2025 (5) TMI 554 - HC - GST

Levy of GST - assignment of leasehold rights of a plot of land allotted on lease by the Maharashtra Industrial Development Corporation (MIDC) and the buildings constructed thereon by the lessee to a third party on the payment of a lump sum consideration - HELD THAT - In the case of Siemens Limited this Court has stayed the adjudication of the show cause notice issued to Siemens Limited. In this Writ Petition what was originally challenged was the Show-cause Notice issued to the Petitioner. However while the Petition was pending the said Show-cause Notice was adjudicated and an order has been passed on 28th February 2025 which is also assailed in the Writ Petition by amending the Writ Petition. This amendment was allowed by us today by passing an Order in Interim Application No. 7750 of 2025. Considering these facts in the present Writ Petition also the impugned Order dated 28th February 2025 shall also remain stayed.

Summary

The Bombay High Court addressed whether Goods and Services Tax (GST) applies to the assignment of leasehold rights of MIDC-allotted land and buildings constructed thereon, transferred for a lump sum consideration. The GST authorities treated such assignment as a "supply of service" under the Central/State GST Act, 2017. The Petitioners relied on the Gujarat High Court's Division Bench ruling in Gujarat Chambers of Commerce and Industry & Others v. Union of India & Others (2025), which held that the assignment of leasehold rights by a lessee to a third party constitutes a transfer of benefits arising from "immovable property." Consequently, Section 7(1)(a) of the GST Act and related provisions in Schedules II and III do not apply, and such transactions are not subject to GST under Section 9.The Bombay High Court noted no contrary precedent and recognized the issue's significance, also pending in related petitions such as Siemens Limited v. Union of India & Others (Writ Petition No. 14434 of 2023). The Court stayed the impugned GST adjudication order dated 28 February 2025 and will hear these matters collectively on 10 June 2025 for directions on further proceedings.Key holdings include the reliance on the Gujarat High Court's interpretation exempting such leasehold assignment from GST and the interim stay on enforcement actions pending final adjudication.