Land Rights Transfer to Third Party Not Taxable Under GST, Ruling Confirms Exemption for Immovable Property Benefits The Bombay HC ruled that assignment of MIDC leasehold land rights to a third party for a lump sum is not subject to GST. Following the Gujarat HC ...
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Land Rights Transfer to Third Party Not Taxable Under GST, Ruling Confirms Exemption for Immovable Property Benefits
The Bombay HC ruled that assignment of MIDC leasehold land rights to a third party for a lump sum is not subject to GST. Following the Gujarat HC precedent, the court determined the transaction constitutes a transfer of immovable property benefits, exempt under GST Act provisions. The court stayed the GST authority's adjudication order and scheduled further hearing, recognizing this as a significant unresolved legal issue.
The Bombay High Court addressed whether Goods and Services Tax (GST) applies to the assignment of leasehold rights of MIDC-allotted land and buildings by the lessee to a third party for a lump sum consideration. The GST Authority treated this as a supply of service under the Central/State Goods and Services Tax Act, 2017.The Court relied on a Division Bench decision of the Gujarat High Court in Gujarat Chambers of Commerce and Industry v. Union of India (3 Jan 2025), which held that such assignment constitutes a "sale/transfer of benefits arising out of immovable property" and is not subject to GST under Section 9 of the GST Act. Specifically, Section 7(1)(a) read with clause 5(b) of Schedule II and clause 5 of Schedule III do not apply to this transaction.Given the absence of contrary authority, the Bombay High Court recognized this as a significant issue pending determination. It noted similar petitions (Siemens Ltd. v. Union of India and Chambers of Small Industries Association v. State of Maharashtra) where adjudication of Show Cause Notices was stayed.In the present case, a Show Cause Notice dated 31 July 2024 and an adjudication order dated 6 January 2025 were challenged. The Court ordered a stay on the effect and implementation of the adjudication order and posted the matter for further hearing on 10 June 2025.Key holding: The assignment of leasehold rights of MIDC land to a third party is not liable to GST as it is considered a transfer of immovable property benefits, exempt under the GST Act provisions cited.
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