Authority for Advance Ruling — Classification and taxability on transfer of one’s leasehold rights – The NCLT Kolkata Bench, passed an order on 06/08/2018, initiating the corporate insolvency resolution process, admitting the applicant as the corporate debtor. The NCLT passed another order on 04/04/2019 under section 33 of the Insolvency & Bankruptcy Code, 2016 to start the process of liquidating the corporate debtor and appointed the Liquidator, who has obtained separate registration as a distinct person. One of the assets under liquidation is the leasehold factory unit along with car parking space. The West Bengal Industrial Development Corporation Ltd granted the applicant possession of the Demised Premises for ninety-nine years under a registered deed of sub-lease dated 06/08/2010 on payment of an up-front premium of Rs.5.07 crore and monthly lease rental of Rs.21,000/-.The Liquidator sought ruling as to whether (i) GST is payable on the consideration receivable on such assignment, if so, what should be the SAC and the rate applicable; (ii) whether he can claim ITC on the transfer fee.
Held that:- The Hon’ble Authority for Advance Ruling held that the activity of assignment is in the nature of agreeing to transfer one’s leasehold rights and 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. The transfer fee charged 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 Act. The GST paid on such transfer fee is, therefore, admissible as input tax credit.—Enfield Apparels Ltd., In Re…  27 TAXLOK.COM 008 (AAR-WB)