GST shall be levied on payment of lump sum upfront premium as transfer charges of leasehold rights

Last updated: 06 April 2024

Court :
Uttar Pradesh, AAR

Brief :
The Uttar Pradesh, AAR in the matter of Remarkable Industries (P.) Ltd.[Advance Ruling No. UP/ADRG/41/2023 Dated December 07, 2023] held that the activity of the Applicant is in the nature of agreeing to transfer one's leasehold rights. It does not amount to further sub-leasing, as the Applicant's right as per the Deed of sublease stands extinguished after the assignment. Neither does it create fresh benefits from the land. It is in the nature of 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" i.e., SAC 999792 and taxable at the GST rate of 18% under SI No. 35 of Notification No. 11/2017- Central Tax (Rate) dated June 28, 2017. Further, the Applicant is not a State Government Industrial Development Corporation or Undertaking. Hence the benefit of Entry No. 41 of Notification No. 12/2017-Central Tax dated June 28, 2017 is not admissible to the Applicant as the condition of the said entry is not satisfied.

Citation :
Advance Ruling No. UP/ADRG/41/2023 Dated December 07, 2023