GST Applicability on Leasehold Rights: Bombay HC Reviews Case, Considers Gujarat HC's Ruling, Adds GST Intelligence Director as Respondent.

The Bombay HC considered whether GST applies to the assignment of leasehold rights of land and buildings for a lump sum. The court consolidated this case with related petitions, including one involving Siemens Ltd., and scheduled further proceedings. The court granted leave to include the Director General of GST Intelligence as a respondent. The HC's decision to proceed, acknowledging the Gujarat HC's ruling that such transactions are not subject to GST, underscores the importance of resolving this legal issue.

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The issue in the present case before the Bombay High Court revolves around whether Goods and Service Tax (GST) can be levied on the assignment of leasehold rights of a plot of land and buildings constructed thereon by the lessee to a third party for a lump sum consideration. The GST Authorities argue that this transaction constitutes a supply of service under the Central/State Goods and Services Tax Act, 2017. The Petitioners rely on a Division Bench decision of the Gujarat High Court in a similar case to support their position.The Gujarat High Court had previously held that the assignment or transfer of leasehold rights of a plot of land allotted by the Gujarat Industrial Development Corporation to a third party for consideration does not fall within the scope of GST levy. The court reasoned that such transactions involve the transfer of benefits arising from immovable property and are not subject to GST under the relevant provisions of the GST Act.The Bombay High Court, noting the absence of any contrary view and the importance of the issue, decided to address the matter. The court also acknowledged that similar issues had been raised in other petitions, including one involving Siemens Limited, where adjudication of show cause notices had been stayed. The court consolidated the present petition with other related cases for further directions and set a date for hearing and final disposal.In summary, the Bombay High Court granted leave to join the Director General of GST Intelligence as a party respondent, recognized the key issue regarding the levy of GST on the assignment of leasehold rights, and scheduled the matter for further proceedings along with related petitions. The court's decision to address the issue in light of the Gujarat High Court's ruling indicates the significance of the legal question at hand.

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