Assignment of MIDC leasehold rights for lump-sum consideration not a taxable supply under Section 9; interim stays granted Bombay HC held that, following the reasoning in a Gujarat HC decision, assignment of leasehold rights (with buildings) by an MIDC lessee to a third party ...
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Assignment of MIDC leasehold rights for lump-sum consideration not a taxable supply under Section 9; interim stays granted
Bombay HC held that, following the reasoning in a Gujarat HC decision, assignment of leasehold rights (with buildings) by an MIDC lessee to a third party for lump-sum consideration is not a taxable supply under GST and thus not leviable under Section 9. For the entities listed in the order, any outstanding show-cause notices not yet adjudicated are stayed, and already-passed adjudication orders are also stayed. The writ was disposed; related petitions were placed on board for directions and returnable for case management and final hearing on 10 March 2025.
The issues presented and considered in the judgment are as follows:1. Whether Goods and Service Tax (GST) can be levied on the assignment of leasehold rights of a plot of land allotted on lease by the Maharashtra Industrial Development Corporation (MIDC) and the buildings constructed thereon by the lessee to a third party, on the payment of a lump sum consideration.2. Interpretation of the provisions of the Central/State Goods and Services Tax Act, 2017 in relation to the assignment of leasehold rights.3. Comparison and consideration of the Division Bench decision of the Gujarat High Court in the case of Gujarat Chambers of Commerce and Industry & Others v/s. Union of India & Others (2025) regarding the applicability of GST on similar transactions.The Court noted that the issue raised in the present Petition is similar to the one addressed by the Gujarat High Court, which held that the assignment by sale or transfer of leasehold rights of a plot of land allotted by the Gujarat Industrial Development Corporation (GIDC) to a third party shall not be subject to the levy of GST under the GST Act.The Court found it crucial to address this issue, especially in light of the absence of a contrary view before them. The Court also acknowledged similar petitions, such as Writ Petition No.14434 of 2023 (Siemens Limited v/s. Union of India & Others), where the adjudication of show cause notices remained stayed pending the resolution of this issue.In conclusion, the Court granted leave to the Petitioners to join the Director General of GST Intelligence (DGGI) as a party Respondent and scheduled the matter for further directions and final disposal on a specified date.The significant holdings of the judgment include:- The Court's decision to address the issue of GST levy on the assignment of leasehold rights based on the Gujarat High Court's interpretation.- The stay on the adjudication of show cause notices in related cases pending the final resolution of the issue.- The scheduling of the matter for further directions and final disposal.Overall, the judgment focuses on the interpretation and application of GST laws in the context of the assignment of leasehold rights, drawing on relevant precedents and the need for clarity on this issue.
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