In re General Motors India Pvt. Ltd. (GST AAR Maharashtra)
The Maharashtra Authority for Advance Ruling (AAR) has determined that General Motors India’s (GM India) assignment of leasehold rights for land and buildings under an Asset Purchase Agreement constitutes a taxable supply of services under the Goods and Services Tax (GST) laws. The AAR clarified that this transfer is akin to “agreeing to do” the transfer of leasehold rights, classifying it under “Other miscellaneous service” (SAC 999792) and subjecting it to an 18% GST rate. Contrary to potential interpretations, the authority stated that the transfer of the building does not qualify as a sale of immovable property, which is excluded from GST, but rather as an assignment of leasehold rights, thus also falling under taxable services. However, the AAR ruled that the sale of plant and machinery by GM India under the same agreement qualifies as a taxable supply of individual goods. Consequently, GST will be applicable to the agreed price for each item of plant and machinery or the input tax credit availed, adjusted as per regulations, whichever is higher, based on their respective classifications and rates.
FULL TEXT OF THE ORDER OF AUTHORITY FOR ADVANCE RULING, MAHARASHTRA
The present application has been filed under Section 97 of the Central Goods and Services Tax Act, 2017 and the Maharashtra Goods and Services Tax Act, 2017 [hereinafter referred to as “the CGST Act and MGST Act” respectively] by M/s. General Motors India Private Limited, the applicant, seeking an advance ruling in respect of the following questions.
a) Whether assignment of Lease Hold Rights of land by the Applicant in terms of the Asset Purchase Agreement qualifies as taxable supply of services under GST Laws? If yes, whether GST would apply on the price agreed for transfer of Lease Hold Rights under the Asset Purchase Agreement?
b) Whether the transfer by way of sale of building by the Applicant to HMI in terms of the Asset Purchase Agreement qualifies as ‘neither a supply of goods nor a supply of services’ under Section 7 read with entry 5 of Schedule III of the GST Laws?
c) Whether the sale of items of plant and machinery in terms of the Asset Purchase Agreement qualifies as taxable supply of individual goods under GST Laws? If yes, whether GST would apply on the price agreed between the parties for the sale of each such items under the Asset Purchase Agreement, as per classification and rate applicable to each item?
At the outset, we would like to make it clear that the provisions of both the CGST Act and the MGST Act are the same except for certain provisions. Therefore, unless a mention is specifically made to any dissimilar provisions, a reference to the CGST Act would also mean a reference to the same provision under the MGST Act. Further to the earlier, henceforth for the purposes of this Advance Ruling, the expression ‘GST Act’
