Transfer of Leasehold Rights not a supply of services; GST not leviable where benefits of immovable property are transferred.

Whether assignment of long-term (95-year) leasehold rights constitutes a taxable supply under the Maharashtra GST framework was analysed by reference to the scope of supply (Section 7(1)) and Schedule II (land/building transactions). The court treated the transaction as an extinguishment and transfer of benefits arising out of immovable property, relied on analogous reasoning in prior high-court authority and on the relevance of a nil-rate notification for certain long-term leases, and found no requisite nexus with the transferor's business; accordingly the assignment is not a supply of services attracting GST and the impugned assessment order was quashed with the writ allowed for the assessee.

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Issues: Whether assignment/transfer of leasehold rights (95 year lease) by the lessee for consideration amounts to a supply of services attracting GST under the Maharashtra Goods and Services Tax Act, 2017 and related notifications.

Analysis: The Court examined Section 7(1) and Schedule II (Clause 2(b)) of the Maharashtra Goods and Services Tax Act, 2017 which deal with scope of supply and land/building transactions. The respondents treated the assignment as a taxable miscellaneous service under Notification No. 11/2017-Central Tax (Rate) dated 28.06.2017 and issued notice under Section 75 read with Section 73(5) of the Maharashtra Act, 2017. The Court analysed the nature of the transaction: the petitioner held a long-term (95 year) lease with transferable rights under the lease deed, and the transaction extinguished the petitioner's rights and transferred benefits arising out of immovable property to the assignee. The Court considered and followed the reasoning of the Gujarat High Court which held that assignment/sale/transfer of leasehold rights of industrial plot allotted by a State industrial development corporation constitutes transfer of benefits arising out of immovable property and is not a supply of services for levy under Section 9, and noted the relevance of Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017 granting nil rate for certain one-time upfront amounts for long-term leases by State industrial development corporations. The Court observed that the essential element of supply - being in the course or furtherance of the petitioner's business - was absent because the transaction related exclusively to transfer of immovable property benefits and had no nexus with the petitioner's business operations. The Court rejected classification of the assignment as 'other miscellaneous services' under the rate notification.

Conclusion: The assignment/transfer of the petitioner's leasehold rights is a transfer of benefits arising out of immovable property and does not constitute a supply of services attracting GST; the impugned order dated 30/12/2025 is quashed and set aside, and the writ petition is allowed in favour of the assessee.

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