Transfer of long-term leasehold rights falls outside GST supply, and the show cause notice was quashed.

Assignment and transfer of long-term leasehold rights to a third-party assignee were treated as transfer of benefits arising from immovable property, so the transaction fell outside the scope of supply under section 7(1)(a) read with Schedule II and Schedule III of the CGST Act and was not exigible to GST under section 9. Because GST was not leviable on the underlying transaction, any issue of utilisation or reversal of input tax credit did not arise. The Gujarat HC quashed the show cause notice, and the challenge succeeded in favour of the petitioner.

---

---

Issues: Whether GST was leviable on the assignment of long-term leasehold rights, and whether the show cause notice proposing such levy could be sustained.

Analysis: The transaction of assignment by sale and transfer of leasehold rights in favour of a third-party assignee was treated as an assignment or transfer of benefits arising out of immovable property. In view of the binding precedent of the Court, such transaction did not fall within the scope of supply under section 7(1)(a) read with clause 5(b) of Schedule II and clause 5 of Schedule III to the Central Goods and Services Tax Act, 2017, and was not exigible to GST under section 9 of the Central Goods and Services Tax Act, 2017. Since GST itself was not leviable on the transaction, the question of utilisation or reversal of input tax credit did not arise.

Conclusion: The show cause notice was quashed and set aside. The challenge succeeded and the relief was granted in favour of the petitioner.

---