TaxTMI 
TaxTMI 
2026 (1) TMI 701
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....els for the parties, the petition is taken up for final hearing. 3. The challenge is to the show cause notice dated 20-12-2024 issued by respondent No. 1 calling upon the petitioner to show cause as to why goods and services tax amounting to Rs. 27,00,000/- should not be demanded and recovered from the petitioner under sub-section (1) of Section 74 of the Central Goods and Services Tax Act, 2017 (for short, "Act of 2017") towards non-payment of GST on transfer of leasehold rights. 4. The notice has been issued under Section 74(1) of Act of 2017 on the ground that the petitioner has concealed a transaction where he has assigned his leasehold rights in the plot belonging to MIDC to Sumit Madanlal Pagariya, Proprietor of M/s. Rishita Ind....
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....business or commerce, either wholly or partly, is a supply of services." 6. As could be seen, sub-clause (b) of clause 2 of Schedule II indicates any lease or letting out of the building including a commercial, industrial or residential complex for business or commerce, either wholly or partly, is a supply of services. 7. In the case before us, the transaction under question is assignment of leasehold rights by the petitioner in favour of assignee-M/s. Rishita Industries, which admittedly is not a lease nor does it amount to sub-lease. In fact, in the show cause notice issued by respondent No. 1, he has categorically mentioned that the transaction under question does not amount to sub-lease as the petitioner's right stands extinguishe....
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....erred the rights to M/s. Rishita Industries with prior consent of MIDC. 10. This transaction on the face of record constitute transfer of immovable property by the petitioner to M/s. Rishita Industries. The transaction pertains exclusively to transfer of benefits arising out of an immovable property and has no nexus whatsoever with the business of the petitioner company. Consequently, the essential element of supply of service in the course of business or in furtherance of business is completely absent. On this point, a profitable reference could be had to the judgment of Gujarat High Court in a case of Gujarat Chamber of Commerce and Industry v. Union of India, (2025) 170 taxmann.com 251 (Gujarat), wherein identical issue was considered....
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....perty held by it on such conditions as may be deemed proper by the Corporation. In exercise of such powers, GIDC enters into lease agreement of 99 years for allotment of land for industrial purpose in the industrial estate developed by it. 33. The ownership of the plot of land allotted by GIDC remains with it and only the right of possession and occupation are transferred by way of leasehold rights in favour of allottee lessee. 34. Schedule-II of the GST Act provides for activities or transactions to be treated either as supply of goods or supply of services. As per clause 5(a) of Schedule II renting of immovable property is to be treated as supply of services. Therefore, allotment of land which is undisputedly an immovabl....
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....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 th....
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....ot of land allotted by GIDC to the lessee in favour of third party-assignee for a consideration shall be assignment/sale/transfer of benefits arising out of "immovable property" by the lessee-assignor in favour of third party-assignee who would become lessee of GIDC in place of original allottee-lessee. In such circumstances, provisions of section 7(1)(a) of the GST Act providing for scope of supply read with clause 5(b) of Schedule II and Clause 5 of Schedule III would not be applicable to such transaction of assignment of leasehold rights of land and building and same would not be subject to levy of GST as provided under section 9 of the GST Act." 13. Thus, the Gujarat High Court held that assignment by sale and transfer of le....