Putting to rest all confusion on the applicability of indirect tax on transactions related to assets under liquidation, the West Bengal Authority for Advance Ruling (AAR) has said that leasehold-right assignment by a corporate debtor attracts 18 percent GST.
The AAR held that activity of assignment of asset leasehold factory unit with car parking space leased by West Bengal Development Corporation (sub-lessor to corporate debtor) is a service taxable as ‘Other Miscellaneous Service’ and therefore GST to be levied at 18 percent. It observed that the sub-lessor has allowed possession of the demised premises for the manufacture of garments and textiles. The West Bengal Development Corporation has no title or ownership, which is central to sale of any immovable property within the meaning Transfer of Property Act, 1882.
Liquidation has been initiated following the National Company Law Tribunal (NCLT) order wherein Enfield Apparels has been admitted as a corporate debtor. This ruling gets importance keeping in mind the large number of liquidation cases.
The AAR can be accessed at: http://wbcomtax.nic.in/GST/GST_Advance_Ruling/05WBAAR2020-21_20200810.pdf