GST on leasehold rights petitions deferred to 2026, issues on Section 7 CGST "supply" scope kept open

HC, in a batch of petitions challenging the constitutional validity of certain CGST provisions relating to levy of GST on assignment of leasehold rights in industrial plots and constructed buildings, did not adjudicate the merits. The Court deferred final hearing to 6 February 2026, subject to overnight part-heard matters, and directed petitioners to immediately serve requisite notices and file affidavits of service. With these procedural directions, the petitions were formally disposed of, leaving all substantive issues on GST levy and scope of "supply" open for future determination.

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1. ISSUES PRESENTED AND CONSIDERED

1.1 Whether interim protection against coercive steps pursuant to impugned show cause notices and/or orders under the CGST regime should be granted to the petitioners in the batch of matters pending final adjudication.

1.2 Whether notice to the Attorney General is required in petitions wherein the constitutional validity of provisions of the CGST Act has been challenged, and consequent directions regarding service and pleadings.

1.3 Case management directions regarding listing, tagging of connected petitions, and timelines for completion of pleadings in the batch of matters concerning levy of GST and challenges to the CGST Act.

2. ISSUE-WISE DETAILED ANALYSIS

Issue 1 - Interim protection against coercive steps based on impugned show cause notices and/or orders

Interpretation and reasoning

2.1 The Court recorded that in some of the matters within the batch, ad-interim orders had already been granted earlier.

2.2 The Court noted that the petitioners relied upon a decision of another High Court holding GST not leviable on assignment of leasehold rights in specified circumstances, and that the said decision has been appealed with notice issued by the Supreme Court. The Court, however, did not adjudicate the substantive GST issue at this stage and chose to defer the hearing of all matters in the batch to a later date.

2.3 Considering that the substantive questions, including the effect of the Gujarat High Court decision and the levy of GST in similar transactions, are yet to be decided, the Court deemed it appropriate to preserve the status quo and protect the petitioners from adverse actions in the meantime.

Conclusions

2.4 The Court directed that, until the next date of hearing, in all matters in the batch, no coercive steps shall be taken against the petitioners based upon the impugned show cause notices and/or orders, if already made.

Issue 2 - Notice to the Attorney General in petitions challenging constitutional validity of CGST Act provisions

Legal framework (as discussed)

2.5 The Court noted that in some petitions in the batch there is a challenge to the constitutional validity of provisions of the CGST Act, and that in such matters notice to the Attorney General is necessary.

Interpretation and reasoning

2.6 The Court observed that notices had already been issued to the Attorney General in some such matters and that it was brought to its attention that there are additional petitions in the batch where constitutional validity of provisions of the CGST Act is also under challenge.

2.7 To ensure that all constitutional challenges are properly addressed and that the Union is adequately represented through the Attorney General, the Court considered it appropriate to issue notice in all such petitions where vires of CGST provisions are questioned.

Conclusions

2.8 The Court directed that in all petitions where the constitutional validity of provisions of the CGST Act has been challenged, notice be issued to the learned Attorney General.

2.9 Petitioners in such constitutional challenges were directed to take immediate steps to serve the said notice and to file an affidavit of service.

Issue 3 - Case management: adjournment, completion of pleadings, and tagging of connected matters

Interpretation and reasoning

2.10 Having heard counsel and in view of the pendency of substantial questions (including those relating to GST on assignment of leasehold rights and constitutional challenges), the Court decided to defer the final hearing of all matters in the batch.

2.11 To facilitate an effective and consolidated hearing, the Court granted liberty to parties to file further pleadings and set a uniform outer limit for completion of pleadings.

2.12 The Court was informed of other writ petitions involving similar or connected issues and found it appropriate to list and "tag" those petitions along with the present batch for being heard together.

Conclusions

2.13 The Court directed that all pleadings in these matters must be completed by 25 January 2026.

2.14 The Court ordered that Writ Petition (ST) No. 36498 of 2025, Writ Petition (ST) No. 35437 of 2025 and Writ Petition (ST) No. 29874 of 2025 be tagged along with the present batch.

2.15 All the matters in the batch were directed to stand over to 6 February 2026 at 3.00 p.m., subject to overnight part-heard matters.

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