-absent
18 January 2019
No, company received only Rs.4 Cr for Cancellation of Deed. Company loose Rs. 3 cr.
Like , the term period of lease was 15 years and upfront premium of Rs.7 cr paid for that 15 years but after 5 years due to breach of some regulation, company need to cancel the sub-lease and we can say that Rs.4 Cr is refund of lease premium of remaining period.
18 January 2019
Sorry for that, but i just read out the full cancellation deed of 45 pages and in whicjh there is clearly mentioned in wording:-
"That Upon execution of this deed, the Sub-lessor has paid to sub-lessee an amount of Rs.4 Cr out of the one-time premium of rs.7 cr as received by the Sub-lessor from the sub-lessee, in full and final Settlement, for cancellation of the Sub-lease."
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