TaxTMI 
TaxTMI 
2025 (12) TMI 312
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....ticles 226 and 227 of the Constitution of India assails the correctness and validity of show cause notice dated 15.09.2025 rendered under Section 74 of the Central Goods & Service Tax Act, 2017 (hereinafter referred to as 'the Act' for short), inter alia considering the assignment of lease hold rights by the petitioner in favour of M/s. LM Wind Power Blades India Private Limited as supply of service under Section 7(1)(a) of the Act and classified under Heading 9972 of Tariff Code. 5. The brief facts leading to filing of the present petition is that Gujarat Industrial Development Corporation (hereinafter referred to as 'GIDC'), which is established under the Gujarat Industrial Development Act, 1962, acts as a nodal agency of Government of Gujarat for the purpose of development of industrial areas /estates. GIDC gives lands to industries on lease, generally for a period of 99 years. GIDC issues an allotment letter to the industry desiring to take plots developed by the GIDC. Allotment letter would set various terms and conditions on which the allotment is being made, including the method and manner in which premium is required to be paid. 5.1 GIDC had originally allotted two su....
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.... 5.3. It is the case of the petitioner that thereafter the petitioner was served with a show cause notice dated 15.09.2025 for the tax period 2019-20 under Section 74 of the Act, which inter alia demanded Rs. 34,83,00,000/- as GST on transfer of leasehold rights in favour of M/s. LM Wind Power Blades India Private Limited on the premise that execution deed and subsequent lease is considered as taxable value of supply of service. 6. Mr. Tushar Jarwal, learned advocate for the petitioner has submitted that the issue is no more res integra pursuant to the decision of this Court in the case of Gujarat Chamber of Commerce, Industries & Ors Vs. Union of India & Ors., rendered in Special Civil Application No. 11345 of 2023. 7. Ms. Nidhi Vyas, learned advocate was unable to controvert the proposition that the issue is now covered by the decision of Gujarat Chamber of Commerce, Industries & Ors.,(supra). It is shocking to note that though the SLP is filed in the month of August, 2025, still it is in diary number and no efforts are made by the Officer to see that the matter gets circulated before the Hon'ble Apex Court and appropriate orders are obtained. 8. This Court, in the case ....
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.... of supply chain by converging any tax that was being levied on the supply of goods or services to be converged in Goods and Service tax to be levied under the GST Act. 62. In view of the legislative intention, section 7 of the GST Act which provides for the scope of supply of good or services or both for the purpose of the GST Act includes all forms of supply of goods or services or both by any form such as transfer, sale, 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. Therefore, considering the settled legal position as held by the Hon'ble Supreme Court and other High Courts from time to time, it is true that any lease or letting out of a building including commercial, industrial, residential complex for business either wholly or partly would be "supply of service". Therefore, reading the provisions of the Act together and harmoniously to understand the nature of levy and the object and purpose of its imposition, no activity of the nature mentioned in the inclusive provision of section 7 of the GST Act can be left out of the net of tax. Simultaneously, the provisions....
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....and (4) of section 9, subsection (1) of section 11, sub-section (5) of section 15 and sub-section (1) of section 16 of the GST Act on the basis of recommendations of the GST Council. 66. As per the notification no. 11/2017, lease of property is included in Heading No. 9954 relating to construction services which provides rates of GST involving transfer of land or undivided share of land, as the case may be, and value of such supply shall be equivalent to the total amount charged for such supply less the value of transfer of land or undivided share of land, as the case may be, and value of such transfer of land or undivided share of land shall be deemed to be 1/3rd of the total amount charged for such supply and total amount means sum total of consideration charged for the 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. Therefore, levy of GST on construction services are exclusive of 1/3rd of total amount charged for such supply which includes transfer by way of lease or sub-lease meaning thereby even for levy of GST on construction services, value of the land by way of lease is....
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....trasted which flows in section 54 where a sale is defined as "transfer of ownership in exchange for a price". Therefore, while assignment conveys the whole interest in the property which passes to the assignee along with rights and liability to sue and be sued upon the covenants in the original lease. XXX XXX XXX 73. Therefore, the scope of "supply of services" would not include transfer of leasehold rights as supply of service as it would be transfer of "immovable property" being a benefit arising out of immovable property consisting of land and building. 74. Clause 5 of Schedule III of the GST Act clearly provides that sale of land cannot to be treated as supply of goods or services. Therefore, leasehold rights which are to be considered as sale of land would be out of purview of the provisions of scope of supply as per section 7 of the GST Act. 75. As the GST Act is nothing but a levy of tax upon all the indirect taxes which were levied under different legislation, it would be germane to refer to definition of "service" as provided in section 2(102) of the GST Act to mean as anything other than goods, money and securities. Considering such def....
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....ct. XXX XXX XXX 81. Therefore, the contention of the respondents that by excluding only sale of land and building as per Schedule-III would not amount to transfer of leasehold rights as the interest in immovable property being an intangible form would be covered by the scope of supply of service, is not tenable as transaction of assignment is nothing but absolute transfer of right and interest arising out of the land which would amount to transfer/sale of immovable property which cannot be said to be "service" as contemplated under the provisions of GST Act. Moreover, assignment/transfer of rights would be out of scope of supply of service. 82. In view of above discussion and analysis of the provisions of section 7 read in context of the facts of the case, the decisions relied upon on behalf of the respondent are required to be dealt in support of the proposition that interest in immovable property cannot be considered as an immovable property as it is not envisaged as such in the GST Act, as immovable property is nothing but bundle of rights and right to give such property on lease is one of such rights and further transfer of the right to occupy or poss....