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of <h1>Leasehold Rights Transfer Sparks GST Interpretation Debate, Challenging Existing Service Supply Definitions Under Tax Regulations</h1> <h3>Tokheim India Pvt. Ltd. Versus Union of India thr. The Ministry of Finance & Ors.</h3> HC examined GST applicability to leasehold rights assignment. Court acknowledged conflicting interpretations regarding whether such transactions ... Levy of GST - assignment of lease hold 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 - HELD THAT:- The Division Bench of the Gujarat High Court in Gujarat Chambers of Commerce and Industry and Others Vs. Union of India and Others [2025 (1) TMI 516 - GUJARAT HIGH COURT] has taken the 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. As far as the present case is concerned a Show Cause Notice dated 2nd August, 2024 was issued to the Petitioner and adjudication order dated 6th January, 2025 is also passed by Respondent No. 3. In these circumstances, in this Petition, the effect and implementation of the order dated 6th January, 2025 shall remain stayed - Place the above Writ Petition alongwith Writ Petition No. 14434 of 2023 and other connected Writ Petitions on 15th April, 2025 at 2.30 p.m. Issue: whether GST can be levied on assignment of leasehold rights in MIDC-allotted land and buildings by a lessee to a third party for a lump-sum consideration. Background: The GST Authority treated the transaction as a supply of service under the Central/State Goods and Services Act, 2017; a Show Cause Notice dated 2 Aug 2024 and an adjudication order dated 6 Jan 2025 were issued. Relevant precedent: A Division Bench of the Gujarat High Court held that such 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 the transaction is not subject to GST under Section 9. Outcome: In view of the Gujarat decision and absence of a contrary view, the Court finds the issue requires determination and stays the effect and implementation of the 6 Jan 2025 adjudication order. The petition is listed with connected matters for further hearing on 15 April 2025.
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