2025 (3) TMI 1237 - HC - GST

GST on Leasehold Rights: Court Stays Decision, Cites Immovable Property Ruling; Hearing Scheduled for April 2025.

The Bombay HC has stayed the adjudication of the Show Cause Notice regarding the imposition of GST on the assignment of leasehold rights for a plot of ... Levy of GST - assignment of leasehold rights to a third party of a plot of land allotted by the Maharashtra Industrial Development Corporation (MIDC) to the original lessee (i.e. the assignor) along with the buildings constructed thereon, on payment of a lump sum consideration by the assignee to the assignor - HELD THAT:- The Division Bench of the Gujarat High Court in Gujarat Chambers of Commerce and Industry & Others V/S Union of India & Others [2025 (1) TMI 516 - GUJARAT HIGH COURT] has taken a view that the assignment by sale or transfer of leasehold rights of the plot of land allotted by the Gujarat Industrial Development Corporation (GIDC) to the lessee or its successor (assignor) in favour of a 3rd party (assignee) for consideration, shall be an assignment/ sale/ transfer of benefits arising out of “immovable property” by the lessee-assignor in favour of a 3rd party who would then become a lessee of GIDC in place of the original allottee-lessee. In such circumstances, the Gujarat High Court held that the provisions of Section 7 (1) (a) of the GST Act providing for scope of supply read with clause 5 (b) of Schedule II and clause 5 of Schedule III would not be applicable to such a transaction and the same would not be subject to levy of GST as provided under Section 9 of the GST Act. In this Petition also the adjudication of the Show Cause Notice dated 13th November 2024 shall remain stayed. The High Court considered whether GST is leviable on the assignment of leasehold rights in MIDC-allotted land (with buildings) to a third party for a lump-sum consideration. The GST Authorities treated the transaction as a 'supply of service' under the CGST/SGST Acts. The petitioner relied on a recent Gujarat High Court Division Bench decision holding that such an assignment 'shall be an assignment/ sale/ transfer of benefits arising out of 'immovable property'' and therefore the provisions of Section 7(1)(a) read with clause 5(b) of Schedule II and clause 5 of Schedule III are not applicable, so GST under Section 9 would not apply. Noting the absence of any contrary High Court view, and that parallel writ petitions raising the same issue have stayed adjudication of show-cause notices, the Court stayed adjudication of the impugned show-cause notice dated 13 November 2024 and directed listing with the related petitions for further hearing on 15 April 2025. The order to be digitally signed for operational purposes.