In re Aryapride Hotel and Convention Private Limited (GST AAR Odisha)
The Authority for Advance Ruling, Karnataka, examined the GST implications of a proposed transaction involving the contribution of developed leasehold land and a constructed hotel project by a company to a Limited Liability Partnership (LLP) as capital contribution. The applicant, a private limited company, had undertaken construction of a hotel-cum-commercial project on leased land and proposed to enter into an LLP with another entity for operating the hotel portion of the project. Under the arrangement, the applicant would contribute the constructed hotel floors along with associated infrastructure and leasehold rights, while the other party would contribute operational inputs and working capital.
The key issue before the Authority was whether such contribution constitutes a “supply” under Section 7 of the CGST Act, and whether it should be treated as a sale of immovable property or a supply of service. The applicant contended that the transaction should be regarded as transfer of immovable property and therefore fall outside GST under Schedule III.
The Authority examined the nature of the transaction and noted that the applicant and the proposed LLP are distinct persons under GST law. Therefore, any transfer between them for consideration, including non-monetary consideration, may constitute a supply. It observed that consideration includes not only monetary payments but also non-monetary benefits such as profit-sharing rights and partnership interest received by the applicant in return for the contribution.
