1 week Ago By Amala
Sign In Sign Up Top Stories In the case of General Motors India Private Limited, the Maharashtra Authority for Advance Ruling (AAR) held that the transfer of completed buildings to Hyundai Motor India Limited (HMI) does not constitute a sale of immovable property but rather qualifies as a supply of service under GST laws , thereby attracting 18% GST. The case was brought before the AAR by General Motors India Pvt. Ltd.
(GMI), which had entered into an Asset Purchase Agreement (APA) dated August 16, 2023, with HMI for the transfer of assets from its manufacturing facility in Talegaon, Maharashtra. These assets included leasehold land rights, buildings, and plant and machinery, totaling Rs. 787.
18 crores. The central question in dispute was whether the transfer of buildings, duly completed and supported by occupancy certificates, should be treated as a supply under GST or fall under Entry 5 of Schedule III of the CGST Act, which covers activities considered neither supply of goods nor supply of services. Worried About SME IPO Pitfalls? Gain Clarity with This Advanced Course! Register Now Read More: Global Trade in Crisis: A Recap of Trump’s Tariffs and the World’s Response General Motors submitted that since the buildings were already completed and not under construction at the time of transfer, the transaction amounted to a sale of immovable property, outside the GST’s radar as per Section 7(2)(a) read with Entry 5 of Schedule III.
The applicant had executed a separate deed of conveyance for the buildings and argued that it held ownership of these structures, distinct from the leased land granted by the Maharashtra Industrial Development Corporation (MIDC). The AAR observed that the lease deed dated July 3, 2010, between MIDC and GMI, included buildings constructed on the leased land as part of the leasehold interest, and not as independently owned assets of GMI. The AAR further observed that GMI could not have transferred ownership in these buildings, but merely assigned its leasehold rights in both the land and structures with MIDC’s approval.
The AAR clarified that the transaction effectively constituted an assignment of rights, classifiable as a service under SAC 999792 (“Other Miscellaneous Services”) and taxable at 18% GST, as per Notification No. 11/2017 – Central Tax (Rate) dated 28/06/2017. Read More: [BREAKING] Table 3.
2 in GSTR-3B to be System-Locked Starting April 2025: GSTN Advisory Worried About SME IPO Pitfalls? Gain Clarity with This Advanced Course! Register Now The AAR explained that even if consideration for land, buildings, and machinery were listed separately, the entire transfer was like a leasehold assignment, and hence subject to GST as a service. It further supported its ruling with reference to the Bombay High Court’s judgment in Builders Association of India, which clarified that long-term leasehold assignments are liable to GST. The AAR ruled that the transfer of completed buildings did not qualify as a sale of immovable property and instead constituted a service of assignment of leasehold rights, taxable at 18%.
The AAR rejected GMI’s claim regarding the exemption for the sale of buildings and held that the transfer is taxable under GST law as a service. Support our journalism by subscribing to Taxscan premium . Follow us on Telegram for quick updates Topics © 2025 Taxscan © 2025 Taxscan.
