In re Kobelco Construction Equipment India Pvt. Ltd. (GST AAR Andhra Pradesh)
M/s Kobelco Construction Equipment India Pvt Ltd, a manufacturer of excavators with a unit in Sri City (DTZ), sought an Advance Ruling from the Andhra Pradesh Authority for Advance Ruling (AAR) regarding the Goods and Services Tax (GST) implications of assigning its long-term leasehold rights.
The applicant held a 99-year lease on 9.35 acres of land in Sri City, commencing from May 29, 2015, which was originally granted to a merged entity, Kobelco Cranes India Private Limited. The applicant now intended to transfer the remaining unexpired lease period of 89 years to India Metal One Steel Plate Processing Private Limited (Transferee) with the consent of the original lessor, Sri City Private Limited.
The total consideration for this transfer was Rs. 15,38,00,000/-. This amount was split into Rs. 11,35,00,000/- for the value of the leasehold rights (the right to occupy and use the land) and Rs. 4,03,00,000/- towards the recovery of the cost of land development, road structures, and facilities constructed by the applicant. Additionally, the applicant was required to pay a commission/transfer fee of approximately Rs. 3.06 million (Rs. 30.6 lakh) to Sri City Private Limited for the transfer of the leasehold rights.
