GST on assignment of leasehold rights in immovable property stayed amid challenge to levy and scope of supply.

GST liability on the assignment of leasehold rights in land and buildings for a lump sum consideration was treated as an open issue, with the Bombay HC noting a Gujarat HC view that such a transfer is an assignment of benefits arising from immovable property and does not fall within the scope of supply under Section 7(1)(a) read with Schedule II and Schedule III, nor attract levy under Section 9. In light of that view and no contrary authority being shown, the Court granted interim protection and stayed the effect and implementation of the adjudication order.

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Issues: Whether GST can be levied on the assignment of leasehold rights in land and the buildings thereon for a lump sum consideration, and whether the impugned adjudication order should remain stayed pending further consideration.

Analysis: The writ petition raised a GST liability question concerning transfer of leasehold rights allotted by MIDC to a third party. The Court noted that a Division Bench of the Gujarat High Court had taken the view that such a transaction amounts to an assignment or transfer of benefits arising out of immovable property and would not fall within the scope of supply under Section 7(1)(a) of the GST Act read with Schedule II and Schedule III, nor attract levy under Section 9. In view of that view and the absence of any contrary view placed before it, the Court treated the issue as requiring consideration and granted interim protection.

Outcome: The effect and implementation of the adjudication order dated 6 January 2025 remained stayed, and the petition was directed to be listed with the connected matter.

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