It is quite common to enter into a leasing arrangements for the purpose of business or providing accommodation to employees etc and terms and conditions are being agreed at the inception while signing it off such leasing arrangements however after the implementation of GST act, there are some provisions which needs to be looked at while finalizing the liability related to such agreements/ arrangements or re-visiting the existing arrangements.
CGST act Sec -85- Liability in case of Transfer of Business
(1) Where a taxable person, liable to pay tax under this Act, transfers his business in whole or in part, by sale, gift, lease, leave and license, hire or in any other manner whatsoever, the taxable person and the person to whom the business is so transferred shall, jointly and severally, be liable wholly or, , to the extent of such transfer, to pay the tax, interest or any penalty due from the taxable person up to the time of such transfer, whether such tax, interest or penalty has been determined before such transfer, but has remained unpaid or is determined thereafter,
Now,
It is quite clear as per sec 85 above that transferor and transferee both would be liable to ensure that liability for payment of TAXES, INTEREST and or PENALTY due upto the time of transfer of such leases would be on both parties.
Just look at it from the point of view of leasee (who takes the lease) who obligates to pay certain periodic payments to the leasor (who provides the lease) and for that whole leasing arrangement would have being structured and ..............for further reading please refer link http://gyanifrs.com/2017/06/re-visiting-leasing-arrangements-from-gst-perspective-and-ind-as-17-contingent-liability/
CGST act Sec -85- Liability in case of Transfer of Business
(1) Where a taxable person, liable to pay tax under this Act, transfers his business in whole or in part, by sale, gift, lease, leave and license, hire or in any other manner whatsoever, the taxable person and the person to whom the business is so transferred shall, jointly and severally, be liable wholly or, , to the extent of such transfer, to pay the tax, interest or any penalty due from the taxable person up to the time of such transfer, whether such tax, interest or penalty has been determined before such transfer, but has remained unpaid or is determined thereafter,
Now,
It is quite clear as per sec 85 above that transferor and transferee both would be liable to ensure that liability for payment of TAXES, INTEREST and or PENALTY due upto the time of transfer of such leases would be on both parties.
Just look at it from the point of view of leasee (who takes the lease) who obligates to pay certain periodic payments to the leasor (who provides the lease) and for that whole leasing arrangement would have being structured and ..............for further reading please refer link http://gyanifrs.com/2017/06/re-visiting-leasing-arrangements-from-gst-perspective-and-ind-as-17-contingent-liability/
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