2025 (4) TMI 496 - HC - GST

Levy 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 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. As far as the present case is concerned a Show Cause Notice dated 2nd August 2024 was issued to the Petitioner and adjudication order dated 6th January 2025 is also passed by Respondent No. 3. In these circumstances in this Petition the effect and implementation of the order dated 6th January 2025 shall remain stayed - Place the above Writ Petition alongwith Writ Petition No. 14434 of 2023 and other connected Writ Petitions on 15th April 2025 at 2.30 p.m.

Summary

**Summary of the Judgement:**The Bombay High Court addressed whether the Goods and Services Tax (GST) applies to the assignment of leasehold rights of land and buildings by the lessee to a third party for a lump sum consideration. The GST Authority considered this transaction a "supply of service" under the Central/State Goods and Services Act, 2017. The Petitioners argued that the issue is covered by a precedent set by the Gujarat High Court, which held that such an assignment is a transfer of benefits arising from "immovable property" and not subject to GST under Section 9 of the GST Act.The Gujarat High Court's decision stated that the provisions of Section 7(1)(a) of the GST Act, along with clauses 5(b) of Schedule II and 5 of Schedule III, do not apply to such transactions. The Bombay High Court acknowledged the significance of this issue and noted that similar matters are pending in other writ petitions, such as Siemens Limited V/S Union of India & Others and Chambers of Small Industries Association V/S The State of Maharashtra & Others. In these cases, the Court has stayed the adjudication of Show Cause Notices.In the current case, a Show Cause Notice was issued on 2nd August 2024, and an adjudication order was passed on 6th January 2025. The Court has stayed the effect and implementation of this order. The writ petition is scheduled to be heard on 15th April 2025, alongside related petitions. The order will be digitally signed and can be acted upon via fax or email.