2025 (1) TMI 1307 - HC - GST

Levy of GST on assignment of the leasehold rights - seeking declaration that Respondents are not entitled to charge Goods and Service Tax on the transaction of assignment of the long-term Leasehold rights under the provisions of the Goods and Service Tax 2017 - HELD THAT - The issue of levy of GST on assignment of the leasehold rights is now no more res integra in view of the decision of this Court in the case of Gujarat Chamber of Commerce and Industries and others vs. Union of India and others 2025 (1) TMI 516 - GUJARAT HIGH COURT wherein it is held that assignment by sale and transfer of leasehold rights of the plot 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. The grievance raised in this petition is required to be considered. Accordingly as such without going into the factual matrix as narrated in the petition the impugned show cause notice is hereby quashed and set aside as the facts are not disputed by the respondent authority for assignment of the leasehold rights by the petitioner - petition disposed off.

Summary

In the case before the Gujarat High Court, the petitioner sought relief under Article 226 of the Constitution of India, challenging a Show Cause Notice dated 09.07.2024, issued by the Respondent Authorities, as being "ex-facie illegal and without jurisdiction." The petitioner contended that the transaction of assignment of long-term leasehold rights should not be subject to Goods and Service Tax (GST) under the provisions of the GST Act, 2017. Alternatively, the petitioner sought a declaration for entitlement to Input Tax Credit (ITC) under Section 16 of the GST Act and a refund of ITC already reversed.The court referenced its prior decision in Gujarat Chamber of Commerce and Industries vs. Union of India, which clarified that the "assignment by sale and transfer of leasehold rights" constitutes a transfer of benefits arising out of "immovable property" and is not subject to GST as per section 9 of the GST Act. Consequently, the court quashed the impugned show cause notice, aligning with the precedent that such transactions are outside the GST's purview. The petition was disposed of, and the rule was made absolute to the extent of the relief granted, with no order as to costs.