Nagpur: GST department has put the industry in a state of fear by sending summons and starting investigation on number of transfers of leased lands have taken place in Maharashtra Industries Development Corporation (MIDC) industrial area since July 2017.
Dr Dipen Agrawal said that, the department seems to be taking a stand after 5 years since inception of GST that the subsequent transfer of leased land from one party to the other comes under the purview of supply of service and hence 18% GST is leviable on the whole of the sale consideration of the transaction, though, MIDC is exempt. If this really goes through then it will sound a death knell for all the MSMEs who have sold their plots since July 2017 and also future transactions.
Chamber of Associations of Maharashtra Industry and Trade (CAMIT) an apex body representing industry & trade associations across Maharashtra has taken up this issue and has represented its case to Devendra Fadnavis, the Dy.CM & Finance Minister, Govt. of Maharashtra, to take up the issue with the GST council, added Dr Agrawal.
Chamber of Small Industries Association (COSIA) an all-India MSME apex body has also taken up the issue and represented the case before Nirmala Sitharaman, Finance Minister, Government of India, GST council and also before all state Finance Ministers, as they are the members of GST Council.
The demands raised by GST Department is huge and especially for the MSMEs this is going to break their back. This is a Pan India issue and presently, there are thousands of units in Maharashtra alone, which hasn’t paid this retrospective levy of GST on the assignment of leasehold rights of such land taken on lease from MIDC on the understanding that the “assignment of leasehold rights in land” is akin to “sale of land” and falls under Schedule III of the CGST Act on which GST is not payable. All have paid stamp duty as per the sale of land, and also paid Income tax on short term and long-term gains considering as deemed ownership, and the premium is paid to MIDC for transferring the lease. Needless to say, that during the service tax regime, this was not chargeable as service tax, as the immovable property was defined in the act.
As we all know that during COVID times many of the MSME have suffered big losses and some had to shut down and sell their plots, just to square up their liabilities.
CAMIT and COISA jointly has brought together the associations from all over India under one platform and are taking up their case at all State levels as well as at the Centre. CAMIT has written to all the concerned departments and requested to amend/clarify the GST rule for the long-term subsequent lease with retrospective effect and give relief to the thousands of MSMEs from all over India by considering it in schedule III. Which says Sale of land and building is neither good nor service.
Hope is that the said issue will be taken up in the forthcoming GST Council meeting scheduled for 18th February and shall be resolved favourably in the interest of all stakeholders.
Informs a press release issued by CAMIT.
