Assignment of leasehold right on land is taxable under the GST @ 18%

Assignment of leasehold right on land is taxable under the GST @ 18%

WEST BENGAL AUTHORITY FOR ADVANCE RULING

The Ruling as follows : 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 applicant‟s rights as per the Deed of sub-lease stands extinguished after assignment. Neither does it create fresh to benefit from the land. It is in the nature of compensation for agreeing to do the transfer of the applicant‟s rights in favor 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. The transfer fee charged by the Sub-lessor is the consideration payable to the Sublessor 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 a transfer fee is, therefore, admissible as an input tax credit. This Ruling is valid subject to the provisions under Section 103 until and unless declared void under Section 104(1) of the GST Act.