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2025 (5) TMI 841 - HC - GSTLevy of GST - assignment of lease hold 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 - The Division Bench of the Gujarat High Court in in the case of Gujarat Chambers of Commerce and Industry and Others Vs. Union of India and Others 2025 (1) TMI 516 - GUJARAT HIGH COURT has taken the view that the assignment by sale or transfer of leasehold rights of the plot of land allotted by the Gujarat Industrial Development Corporation (GIDC) to the lessee or its successor (assignor) in favour of a 3rd party (assignee) for consideration shall be an assignment/sale/ transfer of benefits arising out of immovable property by the lessee-assignor in favour of a 3rd party who would then become a lessee of GIDC in place of the original allottee-lessee. In such circumstances the Gujarat High Court held that the 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 a transaction and the same would not be subject to levy of GST as provided under Section 9 of the GST Act. Considering that one High Court has already taken this view and no contrary view is placed here it is found that this is an important issue that needs to be addressed by this Court. In fact this issue has been raised in other Petitions as well such as Siemens Limited V/S Union of India Others and Chambers of Small Industries Association Another V/S The State of Maharashtra Others. In the case of Siemens Limited as well as in Chambers of Small Industries Association this Court has stayed the adjudication of the Show Cause Notices. Place the above Writ Petition along with Writ Petition No. 4487 of 2025 on 10th June 2025.
The Bombay High Court addressed whether Goods and Services Tax (GST) applies to the assignment of leasehold rights of MIDC-allotted land and buildings by the lessee to a third party for a lump sum consideration. The GST Authority treated this as a supply of service under the Central/State Goods and Services Tax Act, 2017.The Court relied on a Division Bench decision of the Gujarat High Court in Gujarat Chambers of Commerce and Industry v. Union of India (3 Jan 2025), which held that such assignment constitutes a "sale/transfer of benefits arising out of immovable property" and is not subject to GST under Section 9 of the GST Act. Specifically, Section 7(1)(a) read with clause 5(b) of Schedule II and clause 5 of Schedule III do not apply to this transaction.Given the absence of contrary authority, the Bombay High Court recognized this as a significant issue pending determination. It noted similar petitions (Siemens Ltd. v. Union of India and Chambers of Small Industries Association v. State of Maharashtra) where adjudication of Show Cause Notices was stayed.In the present case, a Show Cause Notice dated 31 July 2024 and an adjudication order dated 6 January 2025 were challenged. The Court ordered a stay on the effect and implementation of the adjudication order and posted the matter for further hearing on 10 June 2025.Key holding: The assignment of leasehold rights of MIDC land to a third party is not liable to GST as it is considered a transfer of immovable property benefits, exempt under the GST Act provisions cited.
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