TMI Blog2025 (1) TMI 516X X X X Extracts X X X X X X X X Extracts X X X X ..... property or is supply of goods or supply of services in the course or furtherance of business so as to levy GST as per section 9 (1) of the GST Act at the rate which may be notified by the Government on recommendations of the GST Council? HELD THAT:- Sub-clause(a) of section 14 of the GIDC Act empowers the GIDC to acquire and hold such property, both movable and immovable as may be necessary for the performance of any of its activities and to lease, sell, exchange or otherwise transfer any property held by it on such conditions as may be deemed proper by the Corporation. In exercise of such powers, GIDC enters into lease agreement of 99 years for allotment of land for industrial purpose in the industrial estate developed by it - The ownership of the plot of land allotted by GIDC remains with it and only the right of possession and occupation are transferred by way of leasehold rights in favour of allottee-lessee. Even if the assignment of leasehold rights on the land on charge of one time upfront amount by the GIDC for allotment of plot of land to the industrial unit is covered within the scope of supply of services as per clause 5(a) of the Schedule II read with section 7 (1) of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for business either wholly or partly would be supply of service . Therefore, reading the provisions of the Act together and harmoniously to understand the nature of levy and the object and purpose of its imposition, no activity of the nature mentioned in the inclusive provision of section 7 of the GST Act can be left out of the net of tax - when the GIDC allots the plot of land on lease of 99 years and charges premium for such allotment followed by periodical lease rent to be paid, is to be considered as supply of service in relation to land and building read with clause 5(a) of Schedule-II which specifically provides that renting of immovable property shall be treated as supply of services. Thus, the scope of supply of services would not include transfer of leasehold rights as supply of service as it would be transfer of immovable property being a benefit arising out of immovable property consisting of land and building. GIDC had only allotted the plot of land to the lessee who constructed the building and developed the land to run the business or industry for which such plot of land was allotted. Therefore, what is assigned by the lessee/assignor to the assignee for a considerati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of 2023 With R/SPECIAL CIVIL APPLICATION NO. 1093 of 2024 With R/SPECIAL CIVIL APPLICATION NO. 18593 of 2023 With R/SPECIAL CIVIL APPLICATION NO. 18611 of 2023 With R/SPECIAL CIVIL APPLICATION NO. 19064 of 2023 With CIVIL APPLICATION (FOR AMENDMENT) NO. 1 of 2024 In R/SPECIAL CIVIL APPLICATION NO. 19064 of 2023 With R/SPECIAL CIVIL APPLICATION NO. 19111 of 2023 With R/SPECIAL CIVIL APPLICATION NO. 19173 of 2023 With CIVIL APPLICATION (FOR STAY) NO. 1 of 2025 In R/SPECIAL CIVIL APPLICATION NO. 19173 of 2023 With R/SPECIAL CIVIL APPLICATION NO. 1250 of 2024 With R/SPECIAL CIVIL APPLICATION NO. 1653 of 2024 With R/SPECIAL CIVIL APPLICATION NO. 3497 of 2024 With R/SPECIAL CIVIL APPLICATION NO. 4795 of 2024 With R/SPECIAL CIVIL APPLICATION NO. 8347 of 2024 With R/SPECIAL CIVIL APPLICATION NO. 8807 of 2024 With R/SPECIAL CIVIL APPLICATION NO. 10180 of 2024 With R/SPECIAL CIVIL APPLICATION NO. 10501 of 2024 With R/SPECIAL CIVIL APPLICATION NO. 11016 of 2024 With R/SPECIAL CIVIL APPLICATION NO. 11943 of 2024 With R/SPECIAL CIVIL APPLICATION NO. 12436 of 2024 With R/SPECIAL CIVIL APPLICATION NO. 12659 of 2024 With R/SPECIAL CIVIL APPLICATION NO. 12764 of 2024 With R/SPECIAL CIVIL APPLICATIO ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... signment of leasehold rights of the plot of land allotted on lease by Gujarat Industrial Development Corporation (GIDC) and building constructed thereon by the lessee or its successor (assignor) to a third party (assignee) on payment of lump-sum consideration considering the same as supply of service under the provisions of Central/State Goods and Service Tax Act, 2017 (For short the GST Act ). 4. Special Civil Application No. 11345 of 2023 preferred by Gujarat Chamber of Commerce and Industry and its members is treated as a lead matter. 5. It is the case of the petitioners that GIDC is established under the Gujarat Industrial Development Act, 1962 and acts as Nodal agency of Government of Gujarat for the purpose of development of industrial estates in the State of Gujarat. GIDC acquires land and develops same as industrial estate by creating infrastructure thereon such as road, water supply, street light, drainage, etc. and allots plot of land to an industrial entity/person on long term lease for a period of 99 years. The terms and conditions of the allotment letter issued by the GIDC includes the method and manner in which premium and lease rent is required to be paid by the allo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t Authorities are liable to give Input Tax Credit under Section 16 of the Goods and Service Tax Act, 2017 as and when Goods and Service Tax is paid on the transaction of assignment of the long-term Leasehold rights to all the assignee's in whose favor the long-term Leasehold rights have been assigned; (D) Pending hearing and final disposal of the present petition, Your Lordships be pleased to stay the inquiry/proceedings and any consequential action being undertaken by the Respondents Authorities on the transaction of the assignment of the long-term Leasehold rights; (E) This Hon'ble Court be pleased to grant such other and further relief as deemed just and proper in the interest of justice. 10. To consider the issue as to whether assignment of leasehold rights would be covered by the provisions of GST Act as supply of service or not, it would be germane to refer to relevant provisions of law. :GST Act: [1] Section 2 (17) defines business as under: (17) business includes (a) any trade, commerce, manufacture, profession, vocation, adventure, wager or any other similar activity, whether or not it is for a pecuniary benefit; (b) any activity or transaction in connection with o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rson means a person who is registered or liable to be registered under section 22 or section 24; [7] Section 7 of the GST Act falling under Chapter III for levy and collection of tax defines the scope of supply as under: section 7 reads as under: Scope of supply. 7.(1) For the purposes of this Act, the expression supply includes (a) all forms of supply of goods or services or both such as sale, transfer, barter, exchange, licence, rental, lease or disposal made or agreed to be made for a consideration by a person in the course or furtherance of business; (aa) the activities or transactions, by a person, other than an individual, to its members or constituents or vice versa, for cash, deferred payment or other valuable consideration. Explanation . For the purposes of this clause, it is hereby clarified that, notwithstanding anything contained in any other law for the time being in force or any judgment, decree or order of any Court, tribunal or authority, the person and its members or constituents shall be deemed to be two separate persons and the supply of activities or transactions inter se shall be deemed to take place from one such person to another;] (b) import of services for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tructure or a part thereof, including a complex or building intended for sale to a buyer, wholly or partly, except where the entire consideration has been received after issuance of completion certificate, where required, by the competent authority or after its first occupation, whichever is earlier. Explanation . For the purposes of this clause (1) the expression competent authority means the Government or any authority authorised to issue completion certificate under any law for the time being in force and in case of non-requirement of such certificate from such authority, from any of the following, namely: (i) an architect registered with the Council of Architecture constituted under the Architects Act, 1972 (20 of 1972) ; or (ii) a chartered engineer registered with the Institution of Engineers (India); or (iii) a licensed surveyor of the respective local body of the city or town or village or development or planning authority; (2) the expression construction includes additions, alterations, replacements or remodelling of any existing civil structure; (c) temporary transfer or permitting the use or enjoyment of any intellectual property right; (d) development, design, programmi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... shed under any law for the time being in force. Explanation 1. For the removal of doubts, it is hereby declared that nothing contained in this clause shall apply to, (A) the functions performed by the Members of Parliament, Members of State Legislative, Members of Panchayats, Members of Municipalities and Members of other local authorities who receive any consideration in performing the functions of that office as such member; or (B) the duties performed by any person who holds any post in pursuance of the provisions of the Constitution in that capacity; or (C) the duties performed by any person as a Chairperson or a Member or a Director in a body established by the Central Government or State Governments or local authority and who is not deemed as an employee before the commencement of this section. [Explanation 2. For the purposes of this clause, the expression transaction in money or actionable claim shall not include (i) any activity relating to use of money or its conversion by cash or by any other mode, from one form, currency or denomination, to another form, currency or denomination for which a separate consideration is charged; (ii) any activity carried out, for a consider ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... decisions which are summarised as under: 12.1) Learned Senior Advocate Mr. Mihir Joshi for learned advocate Mr. Tarak Damani appearing for the petitioners of Special Civil Application No. 11345 of 2023 contended that lease of immovable property is an interest in land and building and every interest in immovable property or benefit arising out of land will be immovable property for the purpose of Section 105 of Transfer of Property Act. In support of such submission, reliance was placed on the decision in case of Sri Tarkeshwar Sio Thakur Jiu v. Dar Dass Dey Co and others reported in (1979) 3 Supreme Court Cases 106 wherein it is held as under: 34. Section 105, Transfer of Property Act, defines a 'lease' of immovable property as- a transfer of a right to enjoy such property, made for a certain time, express or implied, or in perpetuity, in consideration of a price paid or promised, or of money, a share of crops, service or any other thing of value, to be rendered periodically or on specified occasions to the transferor by the transferee, who accepts the transfer on such terms. 36. The definition of 'immovable property' given in Section 3, Para I of that Act is in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... granted by the Government of West Bengal in 1953 in favour of the lessees for a period of 999 years at a fixed rent per year on some terms and conditions viz. (i) there will be no transfer without permission, (ii) construction on the leasehold land is to be completed within the specified period, (iii) forfeiture clause will be application etc. The lessees transferred their leasehold interest for the unexpired period in favour of the petitioners who paid stamp duty along with fees on the basis of consideration amount as mentioned in the deed of transfer. xxx 8. The provisions relating to Articles. 63 and 23 of Schedule IA of the Indian Stamp Act, 1899, as amended, are reproduced below: 63. Transfer of lease by way of assignment, and not by way of under-lease The same duty as a Conveyance (No. 23) for the market value of the property. Exemption Transfer of any lease exempt from Duty. 23. Conveyance (as defined by Section 2(10), not being a transfer charged or exempted under S. 62. (a) Six per centum of the market value when the property is situated in the areas within the jurisdiction of any Municipal Corporation or Exemptions Municipality or a notified area; (a) Assignment of copyri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ondent, is out of the way. 12.4) Reliance was also placed on the decision in case of Narendra Dhar v. State of Uttar Pradesh reported in 2010(4) AIILJ 481. 12.5) Learned Senior Counsel Mr. Joshi further submitted that such transfer is also covered as transfer of immovable property under Section 54 of Transfer of Property Act and for the purpose of Section 53-A of the said Act, as also a right under Section 108 (j) of the Transfer of Property Act. 12.6) It was submitted that the definition of Service under Section 2 (102) of GST Act states anything other than goods, money and securities which cannot encompass absolute transfer of property and since it has been held that conceptually sale and service are not interchangeable terms as understood in its ordinary sense and the term service does not refer to transfer of property. In support of such submission, reliance was placed on the decision in case of Narinder S. Chadha and others v. Municipal Corporation of Greater Mumbai and others reported in (2014) 15 Supreme Court Cases 689 , wherein it is held as under: 13. We cannot accept this contention for more than one reason. First and foremost, it is difficult conceptually to say that sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... need or desire,- ministry to a bodily want. A necessary incident of this service or ministry is the consumption of the food required. This consumption involves destruction, and nothing remains of what is consumed to which the right of property can be said to attach. Before consumption title does not pass; after consumption there remains nothing to become the subject of title. What the customer pays for is a right to satisfy his appetite by the process of destruction. What he thus pays for includes more than the price of the food as such. It includes all that enters into the conception of service, and with it no small factor of direct personal service. It does not contemplate the transfer of the general property in the food applied as a factor in the service rendered. This led to the Constitution 46th Amendment Act by which Article 366 (29A) was inserted. Article 366 (29A) reads as follows:- Article 366 (29-A) tax on the sale or purchase of goods includes- (a) a tax on the transfer, otherwise than in pursuance of a contract, of property in any goods for cash, deferred payment or other valuable consideration; (b) a tax on the transfer of property in goods (whether as goods or in some ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... does not lose its natural meaning, that is to say, something other than absolute transfer of property. It was submitted that the attempt of the respondents to encompass transfer of property within the meaning of service amounts to extending the meaning of the word service beyond its reasonable connotation in an anxiety to preserve the power of legislature. It was submitted that the same would amount to tax on service, something which in no rational sense can be regarded as service, which is impermissible. 12.8) Learned Senior advocate Mr. Joshi further submitted that the contention of the respondent that by excluding only sale of land and building by including the same in Schedule III as being neither sale nor service would consequentially imply that sale of other immovable property would be covered within service is not tenable for the following reasons: i. Such exclusion does not displace the principle of giving a natural meaning to the word 'Service' in the definition clause. ii. The inclusion is clearly ex abundanti cautela iii. The same also supports the submissions of the petitioners that the Legislature never intended to tax sale of immovable property. Therefore, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rights and interest arising out of land, amounts to transfer/sale of immovable property and therefore, cannot be said to be service under the Act nor can such transfer of rights and interest be said to be in course or furtherance of business. The said assignment/transfer of rights does not fall within the meaning of the term 'Service' in the Act and the Legislature has not extended the meaning by including transactions which are not service and therefore the term would have to be construed as per its natural meaning, which excludes absolute transfer of property. The levy/demand of tax on Assignment may therefore be held to be illegal and without authority of law. 13. Learned advocate Mr. Uchit Sheth for the petitioners in Special Civil Application No. 19418 of 2023, Special Civil Application No. 4224 of 2024 and Special Civil Application No. 13157 of 2024 submitted that the GST regime was brought into force after the One Hundred and First (Constitution Amendment) Act, 2016. Statement of objects and reasons of the said Act clearly stated that the intention of the constitutional amendment was to subsume some of the existing indirect taxes so as to reduce the cascading effect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... therefore the principle under the service tax regime will continue to apply even under the GST regime particularly when object of introduction of GST regime is to subsume existing taxes. 13.2) Learned advocate Mr. Sheth further submitted that the fact that only existing taxes were sought to be continued under the GST regime is fortified by Agenda 2A to the 5th GST Council meeting wherein, while noting that service tax was not leviable on transfer of immovable property, a specific proposal was made to impose GST on sale of immovable property on the ground that there was no constitutional embargo for imposing such tax and that stamp duty was leviable on a different aspect of the transaction. It was submitted that this agenda was discussed in the 7th GST Council meeting held on 22/23 December, 2016 and a detailed discussion took place wherein number of State Finance Ministers pointed out that stamp duty had not been subsumed in GST and therefore, imposition of GST on land and building would lead to double taxation and it might also be unconstitutional. Considering such objections, the GST Council decided to defer imposition of tax on land and buildings. It is therefore that Sr. No. 5 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it is a profit a prendre: see 11 Halsbury's Laws of England, (Hailsham Edition), pages 382 and 383. In England this is regarded as an interest in land (11 Halsbury's Laws of England, page 387) because it is a right to take some profit of the soil for the use of the owner of the right (page 382). In India it is regarded as a benefit that arises out of the land and as such is immoveable property. 10. Section 3 (26) of the General Clauses Act defines immoveable property as including benefits that arise out of the land. The Transfer of Property Act does not define the term except to say that immoveable property does not include standing timber, growing crops or grass. As fish do not come under that category the definition in the General Clauses Act applies and as a profit a prendre is regarded as a benefit arising out of land it follows that it is immoveable property within the meaning of the Transfer of Property Act. 11. Now a sale is defined as a transfer of ownership in exchange for a price paid or promised. As a profit a prendre is immoveable property and as in this case it was purchased for a price that was paid it requires writing and registration because of section 54 o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing trees, rushes, freshwater fish, stone, sand and shingle from the seashore A and ice from a canal; also the right of pasture and of shooting pheasants. There is, however, no right to take seacoal from the foreshore. The right to take animals ferae naturae while they are upon the soil belongs to the owner of the soil, who may grant to others as a profit a prendre a right to come and take them by a grant of hunting, shooting, fowling and so forth. 99. A profit a prendre is a servitude for it burdens the land or rather a person's ownership of land by separating from the rest certain portions or fragments of the right of ownership to be enjoyed by persons other than the owner of the thing itself (see Jowitt's Dictionary of English Law, Second Edition, Volume 2, page 1640. under the heading Servitude ). Servitude is a wider term and includes both easements and profits a prendre (see Halsbury's Laws of England, Fourth Edition, Volume 14, paragraph 3, page 4). The distinction between a profit a prendre and an easement has been thus stated in Halsbury's Laws of England, Fourth Edition, paragraph 43 at pages 21 to 22: The chief distinction between an easement and a profit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d that a profit a prendre is a benefit arising out land and that in view of clause (26) of section 3 of the General Clauses Act, it is immovable property within the meaning of the Transfer of Property Act. 101. The earlier decisions showing what constitutes benefits arising out of land have been summarized in Mulla on The Transfer of Property Act, 1882 , and it would be pertinent to reproduce the whole of that passage. That passage (at pages 16-17 of the Fifth Edition) is as follows: A 'benefit to arise out of land' is an interest in land and therefore immovable property. The first Indian Law Commissioners in their report of 1879 said that they had 'abstained from the almost impracticable task of defining the various kinds of interests in immovable things which are considered immovable property. The Registration Act, however, expressly includes as immovable property benefits to arise out of land, here diary allowances, rights of way lights, ferries and fisheries'. The definition of immovable property in the General Clauses Act applies to this Act. The following have been held to be immovable property:-varashasan or annual allowance charged on land; a right to collec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rpose of felling and removing the bamboos nor is it, unlike the Timber Contracts, in respect of a particular felling season only. It is an agreement for a long period extending to fourteen years, thirteen years and eleven years with respect to different con tract areas with an option to the Respondent Company to renew the contract for a further term of twelve years and it embraces not only bamboos which are in existence at the date of the contract but also bamboos which are to grow and come into existence thereafter. The payment of royalty under the Bamboo Contract has no relation to the actual quantity of bamboos cut and removed. Further, the Respondent Company is bound to pay a minimum royalty and the amount of royalty to be paid by it is always to be in excess of the royalty due on the bamboos cut in the contract areas. 13.7) It was submitted that mere fact that there is an exemption granted for lease of land by State Industrial Development Corporations cannot ipso facto mean that assignment of leasehold rights by private individuals is taxable and grant of exemption by State Government cannot determine as to whether the transaction is otherwise leviable to tax under the Act. Re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gistration Act, 1908. 14.1) Reliance was also placed on section 2 (6) of the Registration Act which defines immovable property which includes land, buildings, hereditary allowances, right to ways, lights, ferries, fisheries or any other benefit to arise out of land and things attached to the earth or permanently fastened to anything which is attached to the earth, but not standing timber, growing crops nor grass. It was therefore, submitted that leasehold rights are nothing but any such benefit to arise out of land and therefore, same is required to be considered as an immovable property . It was therefore, submitted that as per section 7 (1) of the Act, no GST can be levied upon sale of immovable property. 14.2) Learned advocate Mr. Bose also referred to section 2 (26) of the General Clauses Act which defines immovable property which includes land, benefits to arise out of land, and things attached to the earth, or permanently fastened to anything attached to the earth. 14.3) Reference was also made to section 3A of the Land Acquisition Act, 1994. Reference was also made to Gujarat Stamp Act which levies stamp duty on the transfer of leasehold rights equivalent to rate of conveyan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on Act would not apply to the Housing Urban Development Corporation as allotment of land was made merely to develop for the benefit of Union of India for construction of community centre. In such circumstances, it was held by Delhi High Court in para no. 21 of the decision that for transfer of leasehold right something more is required and from the bare reading of the terms of allotment of the perpetual lease deed, land in question was released on payment of consideration though of minimal premium and the annual gross rent was also payable till the subsistence of lease period along with right to let out the properties and accordingly, the petitioner was liable to pay the property tax on the leasehold right in the property under section 120 (1) (c) of the Delhi Municipal Corporation Act. It was therefore, submitted that the leasehold rights is as an immovable property. 15.1) Reliance was placed on the decision of Delhi High Court in case of Union of India another v. Hotel Excelsior Ltd and another reported in 2012 SCC OnLine Del 4758, wherein it was held that right to conversion of leasehold land into freehold land cannot be permitted as the lessee can never acquire the status of an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of leasing plots by auction did not result in the successful bidder becoming a consumer or the appellants auctioneer becoming service provider so as to award penal interest under the provisions of Consumer Protection Act. The Hon ble Apex Court held as under: 21. With reference to a public auction of existing sites (as contrasted from sites to be formed'), the purchaser/lessee is not a consumer, the owner is not a trader' or service provider' and the grievance does not relate to any matter in regard which a complaint can be filed. Therefore, any grievance by the purchaser/lessee will not give rise to a complaint or consumer dispute and the fora under the Act will not have jurisdiction to entertain or decide any complaint by the auction purchaser/lessee against the owner holding the auction of sites. 17.2) Reliance was placed on the decision in case of Gaziabad Development Authority and another v. Mithilesh Goel reported in (2017) 14 Supreme Court Cases 300 , wherein Hon ble Apex Court held that allotment of house by Gaziabad Development Authority was an immovable property and not services of any kind. 17.3) Reliance was also placed on the decision of Hon ble Apex Cour ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cated into two: one for sale of goods and other for services , thereby making goods component of the contract exigible to sales tax. Further, while going into this exercise of divisibility, dominant intention behind such a contract, namely, whether it was for sale of goods or for services, is rendered otiose or immaterial. It follows, as a sequitur, that by virtue of clause 29-A of Article 366, the State Legislature is now empowered to segregate the goods part of the Works Contract and impose sales tax thereupon. It may be noted that Entry 54, List II of the Constitution of India empowers the State Legislature to enact a law taxing sale of goods. Sales tax, being a subject-matter into the State List, the State Legislature has the competency to legislate over the subject. 21. Keeping in mind the aforesaid principle of law, the obvious conclusion would be that Entry 25 of Schedule VI to the Act which makes that part of processing and supplying of photographs, photo prints and photo negatives, which have goods component exigible to sales tax is constitutionally valid. Mr. Patil and Mr. Salman Khurshid, learned senior counsel who argued for these assessees/respondents, made vehement pl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... leases in question the assessee has parted with an asset of an enduring nature, namely, the rights to possession and enjoyment to the properties leased for a period of 99 years subject to certain conditions on which the respective leases could be terminated. A premium has been charged by the assessee in all the leases. In these circumstances, we fail to see how it could be said that the provisions of Section 12-B of the said Act cannot be brought into play. The grant of the leases in question, in our view, amounts to a transfer of capital assets as contemplated under Section 12-B of the said Act. 19. Learned Senior Advocate Mr. Sreedharan appearing for the petitioner in Special Civil Application No. 10501 of 2024 reiterated the submissions made by the learned advocates for other petitioners. It was submitted that leasehold rights transferred by the lessee is in relation to the property which has been defined and construed in various ways. It was submitted that property refers not only to physical objects that are owned but also to rights of ownership. He invited the attention of the Court with regard to property defined in Corpus Juris Secundum wherein the property has been define ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a common idiom describes property as a bundle of sticks , i.e. collection of individual rights which, in certain combinations, constitute property, state law determines only which sticks are in a person s bundle. 19.3) Reference was also made to section 54 of the Transfer of Property Act which defines Sale read with section 105 and 108 of Transfer of Property Act. Reliance was also placed on clause(j) of the section 108 of the Transfer of Property Act relating to lease as part of rights and liabilities of the lessee which reads as under: 108 (j) the lessee may transfer absolute or by way of mortgage or sub-lease the whole or any part of his interest in the property, and any transferee of such interest or part may again transfer it. The lessee shall not , by reason only of such transfer, cease to be subject to any of the liabilities attaching to the lease. 19.4) It was therefore, submitted that immovable property may be tangible or intangible right which relates to the thing as the sale is an absolute assignment whereas whatever right the lessee has, is sale of interest in land which is equivalent to sale of land. It was therefore, submitted that sale of leasehold rights cannot fal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y to point out that transaction of sale of leasehold rights is nothing but sale of immovable property as contract of sale of leasehold right results into transfer of property on being reduced into writing by Deed of Assignment. 19.9) Reliance was also placed on the following decisions: (1) In case of Commissioner of Income Tax, Madras v. Bagyalakshmi Co. reported in (1965) 55 ITR 550 (SC) Court, wherein it is held as under: We have held in Commissioner of Income-tax v. Abdul Rahim Co. [1965] 55 ITR 651 that the Income-tax Officer can reject the registration of a firm if it is not genuine or valid and if the application for registration has not complied with the rules made under the Act. Here we have admittedly a genuine partnership. It cannot even be suggested that it is invalid. The only objection is that Guruswamy Naidu and Venkatasubba Naidu have less shares in the partition deed than those shown in the partnership deed. If the distinction between the three concepts is borne in mind much of the confusion disappears. A partnership is a creature of contract. Under Hindu law a joint family is one of status and right to partition is one of its incidents. The income-tax law gives the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... deed. This court in Charandas Haridas v. Commissioner of Income-tax [1960] 39 ITR 202, 208; [1960] 3 SCR 296 had to consider a converse position. There, a karta of a Hindu undivided family was a partner in 6 managing agency firms and the share of the managing agency commission received by him as such partner was being assessed as the income of the family. Thereafter, there was a partial partition in the family by which he gave his daughter a one pie share of the commission from each of two of the managing agencies and the balance in those agencies and the commission in the other four managing agencies were divided into five equal shares between himself, his wife and three minor sons. The memorandum of partition recited that the parties had decided that commission which accrued from January 1, 1946, ceased to be joint family property and that each became absolute owner of his share. Notwithstanding the partition, the income-tax authorities assessed the said total income as the income of the joint family. The Bombay High Court agreed with that view. But this court held that as the partition document was a genuine one, it was fully effective between the members of the family and ther ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... debt from the mere fact that special provisions for its collection are made in the Act imposing its levy. After tax becomes due the relationship between the assessee and the department is really that of debtor and creditor. Arrears of sales tax are debts and an assessee who defaults to pay tax is a debtor coming within the meaning of those expressions in Sections 59 and 60 of the Indian Contract Act. 12. When an enactment is said to be complete what is meant is only that it is exhaustive to the extent it goes. It does not mean that in respect of matters not specifically covered by it general principles of law are excluded from consideration and cannot be applied even if they are not inconsistent with it. Otherwise, even principles of interpretation of statutes cannot be applied to it. A statute until it is repealed is living law. To attempt to imprison it within the sections in it is about as reasonable as to attempt to confine a stream within a pond. The water in the pond would soon become a stagnant pool and there would no longer be a living stream. General principles of law to the extent they are not specifically excluded are applicable to any enactment. With respect we conside ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... if so, it is an excellent example of the proposition to which reference was made in the report of the Committee of the Privy Council in In re MacManaway [1951] SC 161 and again by my noble and learned friend Lord Radcliffe in Inland Revenue Commissioners v. Dowdall, O'Mahoney Co. Ltd. [1952] AC 401 that the beliefs or assumptions of those who frame Acts of Parliament cannot make the law. (4) In case of Commissioner of Income Tax v. Shaw Wallace and Company reported in (1932) SCC 515 (SC ), wherein it is held as under: 15. Some reliance has been placed in argument upon Section 4 (3)(v) which appears to suggest that the word income in this Act may have a wider significance than would ordinarily be attributed to it. The Sub-section says that the Act shall not apply to the following classes of income, and in the category that follows, Clause (v) runs:- Any capital sum received in commutation of the whole or a portion of a pension, or in the nature of consolidated compensation for death or injuries, or in payment of any insurance policy, or as the accumulated balance at the credit of a subscriber to any such Provident Fund. 16. Their Lordships do not think that any of these sums, a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es. 19.12) Reference was made to the Notification No. 26/2012-ST dated 20.06.2012 as amended by Notification No. 2/2013 dated 1.03.2013 and 9/2013 dated 8.5.2013 in section 66B of the Finance Act 1994 pertaining to charge of service tax. In the said notification, construction as per Entry No. 12 with regard to construction of a complex, building, civil structure or a part thereof intended for a sale, value of the land is included in the amount charged from the service receiver. It was therefore, submitted that same provision is incorporated in the GST Act while prescribing rate of GST being GST on service under Heading 9954 with regard to construction services. Reference was made to Notification No. 11/2017 dated 28.06.2017 more particularly, Note No. 2 wherein the rate of GST applicable at 9% would consider the value of land or undivided share of land, as the case may be, in such supply of services to be deemed to 1/3rd of total amount charged for such supply. 19.13) Reference was also made to Explanation which has been inserted with effect from 25.01.2018 wherein it is explained that total amount means the sum total of consideration charged for aforesaid service and amount charge ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... validly assigned. However, it is also true that right of lessee is not as much absolute as that of purchaser of property inasmuch as it may be excluded altogether by the parties. It was therefore, submitted that as per the permission of GIDC, lessee has right to assign leasehold rights in the property. 19.17) Reference was also made to General Clauses Act where the immovable property is defined under section 3 of the said Act as well as Registration Act and definition in both the Acts define immovable property which includes land and building intangible rights such as easement rights, rights to ferries and fisheries which would also include equity of redemption in mortgaged property, the interest of a mortgagee and other rights which cannot come within the ordinary exception of actual physical moveable property and those which cannot be included in the definition mentioned in Sale of Goods Act. It was therefore, submitted that there is a distinction between moveable and immoveable property and the leasehold rights would partake the character of immovable property as it is right in land and it affects only immovable property being incorporeal right as during the lease, lessee would ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d on the decision of Apex Court in case of Jilubhai Nanbhai Khachar and others v. State of Gujarat and another reported in 1995 Supp (10) Supreme Court Cases 596 wherein the Hon ble Apex Court has analysed the definition of land given in Black s Law dictionary and Law Lexicon as under: 11. In Black's Law Dictionary (Sixth Edition) at page 877, land is defined to mean- in the most general sense, comprehends any ground, soil or earth whatsoever, including......rocks. Land may include any estate or interest in lands, either legal or equitable, as well as easements and incorporeal hereditaments. Technically, land signifies everything comprehending all things of a permanent nature, and even of an unsubstantial provided they be permanent. Ordinarily, the term is used as descriptive of the subject of ownership and not the ownership. Land is the material of the earth, whatever may be the ingredients of which it is composed, weather, soil, rock, or other substance, and includes free or occupied space for an indefinite distance upwards as well as downwards, subject to limitations upon the use of airspace imposed, and rights in the use of airspace granted by law. 12. According to the Law ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... th the provisions of the Act. 20.1) Referring to above definition, it was submitted that land includes benefits arising out of land and leasehold right is nothing but a benefit arising out of land and as such assignment of such leasehold rights is nothing but a transfer of immovable property subjected to stamp duty as well as registration. It was further submitted that under the provisions of Wealth Tax Act, 1957, asset and property are defined which are subject matter of controversy which is before Hon ble Supreme Court in case of Ahmed G.H. Arif and others v. Commissioner of Wealth Tax, Calcutta reported in (1969) 2 Supreme Court Cases 471, wherein Hon ble Apex Court has analysed the property vis-a-vis assets as under: 8. Now property is a term of the widest import and subject to any limitation which the context may require, it signifies every possible interest which a person can clearly hold or enjoy. The meaning of the word property has come up for examination before this Court in a number of cases. Reference may be made to one of them in which the question arose whether Mahantship or Shebaitship which combines elements of office and property would fall within the ambit of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... joy the benefits granted to them by the lease. That general right may properly be regarded as a capital asset, and the money paid to purchase it may properly be held to be a payment on capital account. But the royalties are on a different footing. It is true that in that case the leases were granted for 999 years; but, though it was one of the circumstances, it was not a decisive factor in the Judicial Committee coming to the conclusion that the salami paid under the leases was a capital asset. This court in Member for the Board of Agricultural Income-tax, Assam v. Sindhurani Chaudhurani [1957] 32 ITR 169; [1957] SCR 1019 denned salami as follows: The indicia of salami are (1) its single non-recurring character and (2) payment prior to the creation of the tenancy. It is the consideration paid by the tenant for being let into possession and can be neither rent nor revenue but is a capital receipt in the hands of the landlord. It is true that in that case the payment was paid in a single lump sum, but that was not a conclusive test, for salami can be paid in a single payment or by instalments. The real test is whether the said amount paid in a lump sum or in instalments is the consid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion obtaining under various other legislations, which are not pari materia legislations or in other words, which are enacted for different purposes. 21.3) It was therefore, submitted that in view of this, even though lease-hold right is an interest in immovable property, the said interest cannot be dubbed as an immovable property' itself, since, it is not envisaged like this under various other provisions of the GST Act, some of which are referred to hereunder:- (i) Section 2 (119) of the GST Act, which defines the 'Works Contract, wherein the term 'immovable property is used in the sense that it has to be any immovable property in tangible form ie in physical form (ii) Section 17 (5) (c) and (d) of the GST Act dealing with Apportionment of credit and blocked credits, once again uses the term an immovable property (other than plant and machinery) (iii) Section 12 of the IGST Act, which applies by virtue of Section 2 (120) of the Act, whereby words and expressions not defined in the Act shall have the same meaning as assigned to them, inter-alia, in the said IGST Act. The said Section 12 (3) refers to the term 'an immovable property with reference to its physical loc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... further transfer, which is also transfer of the right to occupy / possess, will continue to remain as supply of service, which characteristic will not change, merely because, the lessee of GIDC effects absolute transfer thereof in favour of an assignee, leaving no right whatsoever with him in respect of the said lease-hold land. 21.8) It was therefore, submitted that the interest in land would remain the same with the recipient of service. whether he gets the same supplied directly by GIDC in form of lease-hold agreement or from the original lessee of GIDC in form of assignment of lease-hold rights and in both these transactions, there is transfer of lease-hold rights in his favour, which cannot be considered as sale of immovable property. 21.9) In support of his submissions reliance was placed on the following decisions: 1) In case of Legal Hiers of Deceased Fakir Chand Ambaram Patel v. OI of Amruta Mills Limited reported in 2002(3) GLH 367 , wherein it is held as under: 40. To summarise : [a] Leasehold interest is an intangible asset, which is valuable in nature though the valuation may differ from case to case depending upon the unexpired period of lease. [b] Such an asset is t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... facts of the case. 23. The Tribunal appears to be justified in recording that the letting of vacant land by way of lease or license irrespective of the duration or tenure for construction of building or temporary construction for use in the course or furtherance of business or commerce is taxable w.e.f. st July, 2010 in view of Clause (v) of Explanation 1 to Section 65 (105) (zzzz) of the Finance Act, 1994. 24. So far as the term lease is concerned, it may be recorded that it has not been defined under the Finance Act, 1994. The term lease would cover a lease for any period including a lease in perpetuity, as will follow from simple reading of Section 65 (90a). The Finance Act, 1994 does not carve out any distinction in the mater of long term lease/lease in perpetuity or lease for short duration, so far as the charging section is concerned. 25. The word lease as contemplated by the Transfer of Property Act, vis-a-vis 'license' has been explained by the Apex Court in the case of Associated Hotels of India Ltd. vs. R.N. Kapoor reported in AIR (1959) SC 12262, Pr. 28 , wherein it has been held that if the document creates an interest in the property, it is a lease and if it fu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n. No activity of the nature mentioned in the inclusive provision can thus be left out of the net of the tax. Once this law, in terms of the substantive provisions and the Schedule, treats the activity as supply of goods or supply of services, particularly in relation to land and building and includes a lease, then, the consideration therefor as a premium/one-time premium is a measure on which the tax is levied, assessed and recovered. We cannot then probe into the legislation any further. xxx 20. In the passing, we are of the opinion that the High Court of Judicature of Allahabad, while considering the demand, not arising out of the GST, but under the Finance Act in relation to the services of renting of immovable property of Greater Noida, has rightly arrived at the conclusion that the same was a taxable service and on the consideration received, the service tax could have been levied and demanded. Once we agree with the reasoning of the Division Bench, then, we do not feel it necessary to reproduce the paragraphs in the Division Bench judgment. We are not in agreement with the learned senior counsel appearing for the petitioners that the demand is contrary to law or unfair, unju ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... may be. 28. Lease has been defined under section 105 of the Transfer of Property Act and also in section 2 sub section (16) of the Indian Stamp Act 1899. According to section 2 sub section (16) of the Indian Stamp Act, Lease means a lease of immovable property and includes a Patta, a kabuliyat or any instrument by which tolls of any description are let, any writing on an application for lease intended to signify that the application is granted and finally any instrument by which mining lease is granted in respect of minor minerals as defined in clause (e) of section 3 of the Mines and Minerals (Regulation and Development) Act, 1957. 29. From a plain reading of Section 54 and Section 105 of the Transfer of Property Act, there cannot be any doubt in our mind that in case of a lease, there is a partial transfer and the right of reversion remains with the lessor. Whereas in case of a sale, there must be an absolute transfer of ownership and not some rights only as in the case of a lease. Therefore, it is to be considered whether the document in question, which was presented for registration, was a partial transfer and accordingly, it was a lease, or whether it involved any outright sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of lease. The Division Bench construed the transfer of the land as an assignment of lease whereas the transfer of the building appurtenant thereto to be through a deed of sale. It appears to us that the High Court has clearly not interpreted the true essence of the lease deed executed between the lessor and the lessees. 34. The learned counsel appearing on behalf of the appellant has brought to our notice that the said lease deeds categorically provided that not only the land but the appurtenants attached thereto are also governed by its covenants as per para k of the said deed which states that every transfer, assignment, relinquishment, mortgage or sublet of the property shall be bound by the covenants of the deed along with the assignee being answerable to the Noida authorities in all respects. 35. The appellant has also brought to our notice that para g of the said deed states that the lessee/ sub lessee would only be allowed to make any alterations in the building with the prior permission of the authority and would also be liable if any deviations from the permission obtained is brought to light. Moreover, the concerned lease deed specifically provides for a lease of 99 years ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he said lease deed specifically provides for a right of reversion to the land and appurtenances thereto including buildings, on the termination or expiry of the lease. It is thus clear that the buildings and all other appurtenants attached to the land become a part of the assigned transfer through lease and not a separate sale. 39. Moreover section 3 of the Transfer of Property Act states that when an immovable property such as land is transferred by way of assignment of lease, all appurtenances thereto attached to the earth such as buildings and fixtures thereto would also stand assigned. Accordingly, on a plain reading of the deed of assignment, we are of the view that the assignees became liable to the lessor, namely Noida on the covenants running with the land. In conclusion, we are, therefore of the view that the deed presented for registration was a deed of assignment. 40. Before we part with this aspect of the matter, that is to say, whether the document/instrument was in fact a deed of assignment or an outright sale, we must also keep in mind that the nomenclature to the document of assignment cannot be said to be determining factor in deciding whether a particular deed or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ervices which are shown to demonstrate that the price paid for providing leasing services of leased non residential property is a real estate service. 9) Reference was also made to Serial No.716 of Group 99979 providing other miscellaneous services having sub-heading 999792 agreeing to do an act. It was therefore, submitted that agreeing to transfer the leasehold rights is nothing but agreeing to do an act which would also be considered as supply of services. 10) In case of T.N. Kalyana Mandapam Assn. v. Union of India and others reported in (2004) 5 Surpeme Court Cases 632, wherein it is held as under: 40. In the present case, service tax levied on services rendered by mandap-keeper as defined in the said Act under sections 65, 66 and 67 of the Finance Act has been challenged by the appellants on the following two grounds: a) That it amounts to the tax on land and, therefore, by reason of Entry 49 of List 2 of the Seventh Schedule of the Constitution, only the State government is competent to levy such tax and; b) Insofar as it levies a tax on catering services, it amounts to a tax on sale and purchase of goods and, therefore, is beyond the competence of Parliament, particularly i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... this context refer to the decision of Mafatlal Industries Ltd. and Others V/s. Union of India and Others (supra) In the matter of taxation laws, the court permits a great latitude to the discretion of the legislature. The State is allowed to pick and choose districts, objects, persons, methods and even rates for taxation, if it does so reasonably. The courts view the laws relating to economic activities with greater latitude than other matters. 54. Therefore, a levy of service tax on a particular kind of service could not be struck down on the ground that it does not conform to a common understanding of the word service so long as it does not transgress any specific restriction contained in the Constitution. 55. In fact, making available a premises for a period of few hours for the specific purpose of being utilized as a mandap whether with or without other services would itself be a service and cannot be classified as any other kind of legal concept. It does not certainly involve transfer of moveable property nor does it involve transfer of moveable property of any kind known to law either under the Transfer of Property Act or otherwise and can only be classified as a service. 11 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ticles or things' in the Fifth Schedule. Generally, the same words in a statute have the same meaning whenever used in that statute, but they may also have different meaning in different provisions of the same statute. In Shamrao Vishnu Parulekar V/s. The District Magistrate, Thana, 1956 SCR 644, it was held, thus But it is contended by Mr. Chatterjee that the expression 'grounds on which the order has been made' occurring in sec. 3(3) is, word for word, the same as in sec. 7, that the same expression occurring in the same statute must receive the same construction, that what sec. 3 requires is that on the making of an order for detention, the authority is to formulate the grounds for that order, and send the same to the State Government under Section 3(3) and to the detenu u/s. 7, and that therefore it was not sufficient merely to send to the State Government a report of the materials on which the order was made. Reliance was placed on the following passage in Maxwell's Interpretation of Statutes : It is, at all events, reasonable to presume that the same meaning is implied by the use of the same expression in every part of an Act. The rule of construction contende ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s not safe to pronounce on the provisions of one Act with reference to decisions dealing with other Acts which may not be in pari materia. 43. In M/s. MSCO. Pvt. Ltd. V/s. Union of India and Others, 1985 1 SCC 51 , this Court held: 4. The expression 'industry' has many meanings. It means 'skill', 'ingenuity', 'dexterity', 'diligence', 'systematic work or labour', 'habitual employment in the productive arts', 'manufacturing establishment'ect. But while construing a word which occurs in a statute or a statutory instrument in the absence of any definition in that very document it must be given the same meaning which it receives in ordinary parlance or understood in the sense in which people conversant with the subject matter of the statute or statutory instrument understand it. It is hazardous to interpret a word in accordance with its definition in another statute or statutory instrument and more so when such statute or statutory instrument is not dealing with any cognate subject... 44. In Maheshwari Fish Seed Farm V/s. T.N. Electricity Board and Another, 2004 4 SCC 705 , this Court in regard to different meanings of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act which consolidates the law relating to customs duties. This Court opined that although dictionary meanings are helpful in understanding the general sense of the word but it cannot control a situation where the scheme of the statutes or the instrument considered as a whole clearly conveys a somewhat different shade of meaning. In that fact situation, it was opined: It is not always a safe way to construe a statute or a contract by dividing it by a process of etymological dissection and after separating words from their context to give each word some particular definition given by lexicographers and then to reconstruct the instrument upon the basis of those definitions. What particular meaning should be attached to words and phrases in a given instrument is usually to be gathered from the context, the nature of the subject matter, the purpose or the intention of the author and the effect of giving to them one or the other permissible meaning on the object to be achieved. Words are after all used merely as a vehicle to convey the idea of the speaker or the writer and the words have naturally, therefore, to be so construed as to fit in with the idea which emerges on a consideration ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and also to obtain permission for such sale would be taxable? Question: a) In the instant case the GST as applicable on the upfront called premium amount as a cost of land and building. Answer : The activity of the applicant is in the nature of agreeing to transfer one's leasehold rights. It does not amount to further sub-leasing, as the applicant 's right as per the Deed of sub-lease stands extinguished after assignment. Neither does it create fresh benefit from the land. It is in nature of compensation for agreeing to do the transfer of the applicant's rights in favour of the assignee. It is a service classifiable under Other miscellaneous service (SAC 999792) and taxable 18% under SI No. 35 of Notification No. 11/2017 CT (Rate) dated 28/06/2017. 16) In support of his submission that exemption notification should be interpreted strictly, reliance was placed on the decision in case of Commissioner of Customs (Import), Mumbai v. Dilip Kumar and company and others reported in (2018) 9 Supreme Court Cases 1, wherein it is held as under: 66. To sum up, we answer the reference holding as under - 66.1 Exemption notification should be interpreted strictly; the burden of prov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... should be adopted is concerned, the said principle shall not be applicable to construction of an exemption notification, when it is clear and not ambiguous. Thus, it will be for the assessee to show that he comes within the purview of the notification. Eligibility clause, it is well settled, in relation to exemption notification must be given effect to as per the language and not to expand its scope deviating from its language. Thus, there is a vast difference and distinction between a charging provision in a fiscal statute and an exemption notification. 18) In support of his submission that two taxes/imposts which are separate and distinct imposts and on two different aspects of transaction are permissible in law and there is no overlapping, reliance was placed on the decision of Apex Court in case of Union of India and another v. Mohit Mineral Private Limited reported in (2019) 2 Supreme Court Cases 599, wherein it is held as under: 61. The petitioner elaborating his contention submits that as per Section 8 of impugned legislation there shall be levied a cess on intra-State supply of goods and services as provided in Section 9 of the CGST Act whereas CGST Act has been enacted to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s are separate and distinct imposts. If in fact they overlap, that may be because the taxing authority, imposing a duty of excise, finds it convenient to impose that duty at the moment when the excisable article leaves the factory or workshop for the first time on the occasion of its sale. 64. Justice Krishna Iyer in Avinder Singh and others v. State of Punjab and others, (1979) 1 SCC 137 : (AIR 1979 SC 321), laid down that if on the same subject matter the legislature chooses to levy tax twice over there is no inherent invalidity in the fiscal adventure unless there are some other prohibitions. In the above case Government of Punjab had issued a notification under Section 90(4) of the Punjab Municipal Corporation Act, 1976 imposing tax at the rate of Rupee 1 per bottle on Indian made Foreign Liquor within the Municipal Corporation of Ludhiana. One of the contentions raised was that tax imposed is on sale, hence, beyond Government power. In paragraph 4 following was laid down: 4.......A feeble plea that the tax is bad because of the vice of double taxation and is unreasonable because there are heavy prior levies was also voiced. Some of these contentions hardly merit consideration, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... i) rental (vii) lease or (viii) disposal made or agreed to be made for a consideration by a person in course or furtherance of business. 25. Assignment of leasehold rights would be covered by sale, transfer, exchange for a consideration by a person. It would also be required to be considered as to whether such sale, transfer, exchange for a consideration by a person is in course or furtherance of business or not because once the transaction of assignment of leasehold rights takes place, business would be transferred by assignor in favour of the assignee. 26. Sub-section (1) (a) of section 7 of the GST Act is amended with effect from 01.07.2017 by the Central Goods and Services Tax (Amendment) Act, 2018 in place of clause(d) of sub-section (1) whereby reference is made to Schedule-II to treat certain activities or transactions either as supply of goods or supply of services as prescribed therein whereas sub-section(2) of section 7 refers to Schedule III which stipulates activities or transactions which are to be treated neither as supply of goods nor supply of services including the activities and transactions undertaken by the Government or local authority. Sub-section(3) provides ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l estate and develop such industrial area. 32. Sub-clause(a) of section 14 of the GIDC Act empowers the GIDC to acquire and hold such property, both movable and immovable as may be necessary for the performance of any of its activities and to lease, sell, exchange or otherwise transfer any property held by it on such conditions as may be deemed proper by the Corporation. In exercise of such powers, GIDC enters into lease agreement of 99 years for allotment of land for industrial purpose in the industrial estate developed by it. 33. The ownership of the plot of land allotted by GIDC remains with it and only the right of possession and occupation are transferred by way of leasehold rights in favour of allottee-lessee. 34. Schedule-II of the GST Act provides for activities or transactions to be treated either as supply of goods or supply of services. As per clause 5(a) of Schedule II renting of immovable property is to be treated as supply of services. Therefore, allotment of land which is undisputedly an immovable property on lease would be covered by clause 5(a) of the Schedule II of the GST Act and therefore, the same would be covered by the scope of supply of services liable to le ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... petitioner that transfer/assignment of the leasehold rights is nothing but a sale and transfer of benefits arising out of immovable property i.e. plot of land which cannot be considered as supply of services because sale, transfer and exchange of benefit arising out of immovable property is nothing but sale, transfer and exchange of the immovable property itself and, therefore, such transactions would not be subject to levy of tax under the provisions of GST Act as same cannot be covered within the scope of supply as per section 7 of the GST Act is required to be considered by analyzing various provisions of the GST Act vis- -vis provisions of different Acts as to what is an immovable property and whether leasehold rights can be said to be benefits arising out of such immovable property. 39. Immovable property is not defined under the provisions of the GST Act, however, same is defined in the following enactments: i) Section 3 (26) of the General Clauses Act 1897 defines immovable property as under: immovable property shall include land, benefits to arise out of land, and things attached to the earth, or permanently fastened to anything attached to the earth. ii) Section 3 of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the case of a reversion or other intangible thing, can be made only by a registered instrument. 43. Sections 105 and section 108 of the Transfer of Property Act, 1882 pertains to leases of immovable property. Section 105 of the said Act defines lease to mean a lease of immovable property is a transfer of a right to enjoy such property, made for a certain time, express or implied, or in perpetuity, in consideration of a price paid or promised, or of money, a share of crops, service or any other thing of value, to be rendered periodically or on specified occasions to the transferor by the transferee, who accepts the transfer on such terms. Lessor, lessee, premium and rent is further defined as the transferor is called the lessor, the transferee is called the lessee, the price is called the premium and the money, share, service or other thing to be so rendered is called the rent. 44. Section 108 prescribes the rights and liabilities of lessor and lessee. Clause (j) of section 108 pertains to rights and liabilities of lessee and stipulates that a lessee may transfer absolutely or by way of mortgage or sub-lease the whole or any part of his interest in the property, and any transfere ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t to occupy the land which is one of the bundle of rights falling within the interest of immovable property when transferred by GIDC in favour of lessee is to be treated as supply of service under the GST Act and any further transfer which is the same right to occupy/possess will continue to remain as supply of service. It was submitted that characteristics of interest in immovable property on further transfer would not change only because the lessee-assignor effects absolute transfer in favour of assignee with respect to leasehold rights. 51. This submission seems to be very attractive at the first blush, however, there are two transactions, one when the GIDC allots plot of land along with right to occupy, right to construct, right to possess on long term lease basis, it is nothing but supply of service as right of ownership of plot in question remains with the GIDC which will revert back on expiry of lease period whereas transaction of sale and transfer of leasehold rights by the lessee-assignor in favour of assignee divest lessee-assignor of all the absolute rights in the property. Therefore, interest in the immovable property in form of leasehold rights cannot be said to be dif ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... swati Sugar Mills v. Haryana State Board reported in (1992) 1 SCC 418, it is held that taxing statute is to be strictly construed . It is observed by Lord Wensleydale that the subject is not to be taxed without clear words for that purpose; and also that every Act of Parliament must be read according to the natural construction of its words. 54. Rowlatt J, has expressed the principle in following words In a taxing Act one has to look merely at what is clearly said. There is no room for any intendment. There is no equity about a tax. There is no presumption as to tax. Nothing is to be read in, nothing is to be implied. One can only look fairly at the language used. 55. Therefore, it is clear that in a taxing statute there is no room for any intendment but regard must be had to the clear meaning of the words and entire matter is governed only by the language of the provision. 56. The Hon ble Apex Court in case of CIT Madras v. Kasturi and Sons reported in (1999) 3 SCC 346 , has held that the principle of strict construction of taxing statute is required to be implemented in the facts of the said case where the words moneys in the expression moneys payable in section 41 (2) of the Inc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ry into separate economic spheres; and (iv) the creation of tariff and non-tariff barriers such as octroi, entry tax, check posts, etc., hinder the free flow of trade throughout the country. Besides that, the large number of taxes create high compliance cost for the taxpayers in the form of number of returns, payments, etc. 3. In view of the aforesaid difficulties, all the above mentioned taxes are proposed to be subsumed in a single tax called the goods and services tax which will be levied on supply of goods or services or both at each stage of supply chain starting from manufacture or import and till the last retail level. So, any tax that is presently being levied by the Central Government or the State Governments on the supply of goods or services is going to be converged in goods and services tax which is proposed to be a dual levy where the Central Government will levy and collect tax in the form of central goods and services tax and the State Government will levy and collect tax in the form of state goods and services tax on intra-State supply of goods or services or both. 4. In view of the above, it has become necessary to have a Central legislation, namely the Central Goo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation; (j) to provide for an anti-profiteering clause in order to ensure that business passes on the benefit of reduced tax incidence on goods or services or both to the consumers; and (k) to provide for elaborate transitional provisions for smooth transition of existing taxpayers to goods and services tax regime. 6. The Notes on clauses explain in detail the various provisions contained in the Central Goods and Services Tax Bill, 2017. 7. The Bill seeks to achieve the above objectives. 61. A bare perusal of the above Statement of Object and Reasons, clearly indicates the legislative intention to subsume all the existing indirect taxes in a single tax called Goods and Services Tax to be levied on supply of goods or services or both at each stage of supply chain by converging any tax that was being levied on the supply of goods or services to be converged in Goods and Service tax to be levied under the GST Act. 62. In view of the legislative intention, section 7 of the GST Act which provides for the scope of supply of good or services or both for the purpose of the GST Act includes all forms of supply of goods or services or both by any form such as transfer, sale, barter, exchange, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... person to possess, use, enjoy and dispose of a thing and to exclude everyone else from interfering with it and more succinctly, it has been defined as any vested right of any value which refers to both the actual physical object and various incorporeal ownership rights in the object i.e. plot of land and building thereon in facts of the case as the right to possess, to enjoy the income from, to alienate or to recover ownership from one who has obtained title to the object. 65. Under the GST Act and IGST Act relating to Rate of Tax, Exemption, Reverse Charge Scheme and other matters concerning supply of services are covered by notifications issued in exercise of powers conferred by sub-sections (1), (3) and (4) of section 9, sub-section (1) of section 11, sub-section (5) of section 15 and sub-section (1) of section 16 of the GST Act on the basis of recommendations of the GST Council. 66. As per the notification no. 11/2017, lease of property is included in Heading No. 9954 relating to construction services which provides rates of GST involving transfer of land or undivided share of land, as the case may be, and value of such supply shall be equivalent to the total amount charged fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of immovable property . 68. The Hon ble Apex Court in case of Byramjee Jeejeebhoy (P) Ltd vs State Of Maharashtra reported in AIR 1965 Supreme Court 590 while holding as to what a lease contemplates has observed that a demise or a transfer of a right to enjoy land for a term or in perpetuity in consideration of a price paid or promised or services or other things of value to be rendered periodically or on specified occasions to the transferor. The words transfer of right to enjoy such property indicates that all the rights of ownership are not transferred. Therefore, the significance of those words as indicative of the limited estate transfer is apparent in contrasted which flows in section 54 where a sale is defined as transfer of ownership in exchange for a price . Therefore, while assignment conveys the whole interest in the property which passes to the assignee along with rights and liability to sue and be sued upon the covenants in the original lease. 69. The Hon ble Supreme Court in case of Sri Tarkeshwar Sio Thakur Jiu v. Dar Dess Dey Co. and others reported in (1979) 3 Supreme Court Cases 106 while considering the provisions of West Bengal Estates Acquisition Act, 1953 reg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ale of food and the provisions of services in hotels and restaurants which has led to Constitution 46th Amendment Act by which Article 366 (29-A) was inserted expanding the scope of tax on the sale or purchase of goods artificially, more particularly, by sub-clause (f) thereof which stipulates tax on supply, by way of or part of any service or in any other manner whatsoever of goods being food etc. 72. Considering above dictum of law, when section 7 of the GST Act refers to the scope of supply, it is well settled that such definition is an exhaustive definition as held by Hon ble Apex Court in case of P. Kasilingam v. P.S.G. College of Technology reported in 1995 Supp (2) SCC 348 as under: 19. We will first deal with the contention urged by Shri Rao based on the provisions of the Act and the Rules. It is no doubt true that in view of clause (3) of Section 1 the Act applies to all private colleges. The expression college is, however, not defined in the Act. The expression 'private college is defined in Clause (8) of Section 2 which can, in the absence of any indication of a contrary intention, cover all colleges including professional and technical colleges. An indication about ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... building. 74. Clause 5 of Schedule III of the GST Act clearly provides that sale of land cannot to be treated as supply of goods or services. Therefore, leasehold rights which are to be considered as sale of land would be out of purview of the provisions of scope of supply as per section 7 of the GST Act. 75. As the GST Act is nothing but a levy of tax upon all the indirect taxes which were levied under different legislation, it would be germane to refer to definition of service as provided in section 2 (102) of the GST Act to mean as anything other than goods, money and securities. Considering such definition in juxtaposition to provisions of section 65B (44) of the Finance Act, 1944, there was specific exclusion of transfer of title in immovable property from definition of service itself which clearly shows that there was no intention of the legislature to impose tax on transfer of immovable property. Under the Service Tax Act, even the development rights which are the benefits arising from land were not liable to tax. Leasehold right is in fact a greater right and interest in land than development rights and the principle under the service tax regime would therefore, continue ev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... future period. That amounts to a license to enter on the land coupled with a grant to catch and carry away the fish, that is to say, it is a profit a prendre: see 11 Halsbury's Laws of England, (Hailsham Edition), pages 382 and 383. In England this is regarded as an interest in land (11 Halsbury's Laws of England, page 387) because it is a right to take some profit of the soil for the use of the owner of the right (page 382). In India it is regarded as a benefit that arises out of the land and as such is immoveable property. 10. Section 3 (26) of the General Clauses Act defines immoveable property as including benefits that arise out of the land. The Transfer of Property Act does not define the term except to say that immoveable property does not include standing timber, growing crops or grass. As fish do not come under that category the definition in the General Clauses Act applies and as a profit a prendre is regarded as a benefit arising out of land it follows that it is immoveable property within the meaning of the Transfer of Property Act. 11. Now a sale is defined as a transfer of ownership in exchange for a price paid or promised. As a profit a prendre is immoveable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dre to take acorns and beech mast, brakes, fern, heather and litter, thorns, turf and peat, boughs and branches of growing trees, rushes, freshwater fish, stone, sand and shingle from the seashore A and ice from a canal; also the right of pasture and of shooting pheasants. There is, however, no right to take seacoal from the foreshore. The right to take animals ferae naturae while they are upon the soil belongs to the owner of the soil, who may grant to others as a profit a prendre a right to come and take them by a grant of hunting, shooting, fowling and so forth. 99. A profit a prendre is a servitude for it burdens the land or rather a person's ownership of land by separating from the rest certain portions or fragments of the right of ownership to be enjoyed by persons other than the owner of the thing itself (see Jowitt's Dictionary of English Law, Second Edition, Volume 2, page 1640. under the heading Servitude ). Servitude is a wider term and includes both easements and profits a prendre (see Halsbury's Laws of England, Fourth Edition, Volume 14, paragraph 3, page 4). The distinction between a profit a prendre and an easement has been thus stated in Halsbury's ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Property Act. In Ananda Behra and another v. The State of Orissa and another ([1955] 2 S. C. R. 919) this Court has held that a profit a prendre is a benefit arising out land and that in view of clause (26) of section 3 of the General Clauses Act, it is immovable property within the meaning of the Transfer of Property Act. 101. The earlier decisions showing what constitutes benefits arising out of land have been summarized in Mulla on The Transfer of Property Act, 1882 , and it would be pertinent to reproduce the whole of that passage. That passage (at pages 16-17 of the Fifth Edition) is as follows: A 'benefit to arise out of land' is an interest in land and therefore immovable property. The first Indian Law Commissioners in their report of 1879 said that they had 'abstained from the almost impracticable task of defining the various kinds of interests in immovable things which are considered immovable property. The Registration Act, however, expressly includes as immovable property benefits to arise out of land, here diary allowances, rights of way lights, ferries and fisheries'. The definition of immovable property in the General Clauses Act applies to this Act. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n agreement to sell bamboos standing in the contract areas with an accessory licence to enter upon such areas / for the purpose of felling and removing the bamboos nor is it, unlike the Timber Contracts, in respect of a particular felling season only. It is an agreement for a long period extending to fourteen years, thirteen years and eleven years with respect to different con tract areas with an option to the Respondent Company to renew the contract for a further term of twelve years and it embraces not only bamboos which are in existence at the date of the contract but also bamboos which are to grow and come into existence thereafter. The payment of royalty under the Bamboo Contract has no relation to the actual quantity of bamboos cut and removed. Further, the Respondent Company is bound to pay a minimum royalty and the amount of royalty to be paid by it is always to be in excess of the royalty due on the bamboos cut in the contract areas. 103. We may pause here to note what the Judicial Committee of the Privy Council had to say in the case of Raja Bahadur Kamkashya Narain Singh of Ramgarh v. Commissioner of Income-tax, Bihar and Orissa (1943) 11 I.T.R. 513 P.C about the payment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tted for that purpose in order to meet the fuel requirements of the domestic consumption in the houses and offices of the persons employed by it and to pay a fixed royalty for this purpose. Further, the Government was bound, if required by the Respondent Company, to lease to it a suitable site or sites selected by it for the erection of store houses, sheds, depots, bungalows, staff offices, agencies and other buildings of a like nature. 105. We have highlighted above only the important terms and conditions which go to show that the bamboo Contract is not and cannot be a contract of sale of goods. It confers upon the Respondent Company a benefit to arise out of land, namely, the right to cut and remove bamboos which would grow from the soil couple with several ancillary rights and is thus a grant of a profit a prendre. It is equally not possible to view it as a composite contract one, an agreement relating to standing bamboos agreed to be severed H and the other, an agreement relating to bamboos to come into existence in the future. The terms of the Bamboo Contract make it clear that it is one, integral and indivisible contract which is not capable of being severed in the manner can ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not be said to be service as contemplated under the provisions of GST Act. Moreover, assignment/transfer of rights would be out of scope of supply of service. 82. In view of above discussion and analysis of the provisions of section 7 read in context of the facts of the case, the decisions relied upon on behalf of the respondent are required to be dealt in support of the proposition that interest in immovable property cannot be considered as an immovable property as it is not envisaged as such in the GST Act, as immovable property is nothing but bundle of rights and right to give such property on lease is one of such rights and further transfer of the right to occupy or possess will continue to remain as supply of service which character will not change merely because lessee of GIDC affects absolute transfer thereof in favor of the assignee leaving no right whatsoever in respect of such leasehold land and building. (1) Decision in case of Legal Hiers of Deceased Fakir Chand Ambaram Patel (supra) of this Court holding that lease creates an interest in immovable property which is an intangible asset and therefore, would amount to supply of service, would not be applicable as along wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... th the land and liable to the stamp duty accordingly. (5) Reliance was placed on the decision in case of P. Kishore Kumar v. Vittal K. Patkar reported in 2023 SCC OnLine SC 1483 to canvas the proposition that a vendor cannot transfer a title to the vendee better than he himself possesses and the principle arising from the maxim Nemo dat quod non habet i.e. no one can confer a better title than what he himself has . Considering the nature of transaction when lessor assignor transfers the entire leasehold rights along with building constructed thereon to the lessee assignee, it would amount to assignment of all the rights in the immovable property by the lessor assignor. (6) Reliance placed by the respondent on levy of GST under Heading 9972 and Group 997212 for rental or leasing service vis-a-vis Group 99979 for other miscellaneous services in which Sub-group 999792 providing for agreeing to do an Act would not attract the transaction of assignment of leasehold rights along with building on the plot of land as lessee/assignee is not liable to receive any rental from the assignee. Similarly, reliance placed on Group 99836 for Advertising services and sub-group 998363 to 998366 for Sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in accordance with its definition in another statute or statutory instrument and more so, when such statute or statutory instrument is not dealing with any cognate subject and definition of the term in one statute does not afford a guide to the construction of the same term in another statute would not be applicable in the facts of the case as the very nature of transaction of assignment of the absolute right in the property has to be considered as transfer of immovable property and accordingly, would be out of purview of the scope of supply for levy of GST. (9) Reliance placed on the definition of services in the Major Law Lexicon by the respondent which includes transfer of technology including transferring or securing the transfer of rights etc. would not be applicable to the nature of the transaction of assignment of leasehold rights. (10) Reliance placed on Articles 24 and 25 of the Council Directive of the Council of the European Union on the common system of value added tax, more particularly, Article 25 which stipulates that a supply of service may consist inter-alia the transaction of assignment of immovable property whether or not the subject to document establishing tit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ease so as to earn rent on such assignment of leasehold rights, so as to apply clause 5(b) of Schedule II to such transaction. As nature of transaction in facts of the case is outright assignment resulting into sale/transfer of the leasehold rights in favour of assignee by lessee/assignor for a consideration would be covered by clause 5 of Schedule III which provides that sale of land and building shall not be considered as supply of services. Therefore, it cannot be said that assignment of the outright leasehold rights would be a service or transferring of leasehold right. -:CONCLUSION:- 83. In view of foregoing reasons, 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. In such circumstances, 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 transac ..... X X X X Extracts X X X X X X X X Extracts X X X X
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