2025 (4) TMI 1377 - 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 - The Division Bench of the Gujarat High Court in GUJARAT CHAMBER OF COMMERCE AND INDUSTRY ORS. 2025 (1) TMI 516 - GUJARAT HIGH COURT has taken a 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 the third 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 third party (assignee) 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 CGST 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 CGST as provided under Section 9 of the CGST Act. In the facts of the present case what is challenged by the Petitioner is the Impugned Order dated 30th January 2025 passed by Respondent No. 2. Petition disposed off.

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 to a third party for lump-sum consideration. The GST Authorities treated this as a supply of service under the CGST Act, 2017. The Petitioner relied on the Gujarat High Court's Division Bench decision in Gujarat Chambers of Commerce and Industry v. Union of India (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 CGST Act, as Section 7(1)(a), Schedule II Clause 5(b), and Schedule III Clause 5 do not apply.Noting no contrary authority, the Bombay High Court recognized this as a significant issue also raised in other petitions (e.g., Siemens Limited v. Union of India), where adjudication was stayed. The Court granted ad-interim relief by staying the operation of the impugned order dated 30.01.2025 and directed that this petition be heard along with connected petitions on 28.04.2025. The order was digitally signed and authorized for immediate effect upon production.