Leasehold rights transfer in an industrial plot was held outside GST as a non-service transaction.

Assignment of the entire leasehold interest in a GIDC industrial plot for consideration was treated as a transfer of benefits arising from immovable property, not as a supply of service under GST. Relying on its earlier decision on the same issue, the Gujarat High Court held that the provisions governing the scope of supply and taxation of services did not apply to such transfer of leasehold rights. The transfer was therefore held not liable to GST, and the impugned show cause notice could not be sustained.

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Issues: Whether the assignment and transfer of leasehold rights in a GIDC industrial plot for consideration is a supply of service liable to GST.

Analysis: The issue was treated as covered by the earlier decision of the Court on the same question. The transfer by a lessee of the entire leasehold interest in the plot was held to amount to a transfer of benefits arising from immovable property, not a supply of service within the scope of supply. On that basis, the provisions governing scope of supply and taxation of services were held inapplicable to such assignment of leasehold rights.

Conclusion: The transfer of leasehold rights was held not to be liable to GST, and the impugned show cause notice could not stand.

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