TaxTMI 
TaxTMI 
2025 (1) TMI 516
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....th R/SPECIAL CIVIL APPLICATION NO. 19880 of 2023 With R/SPECIAL CIVIL APPLICATION NO. 690 of 2024 With R/SPECIAL CIVIL APPLICATION NO. 19418 of 2023 With R/SPECIAL CIVIL APPLICATION NO. 118 of 2024 With R/SPECIAL CIVIL APPLICATION NO. 21840 of 2023 With R/SPECIAL CIVIL APPLICATION NO. 21932 of 2023 With R/SPECIAL CIVIL APPLICATION NO. 17214 of 2023 With R/SPECIAL CIVIL APPLICATION NO. 17792 of 2023 With R/SPECIAL CIVIL APPLICATION NO. 2630 of 2024 With R/SPECIAL CIVIL APPLICATION NO. 2655 of 2024 With R/SPECIAL CIVIL APPLICATION NO. 18222 of 2023 With R/SPECIAL CIVIL APPLICATION NO. 18296 of 2023 With R/SPECIAL CIVIL APPLICATION NO. 1093 of 2024 With R/SPECIAL CIVIL APPLICATION NO. 18593 of 2023 With R/SPECIAL CIVIL APPLICATION NO. 18611 of 2023 With R/SPECIAL CIVIL APPLICATION NO. 19064 of 2023 With CIVIL APPLICATION (FOR AMENDMENT) NO. 1 of 2024 In R/SPECIAL CIVIL APPLICATION NO. 19064 of 2023 With R/SPECIAL CIVIL APPLICATION NO. 19111 of 2023 With R/SPECIAL CIVIL APPLICATION NO. 19173 of 2023 With CIVIL APPLICATION (FOR STAY) NO. 1 of 2025 In R/SPECIAL CIVIL APPLICATION NO. 19173 of 2023 With R/SPECIAL CIVIL APPLICATION NO. 1250 of 2024 With R/SPECIAL CIVIL APPLICATION NO. 1653 ....
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....s. Palak Kshatriya and learned advocate Mr. S.S. Iyer for the respective petitioners and learned Advocate General Mr. Kamal Trivedi with learned Assistant Government Pleader Mr. Vinay Bairagra and learned advocate Mr. Raj Batada and learned advocate Ms. Nidhi Vyas for the respective respondents. 2. Rule returnable forthwith. Learned Assistant Government Pleader Mr. Vinay Bairagra, learned advocate Mr. Raj Batada and learned advocate Ms. Nidhi Vyas waives service of notice of rule on behalf of the respective respondents. 3. In this group of petitions, the issue pertains to levy of goods and service tax on assignment of leasehold rights of the plot of land allotted on lease by Gujarat Industrial Development Corporation (GIDC) and building constructed thereon by the lessee or its successor (assignor) to a third party (assignee) on payment of lump-sum consideration considering the same as supply of service under the provisions of Central/State Goods and Service Tax Act, 2017 (For short "the GST Act"). 4. Special Civil Application No. 11345 of 2023 preferred by Gujarat Chamber of Commerce and Industry and its members is treated as a lead matter. 5. It is the case of the peti....
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....as under: "(A) Your Lordships be pleased to admit and allow the present Petition. (B) Your Lordships be pleased to issue a writ in the nature of Mandamus and hold that the notices/summons (Annexure A) issued by the Respondent Authorities are ex-facie illegal and without jurisdiction and further be pleased to hold and declare that the Respondents are not entitled to charge Goods and Service Tax on the transaction of assignment of the long-term Leasehold rights under the provisions of the Goods and Service Tax, 2017; And in the alternate, (C) Your Lordships be pleased to issue a writ of mandamus and hold and declare that the Respondent Authorities are liable to give Input Tax Credit under Section 16 of the Goods and Service Tax Act, 2017 as and when Goods and Service Tax is paid on the transaction of assignment of the long-term Leasehold rights to all the assignee's in whose favor the long-term Leasehold rights have been assigned; (D) Pending hearing and final disposal of the present petition, Your Lordships be pleased to stay the inquiry/proceedings and any consequential action being undertaken by the Respondents Authorities on the transaction....
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....s" is defined under section 2 (102) as under: ""services" means anything other than goods, money and securities but includes activities relating to the use of money or its conversion by cash or by any other mode, from one form, currency or denomination, to another form, currency or denomination for which a separate consideration is charged; [Explanation. - For the removal of doubts, it is hereby clarified that the expression "services" includes facilitating or arranging transactions in securities;]" [5] section 2 (105) defines "supplier" as under: ""supplier" in relation to any goods or services or both, shall mean the person supplying the said goods or services or both and shall include an agent acting as such on behalf of such supplier in relation to the goods or services or both supplied:" [6] Section 2 (107) defines a "taxable person" as under: "(107) "taxable person" means a person who is registered or liable to be registered under section 22 or section 24;" [7] Section 7 of the GST Act falling under Chapter III for levy and collection of tax defines the scope of supply as under: section 7 reads as under: ....
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....omission, clause(d) read as under: "(d) the activities to be treated as supply of goods or supply of services as referred to in Schedule II." [8] Schedule III refers to sub-section (2) of section 7 for excluding the activities or transactions which shall be neither treated as supply of goods nor as supply of services and includes Entry No.5 as "sale of land and, subject to clause(b) of paragraph 5 of Schedule II, sale of building." [9] Clause (b) of paragraph no.5 of Schedule II refers to supply of services as per sub-section (1A) of section 7 pertaining to construction of a complex building, civil structure or a part thereof including a complex or building intended for sale to a buyer, wholly or partly, except where the entire consideration has been received after issuance of completion certificate were required by the competent authority or after its first occupation whichever is earlier. Paragraph no. 5 of Schedule II reads as under: "5. Supply of services The following shall be treated as supply of services, namely:- (a) renting of immovable property; (b) construction of a complex, building, civil structure or a par....
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....article, shall, in respect of goods and services tax referred to in clause (5) of Article 279-A, take effect from the date recommended by the Goods and Services Tax Council.] [11] Clause (12A) of Article 366 of the Constitution of India, defines "goods and service tax" as under: "12-A) "goods and services tax" means any tax on supply of goods, or services or both except taxes on the supply of the alcoholic liquor for human consumption;]" [12] Clause (26A) of Article 366 of the Constitution of India defies "Services" as under: (26-A) "Services" means anything other than goods; :Finance Act, 1994 (Service Tax ): [13] Section 65B (44) of the Finance Act, 1994 defines "Services" as under: "(44) "service" means any activity carried out by a person for another for consideration, and includes a declared service, but shall not include- (a) an activity which constitutes merely,- (i) a transfer of title in goods or immovable property, by way of sale, gift or in any other manner; or (ii) such transfer, delivery or supply of any goods which is deemed to be a sale within the meaning of clause (29-A) of Art....
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....ry shall be treated as establishments of distinct persons. Explanation 4.-A person carrying on a business through a branch or agency or representational office in any territory shall be treated as having an establishment in that territory;" [14] Entry No. 41 of Notification No. 12/2017 dated 28.06.2017 has granted exemption from levy of GST on one Time upfront amount called as premium, salami, cost price, development charges or by any other name leviable in respect of the service, by way of granting long term (30 years, or more) lease of industrial plots, provided by the State Government Industrial Development Corporations or Undertakings to industrial units falling under Chapter Heading 9972 of Tariff Code as under: "One time upfront amount (called as premium, salami, cost, price, development charges or by any other name) leviable in respect of the service, by way of granting long term (thirty years, or more) lease of industrial plots, provided by the State Government Industrial Development Corporations or Undertakings to industrial units." 11. On conjoint reading of above provisions and notifications, it is required to be determined as to whether the....
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....ble property' for the purpose of Section 105, Transfer of Property Act." 12.2) It was submitted that an assignment of leasehold rights constitutes absolute transfer of right in immovable property which itself is immovable property as such transfer extinguishes all the rights of the transferor in the immovable property and snaps any legal relationship with the lessor, and the assignee becomes liable for obligations under the Lease Deed vis-a-vis the Lessor. It was submitted that since the assignor steps out of the equation entirely due to sale, there is no element of service in the transaction. In support of this submission, reliance was placed on the decision in case of Gopal Saran v. Satyanarayana reported in 1989 (3) SCC 56 wherein it is held as under: "10 .On the facts found, it cannot be said or even argued that there was any assignment by the tenant, "Assignment", it has been stated in Black's Law Dictionary, Special Deluxe Ed., p. 106, "is a transfer or making over to another of the whole of any property, real or personal, in possession or in action, or of any estate or right therein". It has further been stated as "The transfer by a party of all its....
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....Property Act, 1882, is a transfer of a right to enjoy such property, made for a certain time, express or implied, or in perpetuity, in consideration of a price paid or promised, or of money, a share of crops, service or any other thing of value, to be rendered periodically or on specified occasions to the transferor by the transferee, who accepts the transfer on such terms. 11. The transferor is called the lessor, the transferee is called the lessee, the price is called the premium, and the money, share, service or other thing to be so rendered is called the rent. 12. A lease contemplates, as observed in Byramjee Jeejeebhoy (P) Ltd. v. State of Maharashtra, "a demise or a transfer of a right to enjoy land for a term or in perpetuity in consideration of a price paid or promised or services or other things of value to be rendered periodically or on specified occasions to the transferor." The words "transfer of a right to enjoy such property" indicate that all rights of ownership are not transferred. The significance of those words as indicative of the limited estate transferred is apparent if contrasted with those in Section 54 where a sale is defined as a "transfer....
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....es in hotels and restaurants. The Court held: - "Like the hotelier, a restaurateur provides many services in addition to the supply of food. He provides furniture and furnishings, linen, crockery and cutlery, and in the eating places of today he may add music and a specially provided area for floor dancing and in some cases a floor show. The view taken by the English law found acceptance on American soil, and after some desultory dissent initially in certain states it very soon became firmly established as the general view of the law. The first addition of American Jurisprudence [ Vol. 46, p. 207, para 13] sets forth the statement of the law in that regard, but we may go to the case itself, Electa B. Merrill v. James W. Hodson [1915 B LRA 481] from which the statement has been derived. Holding that the supply of food or drink to customers did not partake of the character of a sale of goods the Court commented: "The essence of it is not an agreement for the transfer of the general property of the food or drink placed at the command of the customer for the satisfaction of his desires, or actually appropriated by him in the process of appeasing his appetite or thirst....
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....eof for cash, deferred payment or other valuable consideration; (f) a tax on the supply, by way of or as part of any service or in any other manner whatsoever, of goods, being food or any other article for human consumption or any drink (whether or not intoxicating), where such supply or service is for cash, deferred payment or other valuable consideration, and such transfer, delivery or supply of any goods shall be deemed to be a sale of those goods by the person making the transfer, delivery or supply and a purchase of those goods by the person to whom such transfer, delivery or supply is made;". It will be seen that the definition of tax on the sale or purchase of goods has been artificially expanded more particularly by sub-clause (f), with which we are concerned, where the distinction between "sale" and "service" has been done away with. In the present case, the well established distinction between "sale" and "service" would continue to apply in view of the definition of "sale" contained in Section 3(m). It will be noticed that the definition is a "means" and "includes" one. It is well settled that such definition is an exhaustive definition (see: P. Kasiling....
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...., the legislative intent to exclude immovable property is clearly discernible. 12.9) It was further submitted that the assignment of Leasehold rights is even otherwise not covered under Section 7 (1) (a) of the Act because: i. Assignment of the Leasehold rights is neither in the course of nor in furtherance of business as mentioned under Section 7 (1) (a) of the Act, 2017 and therefore also, it is not "Supply of Services". ii. The assignment of Lease hold rights is not a "business" as defined under 2 (17) of the Act, 2017 or "input" as defined under 2(59) of the GST Act, 2017. iii. The transaction of assignment is simpliciter selling/transferring of absolute rights in the land, it has nothing to do with the business of the Assignor nor it is in the course or furtherance of business and therefore, the said transaction does not fall within the purview of Section 7 (1) (a) of the Act, 2017 and therefore also, it is not "Supply of Services". 12.10) Learned Senior advocate Mr. Joshi further submitted the contention that since the transaction is covered in the Tariff, the same is taxable, is contrary to the judgment of Hon'ble Supreme Court in....
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....t I of the Seventh Schedule which was regarding tax on services was deleted. Even under List II, Entry Nos. 52 and 55 which were relating to entry tax and luxury tax were deleted whereas Entry No. 54 regarding tax on sales and purchases of goods as well as Entry No. 62 relating to entertainment tax were curtailed. It was further submitted that simultaneously, Article 246A of the Constitution was introduced for giving parallel power to the Parliament and State legislatures to impose "goods and services tax". It was submitted that the constitutional amendment read with the statement of objects and reasons clearly shows that the object of introducing GST regime was to subsume some of the indirect taxes so as to reduce cascading effect of taxes, however, the entries in List I and List II relating to stamp duty were left untouched. This shows that GST was not intended to be imposed on any transfer of immovable property. 13.1) Learned advocate Mr. Sheth further submitted that the term "service" was defined under Section 65B (44) of the Finance Act, 1994. There was specific exclusion of transfer of title in immovable property from the definition of "service" itself. Thus it was n....
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....e erstwhile service tax regime. 13.3) It was further submitted that proposed imposition of GST on assignment of leasehold rights leads to double taxation inasmuch as both stamp duty at rate equal to conveyance of land as well as GST are imposed which will lead to cascading effect of taxes which is specifically sought to be avoided by introduction of the GST regime. It was therefore, submitted that proposed imposition of GST is contrary to the object, purpose and scheme of the GST Acts as well as arbitrary in as much as it leads to double taxation. 13.4) Learned advocate Mr. Sheth placed reliance on the judgment of this Court in case of Munjaal Manishbhai Bhatt v/s Union of India reported in (2022) 104 GSTR 419 (Guj.) wherein it was observed that the intention of introduction of GST regime was not to change the basis of taxation of the Vat and service tax regime and that supply of land in every form was excluded from the purview of the GST Acts. 13.5) It was further submitted that what is assigned by the petitioners is not mere right to use land. In fact building was constructed on the land allotted by GIDC and the entire land along with building thereon h....
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....n value. If it is intangible, then a registered instrument would be necessary whatever the value. The "sales" in this case were oral: there was neither writing nor registration. That being the case, the transactions passed no title or interest and accordingly the petitioners have no fundamental right that they can enforce." (2) In case of State of Orissa v/s Titaghur Paper Mills Co. Ltd. reported in (1985) Supp. SCC 285, wherein it is held as under: "98. The meaning and nature of a profit a prendre have been thus described in Halsbury's Laws of England, Fourth Edition, Volume 14, paragraphs 240 to 242 at pages 115 to 117: "240. Meaning of 'profit a prendre' A profit a prendre is a right to take something off another person's land. It may be more fully defined as a right to enter another's land to take some profit of the soil, or a portion of the soil itself, for the use of the owner of the right The term 'profit a prendre' is used in contradistinction to the term 'profit a prendre', which signified a benefit which had' to be rendered by the possessor of land after it had come into his possession. A profit a prendre ....
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.... servient tenement in a particular manner or prevent the commission of some act on that tenement, a profit a prendre confers a right to take from the servient tenement some part of the soil of that tenement or minerals under it or some part of its natural produce or the animals ferae naturae existing upon it. What is taken must be capable of ownership, for otherwise the right amounts to a mere easement". In Indian law an easement is defined by section 4 of the Indian Easement Act, 1882 (Act No. V of 1882) as being ' a right which the owner or occupier of certain land possesses, as such, for the beneficial enjoyment of that land, to do and continue to do something, or to prevent and continue to prevent something being done, in or upon, or in respect of, certain other land not his own". A profit a prendre when granted in favour of the owner of a dominant heritage for the beneficial enjoyment of such heritage would, therefore, be an easement but it would not be so if the grant was not for the beneficial enjoyment of the grantee's heritage. 100. Clause (26) of section 3 of the General Clauses Act, 1897, defines "immovable property" as including inter alia "ben....
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.... plot of land; a hat or market; a right to possession and management of a saranjam; a malikana; a right to collect rent or jana: a life interest in the income of immovable property; a right of way; a ferry; and a fishery; a lease of land". 102. Having seen what the distinctive features of a profit a prendre are, we will now turn to the Bamboo Contract to ascertain whether it can be described as a grant of a profit a prendre and thereafter to examine the authorities cited at the Bar in this connection. Though both the Bamboo Contract in some of its clauses and the Timber Contracts speak of "the forest produce sold and purchased under this Agreement", there are strong countervailing factors which go to show that the Bamboo Contract is not a contract of sale of goods. While each of the Timber Contracts is described in its body as "an agreement for the sale and purchase of forest produce", the Bamboo Contract is in express terms described as "a grant of exclusive right and licence to fell, cut, obtain and remove bamboos...for the purpose of converting the bamboos into paper pulp or for purposes connected with the manufacture of paper." Further, throughout the Bamboo C....
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....otherwise leviable to tax under the Act. Reliance is placed in this regard upon judgement of this Court in the case of Chunilal Mayachand v/s State of Gujarat (1992) 86 STC 105 (Guj.). 13.8) It was therefore, submitted that the exclusion of sale of land and building as per Sr. no. 5 of Schedule III to the GST Acts has to be interpreted in light of legislative history as well as object and purpose of the statute to mean sale of immovable property which would cover sale of interest in land and benefits arising out of land and proposed imposition of tax under the GST Acts on such sale of interest in land and benefits arising out of land is wholly without jurisdiction, contrary to the object, purpose and scheme of the GST Acts, bad and illegal. It was therefore, submitted that in any case the consideration attributable to sale of building is ex-facie outside the purview of the GST Acts and proposed imposition of tax thereon is wholly without jurisdiction and illegal. 14. Learned advocate Mr. Rajat Bose for the petitioner in Special Civil Application No. 18296 of 2023 submitted that the consideration for transfer of leasehold rights paid to the original lessee is nothing but....
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.... levies stamp duty on the transfer of leasehold rights equivalent to rate of conveyance. It was pointed out that as per Article 265 of the Constitution of India, no tax can be levied or collected except by authority of law. It was therefore, submitted that no GST can be levied upon transaction of transfer of leasehold rights. 14.4) In support of his submissions, reliance was placed on the following decisions: (1) In case of Archaka Sundara Rama Dikshatulu v. Archakam Seshadri Dikshathulu and others reported in (1928) 54 MLJ 76, wherein it was argued that a lease for 99 years or for a long term in consideration of premium paid down is as much an alienation as a sale or mortgage and mere use of the word 'lease' or the fact that a long term is fixed would, having regard to the mischief which is sought to be guarded against by holding that service inam lands are not alienable make the lease valid. (2) In case of Rama Varma Tambaran v. Rraman Nayar reported in I.L.R., 5 Madras 89, there was kanam for 96 years and Innes and Muthuswami Aiyar JJ held that kanam was invalid by observing that there seems to be no real distinction between the mischief of such a tran....
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....it was held that right to conversion of leasehold land into freehold land cannot be permitted as the lessee can never acquire the status of an owner and transfer of leasehold rights cannot be construed as granting permission to convert the land into freehold land as transferee cannot become absolute owner of the property but has only a limited leasehold rights and ownership cannot be smuggled in through back door of lease. It was therefore, held that whether the term of the lease be 5 years, 50 years, 99 years or even 999 years, the transaction is only a lease and there is always a reversion which continues to vest in the owner in the entire term of the lease and the lessee even if for 999 years does not become the owner and freehold conversion is in the sole discretion of lessor. It was therefore, submitted by learned advocate Mr. Gupta that leasehold rights are required to be considered as an immovable property distinct from the ownership rights. 16. Learned advocate Mr. S.H. Iyer submitted that transfer of leasehold rights in the property cannot be considered as supply of services. 17. Learned Senior Advocate Mr. Deven Parikh appearing for the petitioner in Special Civil A....
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....hat allotment of house by Gaziabad Development Authority was an immovable property and not services of any kind. 17.3) Reliance was also placed on the decision of Hon'ble Apex Court in case of Commissioner, Central Excise and Customs, Kerala v. Limited and Toubro Limited reported in (2016) 1 Supreme Court Cases 170, wherein Hon'ble Apex Court while considering the levy of service tax on indivisible works contract held that same is not leviable prior to amendment in the Finance Act, 1994 with effect from 1.06.2007 as works contracts is a separate species of contract distinct from contracts for services simpliciter recognised by the world of commerce and the law and has to be taxed separately as such. 17.4) Reliance was placed on decision in case of Narne Construction Private Limited and others v. Union of India and others reported in (2012) 5 Supreme Court Cases 359, wherein Hon'ble Apex Court held as under: "8. Having regard to the nature of the transaction between the appellant-company and its customers which involved much more than a simple transfer of a piece of immovable property it is clear that the same constituted 'service' within the meani....
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....otographs, photo prints and photo negatives, which have "goods" component exigible to sales tax is constitutionally valid. Mr. Patil and Mr. Salman Khurshid, learned senior counsel who argued for these assessees/respondents, made vehement plea to the effect that the processing of photographs etc. was essentially a service, wherein the cost of paper, chemical or other material used in processing and developing photographs, photo prints etc. was negligible. This argument, however, is founded on dominant intention theory which has been repeatedly rejected by this Court as no more valid in view of 46th Amendment to the Constitution." 18. Learned advocate Mr. Hardik Modh for the petitioner submitted that transfer of leasehold rights is nothing but a capital asset as held by the Hon'ble Apex Court in case of R.K. Palshikar (HUF) v. Commissioner of Income Tax M.P. Nagpur reported in (1998) 3 Supreme Court Cases 594, wherein it is held as under: "8. The next question which we have to consider is whether the provisions of Section 12-B of the said Act can be brought into play, although, what was transferred was only lease hold interests in the lands in question. In this connectio....
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....rious ways. It was submitted that property refers not only to physical objects that are owned but also to rights of ownership. He invited the attention of the Court with regard to property defined in Corpus Juris Secundum wherein the property has been defined as under: "The word "property" has been defined and construed in various ways; it refers not only to physical objects that are owned but also to rights of ownership. The word "property" is a very comprehensive one. In addition to its meaning in the popular vernacular, it has a common-law definition as understood by the courts, and it may be defined in statute for a particular purpose or for a general purpose The construction of the word "property" depends on the context with which it is used. Commonly, the word "property" is used in two different senses. First, it is applied to external things that are the objects of rights or estates; that is, things that are the object of ownership. Second, it is applied to the rights or estates that a person may acquire in or to things. In strict legal parlance," "property" is used to designate a right of ownership or an aggregate of rights that are guaranteed and....
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....aching to the lease." 19.4) It was therefore, submitted that immovable property may be tangible or intangible right which relates to the thing as the sale is an absolute assignment whereas whatever right the lessee has, is sale of interest in land which is equivalent to sale of land. It was therefore, submitted that sale of leasehold rights cannot fall within the scope of supply of goods or services as it is not an activity but an event of transfer of leasehold right. It was submitted that prior to coming into force of GST, service tax was also not leviable on transfer of leasehold rights as the service tax is leviable on bilateral contract whereas deed of assignment is not a contract. 19.5) Reference was also made to commentary on principles of law of transfer by Shantilal Mohanlal Shah on the Transfer of Property Act, 1882 wherein it is opined that "there is a clear distinction between a contract which is still to be performed and of which specific performance may be sought and a conveyance by which title of property has actually passed". It was further pointed out that scope of Transfer of Property Act is stated to regulate and deal with the transfer of propert....
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....ted that it is invalid. The only objection is that Guruswamy Naidu and Venkatasubba Naidu have less shares in the partition deed than those shown in the partnership deed. If the distinction between the three concepts is borne in mind much of the confusion disappears. A partnership is a creature of contract. Under Hindu law a joint family is one of status and right to partition is one of its incidents. The income-tax law gives the Income-tax Officer a power to assess the income of a person in the manner provided by the Act. Except where there is a specific provision of the Income-tax Act which derogates from any other statutory law or personal law, the provision will have to be considered in the light of the relevant branches of law. A contract of partnership has no concern with the obligation of the partners to others in respect of their shares of profit in the partnership. It only regulates the rights and liabilities of the partners. A partner may be the karta of a joint Hindu family; he may be a trustee ; he may enter into a sub-partnership with others; he may, under an agreement, express or implied, be the representative of a group of persons; he may be a benamidar for another. ....
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....d decided that commission which accrued from January 1, 1946, ceased to be joint family property and that each became absolute owner of his share. Notwithstanding the partition, the income-tax authorities assessed the said total income as the income of the joint family. The Bombay High Court agreed with that view. But this court held that as the partition document was a genuine one, it was fully effective between the members of the family and therefore the income in respect of the divided property was not the income of the Hindu joint family. In that context, Hidayatullah J., speaking for the court, made the following observations : "The fact of a partition in the Hindu law may have no effect upon the position of the partner, in so far as the law of partnership is concerned, but it has full effect upon the family in so far as the Hindu law is concerned. Just as the fact of a karta becoming a partner does not introduce the members of the undivided family into the partnership, the division of the family does not change the position of the partner vis-a-vis the other partner or partners. The income-tax law before the partition takes note, factually, of the position of the kar....
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....onsistent with it. Otherwise, even principles of interpretation of statutes cannot be applied to it. A statute until it is repealed is living law. To attempt to imprison it within the sections in it is about as reasonable as to attempt to confine a stream within a pond. The water in the pond would soon become a stagnant pool and there would no longer be a living stream. General principles of law to the extent they are not specifically excluded are applicable to any enactment. With respect we consider the decision in Jogendra Mohan Sen v. Uma Nath Guha (1908) I.L.R. 35 Cal. 636, as laying down the correct law and do not agree with the decision in Ganga Bishun Singh v. Mahomed Jan (1906) I.L.R. 33Cal. 1193." (3) In case of Income Tax Officer v. Mani Ram Etc. reported in (1969) 72 ITR 203, wherein it is held as under: "7. The argument was that these sections apply to a case of a regular assessment and the enactment of these sections should be treated as a Parliamentary exposition of section 18A (3) of the earlier Act as referring only to a case of regular assessment. We are unable to accept this argument as correct. There is nothing in the 1961 Act to suggest that Pa....
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....come " in this Act may have a wider significance than would ordinarily be attributed to it. The Sub-section says that the Act " shall not apply to the following classes of income," and in the category that follows, Clause (v) runs:- Any capital sum received in commutation of the whole or a portion of a pension, or in the nature of consolidated compensation for death or injuries, or in payment of any insurance policy, or as the accumulated balance at the credit of a subscriber to any such Provident Fund. 16. Their Lordships do not think that any of these sums, apart from their exemption, could be regarded in any scheme of taxation of income, and they think that the clause must be due to the over anxiety of the draftsman-to make this clear beyond possibility of doubt. They cannot construe it as enlarging the word "income " so as to include receipts of any kind'-, which are not specially exempted. They do not think that the clause is of any assistance to the appellant." 19.10) Reliance was placed on the decision of Hon'ble Apex Court in case of D.G. Gose and Co.(Agents) Pvt. Ltd. v. State of Kerala and another reported in (1980) 2 Supreme Court Cases 410....
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....e of GST being GST on service under Heading 9954 with regard to construction services. Reference was made to Notification No. 11/2017 dated 28.06.2017 more particularly, Note No. 2 wherein the rate of GST applicable at 9% would consider the value of land or undivided share of land, as the case may be, in such supply of services to be deemed to 1/3rd of total amount charged for such supply. 19.13) Reference was also made to Explanation which has been inserted with effect from 25.01.2018 wherein it is explained that total amount means the sum total of consideration charged for aforesaid service and amount charged for transfer of land or undivided share of land as the case may be including by way of lease or sublease. It was therefore, submitted that as per Entry No. 16 of the said notification, services by Central Government, State Government, etc., on supply of land or undivided share of land by way of lease or sub-lease where such supply is a part of composite supply of construction of flats etc. provides nil rate of GST wherein it is further provided that nothing contained in this entry shall apply to an amount charged for such lease or sub lease-in excess of one third of....
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....nd building intangible rights such as easement rights, rights to ferries and fisheries which would also include equity of redemption in mortgaged property, the interest of a mortgagee and other rights which cannot come within the ordinary exception of actual physical moveable property and those which cannot be included in the definition mentioned in Sale of Goods Act. It was therefore, submitted that there is a distinction between moveable and immoveable property and the leasehold rights would partake the character of immovable property as it is right in land and it affects only immovable property being incorporeal right as during the lease, lessee would be entitled to exclusive possession to enjoy the interest in the property. 19.18) It was submitted that as per the guiding rule of statutory interpretation, purposive interpretation is required to be made of provisions of section 7 of the GST Act. 19.19) Reliance was placed on the decision of Hon'ble Apex Court in case of Gopal Saran v. Satyanarayana reported in (1989) 3 Supreme Court Cases 56, wherein interpretation of word "assignment" is made as under: "10. On the facts found, it cannot be said or even....
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....may include any estate or interest in lands, either legal or equitable, as well as easements and incorporeal hereditaments. Technically, land signifies everything comprehending all things of a permanent nature, and even of an unsubstantial provided they be permanent. Ordinarily, the term is used as descriptive of the subject of ownership and not the ownership. Land is the material of the earth, whatever may be the ingredients of which it is composed, weather, soil, rock, or other substance, and includes free or occupied space for an indefinite distance upwards as well as downwards, subject to limitations upon the use of airspace imposed, and rights in the use of airspace granted by law. 12. According to the Law Lexicon (Reprint edn. 1987) by Ramanatha Iyer p. 701, the word 'land" in the ordinary legal sense comprehends everything of a fixed or permanent nature and, therefore, growing trees, land includes the benefit arise out of the land and things attached to the earth or permanently means everything attached to the earth and also the share in or charges on, the revenue or rent of villages or other defined portions of territory. Land includes the bed of the sea below ....
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.... subject matter of controversy which is before Hon'ble Supreme Court in case of Ahmed G.H. Arif and others v. Commissioner of Wealth Tax, Calcutta reported in (1969) 2 Supreme Court Cases 471, wherein Hon'ble Apex Court has analysed the property vis-a-vis assets as under: "8. Now "property" is a term of the widest import and subject to any limitation which the context may require, it signifies every possible interest which a person can clearly hold or enjoy. The meaning of the word "property" has come up for examination before this Court in a number of cases. Reference may be made to one of them in which the question arose whether Mahantship or Shebaitship which combines elements of office and property would fall within the ambit of the word "property" as used in Article 19 (1) (f) of the Constitution. It was observed in the Commissioner, Hindu Religious Endowments, Madras v. Shri Lakshmindra Thirtha Swamiar of Sri Shirur Mutt(1) that there was no reason why that word should not be given a liberal and' wide connotation and should not be extended to those well recognised types of interests which had the insignia or characteristics of proprietary right. Although Mahantsh....
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....factor in the Judicial Committee coming to the conclusion that the salami paid under the leases was a capital asset. This court in Member for the Board of Agricultural Income-tax, Assam v. Sindhurani Chaudhurani [1957] 32 ITR 169; [1957] SCR 1019 denned "salami" as follows: "The indicia of salami are (1) its single non-recurring character and (2) payment prior to the creation of the tenancy. It is the consideration paid by the tenant for being let into possession and can be neither rent nor revenue but is a capital receipt in the hands of the landlord." It is true that in that case the payment was paid in a single lump sum, but that was not a conclusive test, for salami can be paid in a single payment or by instalments. The real test is whether the said amount paid in a lump sum or in instalments is the consideration paid by the tenant for being let into possession. This court again in Chintamani Saran Nath Sah Deo v. Commissioner of Income-tax [1961] 41 ITR 506 [1961] 2 SCR 790 considered all the relevant decisions on the subject in the context of licences granted to the assessee to prospect for bauxite in some cases for six months and in others for a year or two....
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....e dubbed as an immovable property' itself, since, it is not envisaged like this under various other provisions of the GST Act, some of which are referred to hereunder:- (i) Section 2 (119) of the GST Act, which defines the 'Works Contract, wherein the term 'immovable property is used in the sense that it has to be any immovable property in tangible form ie in physical form (ii) Section 17 (5) (c) and (d) of the GST Act dealing with Apportionment of credit and blocked credits, once again uses the term an immovable property (other than plant and machinery) (iii) Section 12 of the IGST Act, which applies by virtue of Section 2 (120) of the Act, whereby words and expressions not defined in the Act shall have the same meaning as assigned to them, inter-alia, in the said IGST Act. The said Section 12 (3) refers to the term 'an immovable property with reference to its physical location so as to determine the place of supply of services. (iv) Section 13 (4) of the IGST Act dealing with place of supply of services where location of supply or recipient is outside India uses the term Immovable property. 21.4) It was submitted that t....
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....hange, merely because, the lessee of GIDC effects absolute transfer thereof in favour of an assignee, leaving no right whatsoever with him in respect of the said lease-hold land. 21.8) It was therefore, submitted that the interest in land would remain the same with the recipient of service. whether he gets the same supplied directly by GIDC in form of lease-hold agreement or from the original lessee of GIDC in form of assignment of lease-hold rights and in both these transactions, there is transfer of lease-hold rights in his favour, which cannot be considered as "sale of immovable property. 21.9) In support of his submissions reliance was placed on the following decisions: 1) In case of Legal Hiers of Deceased Fakir Chand Ambaram Patel v. OI of Amruta Mills Limited reported in 2002(3) GLH 367, wherein it is held as under: "40. To summarise : [a] Leasehold interest is an intangible asset, which is valuable in nature though the valuation may differ from case to case depending upon the unexpired period of lease. [b] Such an asset is transferable subject to the same terms and conditions as may be stipulated in the lease deed." ....
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.... Tribunal appears to be justified in recording that the letting of vacant land by way of lease or license irrespective of the duration or tenure for construction of building or temporary construction for use in the course or furtherance of business or commerce is taxable w.e.f. 'st July, 2010 in view of Clause (v) of Explanation 1 to Section 65 (105) (zzzz) of the Finance Act, 1994. 24. So far as the term lease is concerned, it may be recorded that it has not been defined under the Finance Act, 1994. The term "lease" would cover a lease for any period including a lease in perpetuity, as will follow from simple reading of Section 65 (90a). The Finance Act, 1994 does not carve out any distinction in the mater of long term lease/lease in perpetuity or lease for short duration, so far as the charging section is concerned. 25. The word "lease" as contemplated by the Transfer of Property Act, vis-a-vis 'license' has been explained by the Apex Court in the case of Associated Hotels of India Ltd. vs. R.N. Kapoor reported in AIR (1959) SC 12262, Pr. 28, wherein it has been held that if the document creates an interest in the property, it is a lease and if it furthe....
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....bject and purpose of its imposition. No activity of the nature mentioned in the inclusive provision can thus be left out of the net of the tax. Once this law, in terms of the substantive provisions and the Schedule, treats the activity as supply of goods or supply of services, particularly in relation to land and building and includes a lease, then, the consideration therefor as a premium/one-time premium is a measure on which the tax is levied, assessed and recovered. We cannot then probe into the legislation any further. xxx 20. In the passing, we are of the opinion that the High Court of Judicature of Allahabad, while considering the demand, not arising out of the GST, but under the Finance Act in relation to the services of renting of immovable property of Greater Noida, has rightly arrived at the conclusion that the same was a taxable service and on the consideration received, the service tax could have been levied and demanded. Once we agree with the reasoning of the Division Bench, then, we do not feel it necessary to reproduce the paragraphs in the Division Bench judgment. We are not in agreement with the learned senior counsel appearing for the petitioner....
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....immovable, is transferred intervivos and which is not otherwise specifically provided for by Schedule 1-A or Schedule 1-B, as the case may be. 28. "Lease" has been defined under section 105 of the Transfer of Property Act and also in section 2 sub section (16) of the Indian Stamp Act 1899. According to section 2 sub section (16) of the Indian Stamp Act, "Lease" means a lease of immovable property and includes a Patta, a kabuliyat or any instrument by which tolls of any description are let, any writing on an application for lease intended to signify that the application is granted and finally any instrument by which mining lease is granted in respect of minor minerals as defined in clause (e) of section 3 of the Mines and Minerals (Regulation and Development) Act, 1957. 29. From a plain reading of Section 54 and Section 105 of the Transfer of Property Act, there cannot be any doubt in our mind that in case of a lease, there is a partial transfer and the right of reversion remains with the lessor. Whereas in case of a sale, there must be an absolute transfer of ownership and not some rights only as in the case of a lease. Therefore, it is to be considered whether th....
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....of the said Act would apply. We cannot agree with these observations of the Division Bench of the High Court. 33. As mentioned earlier, the said document consists of a single deed of assignment of lease. The Division Bench construed the transfer of the land as an assignment of lease whereas the transfer of the building appurtenant thereto to be through a deed of sale. It appears to us that the High Court has clearly not interpreted the true essence of the lease deed executed between the lessor and the lessees. 34. The learned counsel appearing on behalf of the appellant has brought to our notice that the said lease deeds categorically provided that not only the land but the appurtenants attached thereto are also governed by its covenants as per para "k" of the said deed which states that every transfer, assignment, relinquishment, mortgage or sublet of the property shall be bound by the covenants of the deed along with the assignee being answerable to the Noida authorities in all respects. 35. The appellant has also brought to our notice that para "g" of the said deed states that the lessee/ sub lessee would only be allowed to make any alterations in the ....
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....Noida Authorities, the lease deed would not have provided for such a clause wherein the Noida authorities have a right over the buildings and the appurtenants on the land in case of any failure of the sub-lessee to remove such constructions at the time of re-entry. Thus the said lease deed specifically provides for a right of reversion to the land and appurtenances thereto including buildings, on the termination or expiry of the lease. It is thus clear that the buildings and all other appurtenants attached to the land become a part of the assigned transfer through lease and not a separate sale. 39. Moreover section 3 of the Transfer of Property Act states that when an immovable property such as land is transferred by way of assignment of lease, all appurtenances thereto attached to the earth such as buildings and fixtures thereto would also stand assigned. Accordingly, on a plain reading of the deed of assignment, we are of the view that the assignees became liable to the lessor, namely Noida on the covenants running with the land. In conclusion, we are, therefore of the view that the deed presented for registration was a deed of assignment. 40. Before we part wit....
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....erence was made to Serial No.345 where Group 99837 which prescribes sub-heading 998371 as market research services and to serial no.356 Group 99839 wherein other professional, technical and business services are classified to show the distinction that rental or leasing services involving own or leased non-residential property is classified as a real estate services vis-a-vis other services which are shown to demonstrate that the price paid for providing leasing services of leased non residential property is a real estate service. 9) Reference was also made to Serial No.716 of Group 99979 providing other miscellaneous services having sub-heading 999792 agreeing to do an act. It was therefore, submitted that agreeing to transfer the leasehold rights is nothing but agreeing to do an act which would also be considered as supply of services. 10) In case of T.N. Kalyana Mandapam Assn. v. Union of India and others reported in (2004) 5 Surpeme Court Cases 632, wherein it is held as under: "40. In the present case, service tax levied on services rendered by mandap-keeper as defined in the said Act under sections 65, 66 and 67 of the Finance Act has been challenged....
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....of this, the contention of the appellant on this aspect is not well founded. xxxx 53. It is also emphasized that a tax cannot be struck down on the ground of lack of legislative competence by enquiring whether the definition accords what the layman's view of service. It is well settled that in matters of taxation laws, the court permits greater latitude to pick and chose objects and rates for taxation and has a wide discretion with regard there to. We may in this context refer to the decision of Mafatlal Industries Ltd. and Others V/s. Union of India and Others (supra) "In the matter of taxation laws, the court permits a great latitude to the discretion of the legislature. The State is allowed to pick and choose districts, objects, persons, methods and even rates for taxation, if it does so reasonably. The courts view the laws relating to economic activities with greater latitude than other matters." 54. Therefore, a levy of service tax on a particular kind of service could not be struck down on the ground that it does not conform to a common understanding of the word "service" so long as it does not transgress any specific restriction contai....
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.... find that processed seeds which are products of plants have been shown as 'articles or things'. Similarly, Item No. (30) of the said Schedule is 'fish', which is an animate object, it has been shown under heading 'articles of things'. On the strength of the meaning assigned to articles and things in the Fifth Schedule of the Act, it was urged that hatching of chicks is also production of 'articles or things'. It is, no doubt, true that processed seeds and fish have been described under the heading 'articles or things' in the Fifth Schedule. Generally, the same words in a statute have the same meaning whenever used in that statute, but they may also have different meaning in different provisions of the same statute. In Shamrao Vishnu Parulekar V/s. The District Magistrate, Thana, 1956 SCR 644, it was held, thus "But it is contended by Mr. Chatterjee that the expression 'grounds on which the order has been made' occurring in sec. 3(3) is, word for word, the same as in sec. 7, that the same expression occurring in the same statute must receive the same construction, that what sec. 3 requires is that on the making of an order fo....
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....ve the meanings respectively assigned to them in those Acts. Thus, meaning of only such words which are not defined under TRAI Act but defined under those Acts could be taken into consideration. It is furthermore well known that the definition of a term in one statute cannot be used as a guide for construction of a same term in another statute particularly in a case where statutes have been enacted for different purposes. 42. In Hari Khemu Gawali V/s. Deputy Commissioner of Police, Bombay and another, AIR 1956 SC 559, a Constitution Bench of this Court stated: "It has been repeatedly said by this Court that it is not safe to pronounce on the provisions of one Act with reference to decisions dealing with other Acts which may not be in pari materia." 43. In M/s. MSCO. Pvt. Ltd. V/s. Union of India and Others, 1985 1 SCC 51, this Court held: "4. The expression 'industry' has many meanings. It means 'skill', 'ingenuity', 'dexterity', 'diligence', 'systematic work or labour', 'habitual employment in the productive arts', 'manufacturing establishment'ect. But while construing a word which ....
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....th any cognate subject" 46. Reliance has been placed upon a decision of this Court in Deputy Chief Controller of Imports and Exports, New Delhi V/s. K.T. Kosalram and Others, 1970 3 SCC 82 wherein the provisions of the Indian Tariff Act, 1934 were called in aid to interpret import licence granted under the Imports and Exports Control Act, 1947 on the premise that both relates to the larger import scheme of the Government of India. In that case, the Central Government made Imports Control Order under the Imports and Exports Control Act. Item No. 67 (1) in Schedule I, Part V contained a very large number of various components of a printing press corresponding to Item No. 72(2) of the Indian Tariff Act which consolidates the law relating to customs duties. This Court opined that although dictionary meanings are helpful in understanding the general sense of the word but it cannot control a situation where the scheme of the statutes or the instrument considered as a whole clearly conveys a somewhat different shade of meaning. In that fact situation, it was opined: "It is not always a safe way to construe a statute or a contract by dividing it by a process of etymologic....
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....ecision of UP Authority for Advance Ruling in case of Remarkable Industries Private Limited reported in 2023 SCC Online UP AAR-GST 14, wherein it is held as under: "38. The activity of assignment is in the nature of agreeing to transfer one's leasehold rights. It does not amount to further sub-leasing, as the applicant's rights as per the Deed stands extinguished. Neither does it create fresh benefit from land other than the leasehold right. It is like a compensation for agreeing to do the transfer of the applicant's rights in favour of the assignee. It is a service classifiable under Other miscellaneous service (SAC 999792) and taxable @ 18% under SI No. 35 of Notification No. 11/2017 CT (Rate) dated 28/06/2017. xxx 40. Under the GST provisions, whether activity relating to sale/Transfer of leasehold Land and building and also to obtain permission for such sale would be taxable? Question: a) In the instant case the GST as applicable on the upfront called premium amount as a cost of land and building. Answer: The activity of the applicant is in the nature of agreeing to transfer one's leasehold rights. It does not amount ....
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....ard. 8.2 The exemption notification should be strictly construed and given a meaning according to legislative intendment. The Statutory provisions providing for exemption have to be interpreted in light of the words employed in them and there cannot be any addition or subtraction from the statutory provisions. 8.3 As per the law laid down by this Court in a catena of decisions, in a taxing statute, it is the plain language of the provision that has to be preferred, where language is plain and is capable of determining a defined meaning. Strict interpretation of the provision is to be accorded to each case on hand. Purposive interpretation can be given only when there is an ambiguity in the statutory provision or it results in absurdity, which is so not found in the present case. 8.4 Now, so far as the submission on behalf of the respondent that in the event of ambiguity in a provision in a fiscal statute, a construction favourable to the assessee should be adopted is concerned, the said principle shall not be applicable to construction of an exemption notification, when it is clear and not ambiguous. Thus, it will be for the assessee to show that he comes....
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...., if the taxes are separate and distinct imposts and levied on the different aspects, then there is no overlapping in law. Following was laid down in paragraph 31: "31. Indeed, the law 'with respect to' a subject might incidentally 'affect' another subject in some way; but that is not the same thing as the law being on the latter subject. There might be overlapping; but the overlapping must be in law. The same transaction may involve two or more taxable events in its different aspects. But the fact that there is an overlapping does not detract from the distinctiveness of the aspects, Lord Simonds in Governor General in Council v. Province of Madras [1945] FCR 179 P.C. at 193 : (AIR 1945 PC 98 at p. 101 ), in the context of concepts of Duties of Excise and Tax on Sale of Goods said: "...The two taxes, the one levied on a manufacturer in respect of his goods, the other on a vendor in respect of his sales, may, as is there pointed out, in one sense overlap. But in law there is no overlapping. The taxes are separate and distinct imposts. If in fact they overlap, that may be because the taxing authority, imposing a duty of excise, finds it convenient to....
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....oup of petitions pertains to levy of goods and service tax on assignment of leasehold rights by the lessee in whose favour GIDC has granted lease of the plot of land for industrial purpose. 23. Chapter III of the GST Act provides for levy and collection of tax. The GST Act is based upon levy of tax on the concept of "supply" of goods or services. Scope of supply is provided under section 7 of the GST Act. Sub-section(1)(a) thereof stipulates that for the purpose of the GST Act, the expression "supply" includes all forms of supply of goods or services or both such as sale, transfer, barter, exchange, license, rental, lease or disposal made or agreed to be made for a consideration by a person in the course or furtherance of business. 24. Therefore, it is necessary to determine as to whether the assignment of leasehold rights of the land along with the building thereon would be covered by the supply of goods or supply of services because as per the provision of section 7 (1) (a), supply of goods or services or both covers (i) sale (ii) transfer (iii) barter (iv) exchange (v) license (vi) rental (vii) lease or (viii) disposal made or agreed to be made for a consideration by a per....
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....reads as under: "3. Establishment and incorporation. (1) For the purposes of securing and assisting in the rapid and orderly establishment, and organisation of industries in industrial areas and industrial estates in the State of Gujarat [and for the purpose of establishing commercial centres in connection with the establishment and organisation of such industries] [These words were inserted by Gujarat 11 of 1986, Section 4 (w.e.f. 01-07-1986).], there shall be established by the State Government by notification in the Official Gazette, a Corporation by the name of the Gujarat Industrial Development Corporation. (2) The Corporation shall be a body corporate with perpetual succession and a common seal, and may sue and be sued in its corporate name, and shall be competent to acquire, hold and dispose of property, both movable and immovable, and to contract, and do all things necessary, for the purposes of this Act." 31. The functions and powers of the GIDC are prescribed under Chapter III of the GIDC Act for growth and development of industries in the State of Gujarat by establishing and managing the industrial estate and develop such industrial area. ....
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....notification. Therefore, when the industrial unit is allotted land by the GIDC, no GST is required to be paid under the provisions of GST Act as per entry no. 41 of Notification No. 12/2017. 37. As per the lease deed executed by GIDC in favour of industrial unit for allotment of plot of land, the industrial unit is entitled to transfer such leasehold land in favour of any third party with the prior permission of the GIDC on payment of transfer charges as prescribed by GIDC. However, such transfer fee would be subject to levy of GST at the rate of 18% under the GST Act as it would amount to supply of services by GIDC giving permission to transfer the leasehold rights by the industrial unit in favour of a third party who will become the lessee-assignee in place of the original allottee-assignor of the plot by the GIDC. Deed of assignment of leasehold rights which is executed by the lessee-assignor in favour of the third party is also subjected to levy of stamp duty under the provisions Gujarat Stamp Act, 1958 as well as it is compulsorily required to be registered under the provisions of the Registration Act, 1908. 38. Hence the contention on behalf of the petitioner that trans....
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....t to note that what the petitioner has transferred by way of assignment/sale is leasehold rights which is over and above the actual physical plot of land and building, encompasses incorporeal ownership right in such land and building such as the right to possess, to enjoy the income from, to alienate, or to recover ownership of such right from one who has improperly obtained the title. Therefore, immovable property includes in addition to right of ownership, aggregate of rights that are guaranteed and protected by the further agreement or contract between the owner and the lessee. Therefore, as held in case of Schweihs v. Chase Home Finance, LLC reported in 2015 IL App(1st) 140683, property is nothing but a "bundle of sticks", i.e. collection of individual rights which, in certain combinations, constitute property and law determines only which sticks are in bundle of a person. 42. In the above context, it would be germane to refer to section 54 of the Transfer of Property Act, 1882 which defines "sale" as transfer of ownership in exchange for a price paid or promised or part-paid and part-promised. It further defines "sale how made" as transfer in the case of tangible immovable ....
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....: "(n) "Lease" means a lease of immovable property and includes also (a) a patta; (b) a Kabuliyat or other undertaking in writing, not being a counterpart of a lease, to cultivate, occupy, or pay or deliver rent for, immovable property; (c) any instrument by which tolls of any description are let; (d) any writing on an application for a lease intended to signify that the application is granted." 48. The instrument of lease is liable to levy of stamp duty as per Article 30 of the Schedule-I of the Gujarat Stamp Act, 1958, where lease is more than ninety eight years, same duty is prescribed as is leviable for conveyance under Article 20.Therefore, as per the provisions of the Gujarat Stamp Act, instrument of lease is considered at par with the conveyance for the sale of immovable property. 49. Learned Advocate General Mr. Kamal Trivedi has drawn distinction between "immovable property" and "interest in immovable property" i.e. difference between tangible rights and intangible rights in the immovable property so as to submit that immovable property as such is not liable to levy of GST whereas interest in immovable property like leaseh....
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.... way of grant of right to use immovable property or for carrying out or coordination of construction work by way of lodging accommodation by a hotel, by way of accommodation in any immovable property for organizing marriage or any services ancillary to the services referred to in other clauses, shall be the location at which the immovable property is located. 52. Therefore, the place of supply of service may be at the location of the immovable property, however when the lessee-assignor transfers absolute right by way of sale of leasehold rights in favour of the assignee, the same shall be transfer of "immovable property" as leasehold rights is nothing but benefits arising out of immovable property which according to the definition contained in other statutes would be "immovable property". Therefore, the question of supply of services or place of supply of services does not arise in view of the above analysis of the provisions of the GST Act as the term "immovable property" is not defined under the GST Act. 53. Lord Wensleydale reaffirmed by Lord Halsbury and Lord Simonds in Micklehwait, (1885) 11 Ex 452 referred to in Tenant v. Smith (1892) AC 150 154 (HL) and St. Aubyn v AG,....
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....ntire issue is governed only by the language of the provisions. 59. Section 7 of the GST Act read with Schedule II and Schedule III thereof indicates wide scope for interpretation of concept of supply which is the basis to levy the tax as per the charging provision of section 9 of the GST Act. 60. Statement of object and reasons stated in Central Goods and Service Tax Bill, 2017 reads as under: "STATEMENT OF OBJECTS AND REASONS Presently, the Central Government levies tax on, manufacture of certain goods in the form of Central Excise duty, provision of certain services in the form of service tax, inter-State sale of goods in the form of Central Sales tax. Similarly, the State Governments levy tax on and on retail sales in the form of value added tax, entry of goods in the State in the form of entry tax, luxury tax and purchase tax, etc. Accordingly, there is multiplicity of taxes which are being levied on the same supply chain. 2. The present tax system on goods and services is facing certain difficulties as under- (i) there is cascading of taxes as taxes levied by the Central Government are not available as set off against the taxes being ....
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.... 5. The Central Goods and Services Tax Bill, 2017, inter alia, provides for the following, namely:- (a) to levy tax on all intra-State supplies of goods or services or both except supply of alcoholic liquor for human consumption at a rate to be notified, not exceeding twenty per cent. as recommended by the Goods and Services Tax Council (the Council); (b) to broad base the input tax credit by making it available in respect of taxes paid on any supply of goods or services or both used or intended to be used in the course or furtherance of business; (c) to impose obligation on electronic commerce operators to collect tax at source, at such rate not exceeding one per cent. of net value of taxable supplies. out of payments to suppliers supplying goods or services through their portals; (d) to provide for self-assessment of the taxes payable by the registered person: (e) to provide for conduct of audit of registered persons in order to verify compliance with the provisions of the Act; (f) to provide for recovery of arrears of tax using various modes including detaining and sale of goods, movable and immovable property of defau....
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....ovisions of section 7 has to be read in terms of substantive provision and Schedules which treats the activity as supply of service, particularly, in relation to land and building and includes a lease. The consideration, therefore, as premium/one time premium is a measure on which tax is to be levied, assessed and recovered. Therefore, when the GIDC allots the plot of land on lease of 99 years and charges premium for such allotment followed by periodical lease rent to be paid, is to be considered as supply of service in relation to land and building read with clause 5(a) of Schedule-II which specifically provides that renting of immovable property shall be treated as supply of services. 63. However, when such leasehold right is transferred by the lessee-assignor in favour of a third person-assignee by execution of deed of assignment, it would be nothing but transfer of an "immovable property" in view of the settled legal position to the effect that lease for 99 years or for a long term in consideration of premium paid is as much an alienation as sale or mortgage. 64. Corpus Juris Secundum relied upon on behalf of the petitioner defines the word "property" which depends on the....
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....ed considering such value being the value of immovable property which is transferred. 67. In such circumstances, the contention raised on behalf of the petitioner that leasehold rights are nothing but interest in immovable property as per the provision of section 105 read with section 108 (j) of the Transfer of Property Act constituting absolute transfer of right in such property because transfer of such leasehold right extinguishes the estate of the transferor-lessee-assignor in the immovable property and all legal relationships with lessor-GIDC are severed and third party-assignee becomes lessee liable for obligation under the assignment deed vis-à-vis the lessor-GIDC. As the assignor transfers leasehold rights after receiving the consideration as determined on the basis of value of such leasehold rights, such transaction therefore would of an "immovable property" and cannot be considered as "supply of services" as held by Hon'ble Apex Court in case of Gopal Saran v. Satya Narayana reported in (1989) 3 Supreme Court Cases 56 wherein definition of "assignment" as stated in Black's Law Dictionary, Special Deluxe Edition page 106, is referred to as assignment means "is....
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.... transfer on such terms." 35. In the second paragraph of the Section, it is expressly stated that the price so paid in consideration of the transfer is called "the premium, and the money, share, service, or other thing to be so rendered, is called the rent." 36. The definition of "immoveable property" given in Section 3, para 1 of that Act is in the negative, and is not exhaustive. Therefore, the definition given in Section 3 (26) of the General Clauses Act (X of 1897) will apply to the expression used in this Act, except as modified by the definition in the first clause of Section 3. According to the definition given in section 3 (26) of the General Clauses Act, "immoveable property" shall include land, benefits to arise out of land, and things attached to the earth, or permanently fastened to anything attached to the earth." In short, the expression 'immoveable property' comprehends all that would be real property according to English Law and possible more. Thus, every interest in immovable property 'or a benefit arising out of land, will be "immovable property" for the purpose of section 105, Transfer of property Act." 70. The Hon'ble Apex Court ....
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....nature and also covers categories which are not expressly mentioned therein. We are unable to agree. A particular expression is often defined by the Legislature by using the word 'means' or the word 'includes'. Sometimes the words 'means and includes' are used. The use of the word' ' indicate that "definition is a hard-and-fast definition. and no other meaning can be assigned to the expression that is put down in definition." [See Gough v. Gough, (1891) 2 QB 665; Punjab Land Development and Reclamation Corpn. Ltd. v. Presiding Officer, Labour Court, (1990 (3) SCC 682, at p. 717]. The word 'includes' when used, enlarges the meaning of the expression defined so as to comprehend not only such things as they signify according to their natural import but also those things which the clause declares that they shall include. The words 'means and includes', on the other hand, indicate "an exhaustive explanation of the meaning which, for the purposes of the Act, must invariably be attached to these words or expressions."' [See : Dilworth v Commissioner of Stamps, (1899 AC 99 at pp. 105-106 (Lord Watson);1 Mahalakshmi Oil Mills v. State of A....
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....detailed discussion decided to defer imposition of tax on land and building and thereafter, clause 5 of Schedule III of the GST Act clearly excludes sale of land and building which fortifies the intention of the GST Council not to impose tax on transfer of immovable property continuing the underlying object of erstwhile service tax regime. 77. In case of Munjaal Manishbhai Bhatt v. Union of India reported in (2022) 104 GSTR 419 (Guj), this court has observed that the intention of introduction of GST regime was not to change the basis of taxation of the Value Added and Service Tax regime and that supply of land in every from was excluded from the purview of GST Act. 78. Moreover, in the facts of the various cases, GIDC had only allotted the plot of land to the lessee who constructed the building and developed the land to run the business or industry for which such plot of land was allotted. Therefore, what is assigned by the lessee/assignor to the assignee for a consideration is not only the land allotted by GIDC on lease but the entire land along with building thereon which was constructed on such land. The entire land and building is therefore, transferred along with leaseho....
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....ordingly the petitioners have no fundamental right that they can enforce." 80. In case of State of Orissa v. Titaghur Paper Mills Co. Ltd reported in (1985) Supp. SCC 285, it is held as under : "98. The meaning and nature of a profit a prendre have been thus described in Halsbury's Laws of England, Fourth Edition, Volume 14, paragraphs 240 to 242 at pages 115 to 117: "240. Meaning of 'profit a prendre' A profit a prendre is a right to take something off another person's land. It may be more fully defined as a right to enter another's land to take some profit of the soil, or a portion of the soil itself, for the use of the owner of the right The term 'profit a prendre' is used in contradistinction to the term 'profit a prendre', which signified a benefit which had' to be rendered by the possessor of land after it had come into his possession. A profit a prendre is a servitude. 241. Profit a prendre as an interest in land. A profit a prendre is an interest in land and for this reason any disposition of it must be in writing.A profit a prendre which gives a right to participate in a portion only of some specified pr....
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....e animals ferae naturae existing upon it. What is taken must be capable of ownership, for otherwise the right amounts to a mere easement". In Indian law an easement is defined by section 4 of the Indian Easement Act, 1882 (Act No. V of 1882) as being ' a right which the owner or occupier of certain land possesses, as such, for the beneficial enjoyment of that land, to do and continue to do something, or to prevent and continue to prevent something being done, in or upon, or in respect of, certain other land not his own". A profit a prendre when granted in favour of the owner of a dominant heritage for the beneficial enjoyment of such heritage would, therefore, be an easement but it would not be so if the grant was not for the beneficial enjoyment of the grantee's heritage. 100. Clause (26) of section 3 of the General Clauses Act, 1897, defines "immovable property" as including inter alia "benefit to arise out of land". The definition of "immovable property" in clause (f) of section 2 of the Registration Act 1908, illustrates a benefit to arise out of land by stating that immovable property "includes...rights to ways, lights ferries, fisheries or any other ....
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....t the distinctive features of a profit a prendre are, we will now turn to the Bamboo Contract to ascertain whether it can be described as a grant of a profit a prendre and thereafter to examine the authorities cited at the Bar in this connection. Though both the Bamboo Contract in some of its clauses and the Timber Contracts speak of "the forest produce sold and purchased under this Agreement", there are strong countervailing factors which go to show that the Bamboo Contract is not a contract of sale of goods. While each of the Timber Contracts is described in its body as "an agreement for the sale and purchase of forest produce", the Bamboo Contract is in express terms described as "a grant of exclusive right and licence to fell, cut, obtain and remove bamboos...for the purpose of converting the bamboos into paper pulp or for purposes connected with the manufacture of paper...." Further, throughout the Bamboo Contract, the person who is giving the grant, namely, the Governor of the State of Orissa, is referred to as the "Grantor." While the Timber Contracts speak of the consideration payable by the forest contractor, the Bamboo Contract provides for payment of royalty. "Royalty" i....
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.... (at pages 522-3): "These are periodical payments, to be made by the lessee under his covenants in consideration of the benefits which he is granted by the lessor. What these benefits may be is shown by the extract from the lease quoted above, which illustrates how inadequate and fallacious it is to envisage the royalties as merely the price of the actual tons of coal. The tonnage royalty is indeed only payable when the coal or coke is gotton and despatched: but that is merely the last stage. As preliminary and ancillary to that culminating act, liberties are granted to enter on the land and search, to dig and sink pits, to erect engines an machinery, coke ovens, furnaces and form railways and , roads. All these and the like liberties show how fallacious it is to treat the lease as merely one for the acquisition of a certain number of tons of coal, or the agreed item of royalty as merely the price of each ton of coal." Though the case before the Judicial Committee was of a lease of a coal mine and we have before us the case a grant for the purpose of felling, cutting and removing bamboos with various other rights and licences ancillary thereto, the above observati....
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....s only a right to enter upon the land to take a part of the produce thereof for its own benefit. Further, it is also pertinent that while this right to enter upon the contract areas is described as a "licence", under clause XXV of the Bamboo Contract the Respondent (company has the right to take on lease a suitable site or sites of its choice within the contract areas for the erection of store houses, sheds, depots, bungalows, staff offices, agencies and other buildings of alike nature required fourth purpose of its business. The terms and conditions of the Bamboo Contract leave no doubt that it confers upon the Respondent Company a benefit to arise out of land and it would thus be an interest in immovable property. As the grant is of the value exceeding Rs. 100, the Bamboo Contract is compulsorily registrable. It is, in fact, not registered. This is, however, immaterial because it is a grant b the Government of an interest in land and under section Registration Act it is exempt from registration. The High Court was, therefore, right in holding that the Bamboo Contract was a grant of a profit prendre, though the grant of such right not being for the beneficial enjoyment of any land....
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....d of service tax on renting of immovable property on lease for any period and the term of lease would not determine the character of service of renting on property under section 65 (105) (zzzz) of the Finance Act, 1994 as now under Schedule II, clause 5(a) renting of immovable property is deemed to be supply of services. Therefore, there is a thin line of distinction as to renting of immovable property and assignment of such leasehold rights in immovable property for a consideration. In facts of the case, therefore, such assignment of leasehold right for a consideration in immovable property would be out of scope of purview of the supply of service as it would amount to sale of immovable property in form of land and building which would not be covered by definition of section 7 (1) (a) read with clause 5 to Schedule III of the Act. (3) Therefore, merely because GIDC is having title of the ownership over the land in question would not be sufficient to exclude the assignment of leasehold rights to be included as supply of service as levy of GST would depend upon the nature of transaction in question. In facts of the case when the lessee/assignor transfers the land having lea....
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.... for consideration. Therefore, reliance placed on the decision in case of T.N. Kalyana Mandapam Assn.(supra), for levy of service tax on the mandap-keeper and caterer service provided by them cannot be applied in the facts of the case, as in case of catering service provided by mandap-keeper it was a tax on service and not a tax on sale or purchase of goods by applying doctrine of pith and substance whereas in the facts of the case there cannot be any element of service for assignment of leasehold rights of the land and building as interest in leasehold rights of land and building would be transfer/sale of the immovable property. (7) Reliance placed on the decision of Apex Court in case of Venkateswara Hatcheries (P) Ltd.(supra) wherein it is observed that as per principle of interpretation of statute that external aids to other statutes cannot be imported for definition of a word in the statute as the word occurring in the provisions of the Act must take its colour from the context in which they are so used. In other words, for arriving at the true meaning of a word, the said word should not be detached from the context. Therefore, in the facts of the case when legislativ....
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....erty as leasehold rights transferred by lessee/assignee is with the concurrence of lessor GIDC in facts of the case and therefore, transfer charges paid by the assignee, would be subject to levy of GST but at the same time consideration paid by the assignee to the lessee/assignor would amount to transfer of immovable property which would be out of purview of provision of section 7 (1) (a) of the GST Act read with Schedule II and Schedule III thereof. (11) Contention of the respondent that activity of lessee/assignor to transfer the leasehold rights is in nature of compensation for agreeing to do the transfer in favour of the assignee is a service classifiable under other miscellaneous service under Group 999792 and taxable at the rate of 18% under serial no.35 of Notification No. 11/2017-Central Tax (Rate) dated 28.06.2017 would not cover the nature of transaction as consideration received by lessee/assignee is not in nature of premium but is a consideration for outright sale of leasehold rights which cannot be equated with subleasing in any manner as tried to be applied by Uttar Pradesh Authority for Advance Ruling (GST) in case of Remarkable Industries Private Limited re....