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Deed of Assignment: Everything You Need to Know

A deed of assignment refers to a legal document that records the transfer of ownership of a real estate property from one party to another. 3 min read updated on January 01, 2024

Updated October 8,2020:

A deed of assignment refers to a legal document that records the transfer of ownership of a real estate property from one party to another. It states that a specific piece of property will belong to the assignee and no longer belong to the assignor starting from a specified date. In order to be valid, a deed of assignment must contain certain types of information and meet a number of requirements.

What Is an Assignment?

An assignment is similar to an outright transfer, but it is slightly different. It takes place when one of two parties who have entered into a contract decides to transfer all of his or her rights and obligations to a third party and completely remove himself or herself from the contract.

Also called the assignee, the third party effectively replaces the former contracting party and consequently assumes all of his or her rights and obligations. Unless it is stated in the original contract, both parties to the initial contract are typically required to express approval of an assignment before it can occur. When you sell a piece of property, you are making an assignment of it to the buyer through the paperwork you sign at closing.

What Is a Deed of Assignment?

A deed of assignment refers to a legal document that facilitates the legal transfer of ownership of real estate property. It is an important document that must be securely stored at all times, especially in the case of real estate.

In general, this document can be described as a document that is drafted and signed to promise or guarantee the transfer of ownership of a real estate property on a specified date. In other words, it serves as the evidence of the transfer of ownership of the property, with the stipulation that there is a certain timeframe in which actual ownership will begin.

The deed of assignment is the main document between the seller and buyer that proves ownership in favor of the seller. The party who is transferring his or her rights to the property is known as the “assignor,” while the party who is receiving the rights is called the “assignee.”

A deed of assignment is required in many different situations, the most common of which is the transfer of ownership of a property. For example, a developer of a new house has to sign a deed of assignment with a buyer, stating that the house will belong to him or her on a certain date. Nevertheless, the buyer may want to sell the house to someone else in the future, which will also require the signing of a deed of assignment.

This document is necessary because it serves as a temporary title deed in the event that the actual title deed for the house has not been issued. For every piece of property that will be sold before the issuance of a title deed, a deed of assignment will be required.

Requirements for a Deed of Assignment

In order to be legally enforceable, an absolute sale deed must provide a clear description of the property being transferred, such as its address or other information that distinguishes it from other properties. In addition, it must clearly identify the buyer and seller and state the date when the transfer will become legally effective, the purchase price, and other relevant information.

In today's real estate transactions, contracting parties usually use an ancillary real estate sale contract in an attempt to cram all the required information into a deed. Nonetheless, the information found in the contract must be referenced by the deed.

Information to Include in a Deed of Assignment

• Names of parties to the agreement
• Addresses of the parties and how they are binding on the parties' successors, friends, and other people who represent them in any capacity
• History of the property being transferred, from the time it was first acquired to the time it is about to be sold
• Agreed price of the property
• Size and description of the property
• Promises or covenants the parties will undertake to execute the deed
• Signatures of the parties
• Section for the Governors Consent or Commissioner of Oaths to sign and verify the agreement

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• Define a Deed
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..., GIDC will effect the transfer in favour of the applicant of Company Application No. 72 of 2008. It is made clear that transfer fees have already been paid by the said applicant and this amount is over and above t...has further submitted that the applicant moved an application dated 27.12.2007 to GIDC requesting for transfer of the plot in favour of the applicant. The applicant also paid transfer fee of Rs...and then only, the GIDC can transfer the property in question in favour of the highest bidder.9. Considering the submissions made on behalf of the parties and further considering the...

...asking GIDC to desist from effecting transfer of immovable property belonging to GIDC in absence of any powers available with Central Excise authorities.4. On behalf of Central Excise...Certificate could be issued to enable GIDC to transfer the immovable property.5. On behalf of GIDC , learned advocate placed reliance on the affidavit-in-reply dated 24th June, 2009 and...submitted that GIDC was merely cooperating with a Department of Union of India. It was further submitted that GIDC can transfer the immovable property belonging to GIDC only upon a requisite application...

...02.06.2018 for the purpose is not decided. It is submitted that the petitioner has already expressed his willingness to pay all the legal dues to the GIDC which includes the fees for transfer of the plot to... 1. This petition under Article 226 of the Constitution of India is filed for the direction to transfer the plot in question and allowing the application of the petitioner at Annexure A dated... 02.06.2018. 2. The petitioner is an auction purchaser of a premises of GIDC and after a due procedure of auction purchase, the petitioner...

...asked to pay an amount of Rs.62,100/- at the rate of Rs.18.95 per sq.,mtrs., as transfer fees . Petitioner at that point of time had no option but to pay the said transfer fees as demanded by the respondents. ...). 2.2. It is on account of such action of respondent no. 2, petitioner requested the authority as to how additional transfer fees as well as transfer fees are claimed from petitioner...informed petitioners to visit GIDC , office. Later on, a notice came to be issued by petitioner through its advocate on 25.10.2019 demanding particulars under which policy such demand of transfer fees as...

...any other entity and merely change of name under Section 23 of Companies Act, 1956, petitioner was wrongly asked to pay transfer fees of Rs. 62,100 @ 18.95/- per sq mtr. The petitioner having no option paid the transfer fee...of rule, regulation or clause of lease agreement, license agreement or allotment letter Respondent no 2 demanded transfer fees and additional transfer fees . 5.11 The Respondent no. 2 ...from one person to other. Therefore, GIDC has levied the transfer fees prior to giving permission u/c 2(R). It is to be noted that the...

...requisite fees , if any. Similarly, if any dues of GIDC are outstanding in relation to the immovable property in question, GIDC is entitled to seek satisfaction thereof before effecting transfer of the...conditions under which the immovable property belonging to GIDC is leased out. GIDC is right to the extent GIDC is asking for an application for transfer in the prescribed format accompanied by... transfer of the immovable property if all other requisite formalities as required by law are completed by the petitioners. GIDC is, therefore, directed to effect transfer of the immovable property subject...

....5. The petitioners have thereafter made an application for transfer of sub-plots in their individual names before respondent no. 3 Regional Manager, GIDC , Gandhinagar. It is the case of the...petitioners that the petitioners were asked to pay 30% of the transfer fee according to the circular dated 6 July, 2017 of the GIDC , Gandhinagar. The petitioners thereafter made a representation before... GIDC that the petitioners are entitled to pay transfer fee at the rate of 5% and not 30% as per circular dated 6 July, 2017. It appears that GIDC by amendment order dated 25 July, 2018 reduced the...

...on 16.1.2009 as transfer fees .4. Opponent No. 1, who is the petitioner in the main petition has filed the petition only against GIDC for registering the charge over the property in...plot/shed Nos. 352 and 353 situated at Road No. 3, Sachin, GIDC , Surat, was purchased in public auction held by Gujarat Industrial Cooperative Bank Ltd., under provisions of section...put in possession as per sale-deed executed on 23.01.2009 The Applicant has paid a sum of Rs. 2 crore and more towards purchase price while an amount of Rs. 10,33,400/-, has been paid to the GIDC , Surat...

...submitted that there is possibility that there may be certain dues of GIDC like unpaid charges, transfer fees etc. which are required to be paid as per the Rules and Policy of GIDC and that shall be the...Plot No. 504, 512, 513 and 514, GIDC Estate, Dholka, Dist. Ahmedabad and the sale may be confirmed on the terms and conditions of sale assets as specified in tender forms at Annexure-E or on such other...is where is and whatsoever there is basis and the official liquidator will not transfer title except the title which the company was having prior to its liquidation.(G) The stamp duty...

... transfer fees /any other charges that may be levied by the GIDC in case of change in the name of the Corporate Debtor or transfer of assets of the Corporate Debtor to third party. It was submitted that... transfer fees /any other charges Not granted. The Resolution Plan shall be levied by the GIDC in case cannot be in violation of any law for of change in the name of the the time being in force. Therefore... undefined submitted by Mr. Bhatt, learned advocate, that the transfer fees be directed to be paid by the petitioner herein for the prayers as prayed for that No Due Certif...

...." 3. Various circulars of the GIDC stipulate a percentage of the fees to be paid by the transferor in the event the transfer falls within the various categories of transfer . ...public. There was no change in identity, however, in view of the circulars of the GIDC , the petitioner made an application on 10.12.2018 intimating such transfer of shares to Bombay Minerals Limited...not have been deed of assignment. The company, therefore, requested the GIDC that there was no need of a registered deed of assignment. The company was willing to pay the transfer fee and, therefore...

..., The plots stood transferred in the changed name of the Company “ABC Bearings Limited” vide office order dated 11.04.2018 and transfer fees was also not charged by the GIDC as there was no transfer of...within the meaning of provisions of Transfer of Property Act.21. It was submitted that the respondent-authorities have also not considered the fact that the GIDC was one of the party in...vide No. GIDC /RM/ANK/TRF/PTO/BHA1/0018 dated 05-03-2018. This is a formal nature of change and corporation has not charged any transfer fee.The said transfer /change in constitution...

...to GIDC along with the requisite transfer fees . After due scrutiny of all the documents on record, GIDC vide its final order dated 13.3.2013 transferred the said plot No. 821 in favour of the...to an application made by Tehelram Thakordas Arora seeking transfer of plot No. 821 in favour of the petitioner company, the competent authority of the GIDC (the fourth respondent herein) by an order...has purchased the plot in question from Shri Tehelram Thakordas Arora and that the transfer has been duly registered by the GIDC . It was submitted that the transfer in favour of the petitioner was...

...the transfer fees . In paragraph 23 of the affidavit-in-reply, it has been stated by GIDC that land acquired at village Undhera, Dist. Vadodara for public purpose of residential township for the...dues of GIDC and Notified Area Authority including transfer fees and revenue and other charges thereon. After these formalities are completed, thereafter GIDC may enter into supplementary agreement with...cannot be used for any private purpose by the allottees of GIDC or the successor of the allottees. The Society or its successor have no right to transfer , sell or in any manner assign its rights to any...

..., thus, the GIDC continues to earn on account of fees charged by it on transfer of leasehold rights and on conversion of leasehold rights to freehold rights.3.1 It is the allegation of the...rights again on payment of premium/ fees to GIDC . Thus, many industrial units have taken the benefit of such policy of the GIDC and therefore, such plots in the Industrial Estate are in great demand..., or any other appropriate, writ order or direction(i) restraining GIDC from making any fresh allotment of land within GIDC Industrial Estate, Naroda, including those that are advertised...

...society in liquidation. The transfer fees of Rs. 65,000 which was paid to GIDC and which is mentioned in the computation by the assessee has not been doubted by the ITO and was certainly deductible. The.... The assessee has filed copy of document evidencing transfer of assets for Rs. 9,11,151. In fact in this document three parties have been mentioned viz. Ahmedabad Silicate Utpadak Sahakari Mandali Ltd...of assets which are subject-matter of transfer that the principle laid down by the Supreme Court in the case of B.C. Srinivasa Setty (supra) would be applicable. The decision in the case of Artex Mfg...

...enable the Receiver alongwith the applicant company to transfer the same to third party within the parameters of the GIDC . 4 of 14 (d) GIDC to receive development/conversion fee...paying the prorate development/conversion fees of GIDC . 7. The application was opposed by the appellant GIDC as well as by the borrower/guarantors by filing written statement. In... transfer /sub lease consideration from the new transferees and the appellant GIDC be directed to issue the provisional transfer order to the F.I. 13. The learned counsel had further...

...the policy of the respondent GIDC , the transaction of transfer was termed as that of informal nature of transfer of unutilized plot, it was decided to levy transfer fees at the rate of 20% of the...fee. The respondent, while granting the transfer , informed that the request would be submitted to GIDC Board and that if ultimately the Board decides not to charge the transfer fee, the same would be....10. Mr. M.B Gandhi, learned Advocate appearing for the respondent GIDC submitted that the transfer of the plot took place from the name of M/s Sankalp Laboratories Ltd. to M/s Sun...

...Rs. 50,31,000/- Jayagauri Finance & Investment Rs. 11,00,000/- Transfer fees Rs. 8,36,130/- No C from GIDC Rs...following:—(i) Provisional Transfer Order No. GIDC /RM/BO/ALT/MR from GIDC dated 4-3-2003(ii) Agreement to sell dated 18-12-2002 between Jayagauri Finance & Investment (P) Ltd...for sale dated 18-12-2002, an application was made to GIDC for transfer of the said plot and shed in favour of JVS Engineers. The provisional permission for transfer had been given by the Corporation...

...of the petitioner who had completed the terms & conditions. 4.1 Learned advocate for the petitioner also submitted that once the Corporation had charged the transfer fees , No Due Certificate was required to be issued. It was nex.... Various charges like drainage connection charges, notified area tax, transfer fees etc., were also paid to the Corporation. It is stated that the transfer fees of Rs.5,77,200/on the basis of current...hereby sell, grant, release, convey and transfer property i.e. shed No. A2/2411, GIDC , Ankleshwar 393 002. (hereinafter referred as THE SAID PROPERTY for the sake of brevity) Page 9 of 12 HC-NIC Page 9...

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Rajat Dosi – [2023] 153 taxmann.com 331 (Article)

Introduction

The applicability of Goods and Services Tax (GST) on the assignment or transfer of long-term leasehold rights has been a subject of debate in India for quite some time. The significance of this issue arises from the fact that in India, a significant portion of land, industrial, commercial, or residential, is leased by Government bodies such as GIDC, HSIDC, RIICO, DDA, etc., to the allottees on a long-term basis (99 years or 50 years). For grant of such lease the allottees usually pay a onetime premium (also commercially known as salami) and annual lease charges. Such lease transactions grant the allottees the right to use the land for an extended/long period, often spanning 99 years. Over time, these allottees either retain the land for their own use or opt to sell or assign it to other individuals, usually at a profit, for the remainder duration of the original lease period (commercially known as ‘assignment of leasehold rights’).

The question of GST applicability on assignment of leasehold rights has been looming for a long period of time without any concrete conclusions. While some interpret it as a ‘supply of service’ and subject to GST, others argue that it qualifies as ‘sale of land’ or ‘deemed sale’, exempting it from GST. In this article, we will explore both perspectives, taking into account the relevant legal provisions, CBIC Circulars, Advance Rulings, and consider the implications under land laws and the Income Tax Act.

View I – GST is Payable

Proponents of this view rely on the following arguments:

1. Relevant Legal Provisions:

1.1. Section 7 of the CGST Act, which is the charging section, encompasses all supplies of goods and services, including lease and rental activities, making them subject to GST.

1.2. Schedule II of the CGST Act deems lease or rental of land or immovable property as a ‘supply of services’, attracting GST. This Schedule also deems ‘agreeing to do an act’ as a ‘supply of service’, attracting GST.

2. CBIC Circular:

2.1. CBIC Circular No. 44/18/2018-CGST clarifies that the assignment or transfer of leasehold rights is indeed a ‘supply of service’ subject to GST payment.

2.2. The circular emphasizes that registration requirements and stamp duty payments do not exempt these transactions from GST liability. It also clearly states that these transactions do not qualify as ‘sale of land’ under Schedule III to the CGST Act (which entails transactions on which no GST is applicable).

3. Legal Precedents:

3.1. Advance Rulings from various states, including Tamil Nadu, West Bengal, and Maharashtra, have consistently classified assignment of leasehold rights as ‘supply of service’ liable to GST. The assignment transactions were seen as consideration for agreeing to transfer the leasehold rights to the assignee and accordingly opined to be subjected to GST in terms of Schedule II to the CGST Act.

3.2. In Builders Association of Navi Mumbai v. Union of India [2018] 92 taxmann.com 134/67 GST 334/2018 (12) GSTL 232 (Bom.), the Hon’ble Bombay High Court has held that long term lease transactions, irrespective of the duration of lease, will be subject to GST. This judgment has been accepted by the Hon’ble Supreme Court and challenge to the same, via the SLP route, was rejected.

3.3. Even judgments rendered under the erstwhile service tax regime have considered such long-term lease transactions as being subject to service tax, irrespective of the duration of lease period – Greater Noida Industrial Development Authority (Allahabad High Court) and Rajasthan Housing Board (CESTAT).

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Assignment of leasehold right on land is taxable under GST

Case law details, in re enfield apparels ltd (gst aar west bengal).

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 benefit 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’ (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 transfer fee is, therefore, admissible as input tax credit.

FULL TEXT OF ORDER OF AUTHORITY OF ADVANCE RULING,WEST BENGAL

1. Admissibility of the Application

1.1 The National Company Law Tribunal (hereinafter NCLT), Kolkata Bench, passed an order on 06/08/2018, initiating the corporate insolvency resolution process (hereinafter CIRP), admitting the applicant as the corporate debtor, and appointed Sri Kanchan Duatta as Interim Resolution Professional (IRP). The Committee of Creditors (hereinafter CoC) subsequently confirmed Sri Dutta as the Resolution Professional (RP). During the CIRP, the RP and the CoC did not receive any resolution plan. The NCLT, therefore, passed another order on 04/04/2019 under section 33 of the Insolvency & Bankruptcy Code, 2016 (hereinafter the IBC) to start the process of liquidating the corporate debtor and appointed Sri Dutta as the Liquidator. He has obtained separate registration as a distinct person (GSTIN 19AABCE8762F4ZC) in terms of Notification No. 11/2017 – CT (Rate) dated 28/06/2017 ).

1.2 One of the assets under liquidation is the leasehold factory unit along with car parking space situated at Paridhan Garment Park at 19 Canal South Road, Kolkata -700015 (hereinafter the Demised Premises). The West Bengal Industrial Development Corporation Ltd (hereafter the Sub-lessor) granted the applicant possession of the Demised Premises for ninety-nine years under a registered deed of sub-lease dated 06/08/2010 (hereinafter the Deed) on payment of an up-front premium of Rs 5.07 crore and monthly lease rental of Rs 21,000/-. According to clause 12.28 of the Deed, the applicant, after the expiry of at least five years from the date of the Deed coming into force, is entitled to assign to another person the unexpired residual period of the sub-lease after taking written approval of the Sublessor and on payment of transfer fee, being 10% of the prevailing market value of the property as assessed by the Registering Authority of the State Government.

1.3 The Liquidator wants to know whether GST is payable on the consideration receivable on such assignment. If so, what should be the SAC and the rate applicable? He also seeks clarity on whether he can claim input tax credit for the GST paid on the transfer fee. Both the questions are admissible under section 97 (2) (a), (b), (d) & (e) of the GST Act.

1.4 The applicant declares that the questions raised are not pending before or disposed of by any authority in any proceedings under the GST Act. The concerned officer from the revenue does not object to the admission of the application. The application is, therefore, admitted.

2. Submissions of the Applicant

2.1 The applicant submits that leasehold right to immovable property is an immovable property. He refers to section 3 (26) of the General Clauses Act, 1897, which defines immovable property to include land, benefits to arise out of the land and things attached to the earth, or permanently fastened to anything attached to the earth. The phrase ‘benefits to arise out of land’ is relevant. According to the applicant, it means the interest in land. Even the transfer of development rights in the land through joint development is treated as the sale of land. The applicant refers to several case laws in support of his argument [Mati Lal Daga and Ors vs (Sri Sri) Iswar Radha Damodar, AIR 1936 Cal 727; Girnar Traders vs State of Maharashtra, (2011) 3 SCC 1; Chheda Housing Development vs Bibijan Shaikh Farid and Ors, (2007) 3 MhLJ 402].

2.2 The applicant, therefore, concludes that lease simpliciter alone should attract levy of GST. Assignment of leasehold rights on land, on the other hand, is nothing but the transfer of immovable property akin to the sale of land and buildings, and no GST is leviable on such assignments. ‘Sale’ means the transfer of property or title for a price. Assignment of the leasehold rights effectively transfers possession and title to the assignee for a price. It is nothing but a sale of the building.

2.3 At this point the applicant tries to distinguish his case from the judgments in Builders Association of Navi Mumbai [(2018) 12 GSTL 232 (Bom)] and Greater Noida Industrial Development Authority [(2015) 40 STR 95]. He contends that the High Courts in the above cases have dealt with leasing, which is different from the assignment of leasehold rights. The rulings pronounced based on those two judgments [Greentech Mega Food Park Pvt Ltd, (2019) 27 GSTL 143 (AAR, Rajasthan) and Goa Tourism Development Corporation Ltd, (2018) 19 GStL 700 (AAR, Goa)], therefore, are not tenable.

2.4 The applicant now draws attention to the question of admissibility of the input tax credit, being the GST to be paid on the transfer fee. According to the applicant, such transfer fee is the consideration payable to the Sub-lessor for rendering service in the course or furtherance of business, more specifically because business includes in terms of section 2 (17) (d) of the GST Act supply or acquisition of goods or services in connection with the closure of a business. The applicant, therefore, argues that GST to be paid on such transfer fee is admissible as input tax credit in the event it is ruled that the assignment of leasehold right is a supply of taxable service.

3. Submissions of the concerned officer from the revenue

3.1 The applicant’s argument described in paragraphs 2.1 to 2.3 above is not discussed in the submissions of the concerned officer from the revenue. He submits that the assigning of the sub-lease is a service classifiable under the heading ‘Other Miscellaneous Services’ (SAC 99979) and taxed accordingly.

4. Observations and findings of the Authority

4.1 Section 3(26) of the General Clauses Act, 1897 defines “immovable property” as to include land, benefits to arise out of the land, and things attached to the earth, or permanently fastened to anything attached to the earth. Applicability of the General Clauses Act, 1897 in the context of a Special Act like the CGST Act, 2017, however, is limited to areas where no express provisions are made under the said Special Act.

4.2 Scope of supply under section 7 (1) of the GST Act includes all forms of supply of goods and services, including a sale, transfer, barter, exchange, license, rental, lease or disposal made or agreed to be made. Section 7 (1A) read with Schedule II under the GST Act provides which of such supplies shall be treated as supply of goods or services. Paragraph 2 of Schedule II provides that with respect to transactions relating to land and buildings, any lease, tenancy, easement, license to occupy the land, letting out of a building including a commercial, industrial or residential complex for business or commerce is the supply of services. In other words, benefits arising from land in the forms specified in paragraph 2 of Schedule II are not to be treated as transactions in immovable property but as the supply of service for the purpose of the GST Act. The Deed, therefore, confers upon the applicant no better title to the Demised Premises other than a service contract of lease. He can, therefore, transfer to the assignee only his right to receive the service of the lease for the unexpired period after obtaining prior approval of the Sub-lessor on payment of the transfer fee.

4.3 Clause 11 of the Deed provides the rights of the Sub-lessee. They include the right to have peaceful possession of the Demised Premises on regular payment of the lease rental and compliance to the conditions and restrictions enumerated under clause 12 of the Deed. A conjoint reading of the two clauses makes it clear that the Sub-lessor allows the applicant possession of the Demised Premises for the manufacture of garments and textiles. The Demised Premises shall not be used for residential use or any unlawful activity, nor shall be structurally altered in any way. The sub-lease may be terminated if the Sub-lessee fails to pay the lease rental or maintenance charges, fails or delays in commencing commercial operation, discontinues the business, fails to maintain good labour practice or breaches any terms of the Deed.

4.4 It is evident from the above discussion that the applicant, apart from the conditional possession of the Demised Premises, enjoys no title or ownership, which is central to sale of any immovable property within the meaning of section 54 of the Transfer of Property Act, 1882. The applicant’s interest in the benefits arising out of the Demised Premises is limited to sub-leasing in terms of the Deed, and he is capable of transferring the benefits only to that extent. The assignment, therefore, does not amount to transfer of any benefit other than leasehold rights in terms of the Deed for the unexpired period of the lease and is no transfer of any immovable property in the context of the GST Act.

4.5 The applicant’s reference to the case laws where joint development right is treated as the sale of an immovable property (refer to para 2.1 above) needs to be distinguished. None of those cases is decided in the context of the GST Act, where the provisions of paragraph 2 of Schedule II curve out certain benefits arising out of the land from the realm of immovable property and treat them as ‘service’ for the purpose of the GST Act. The reference to the above case laws is, therefore, not relevant.

4.6 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 stands extinguished. Neither does it create fresh benefit from land other than the leasehold right. It is like a 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’ (SAC 999792) and taxable @ 18% under Sl No. 35 of Notification No. 11/2017 – CT (Rate) dated 28/06/2017 (State Notification No. 1135FT dated 28/06/2017), as amended from time to time (hereinafter collectively called the Rate Notification).

4.7 Similarly, the transfer fee charged by the Sub-lessor is in the nature of a consideration for tolerating an act that the applicant is otherwise refrained from doing in terms of clause 12.28 of the Deed. It is also a service classifiable under ‘Other miscellaneous service’ (SAC 999794) and taxable @ 18% under Sl No. 35 of the Rate Notification. It 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 GST Act. The GST to be paid on such transfer fee is, therefore, admissible as input tax credit.

Based on the above discussion, we rule as under,

This Ruling is valid subject to the provisions under Section 103 until and unless declared void under Section 104(1) of the GST Act.

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