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TMI Blog2025 (1) TMI 516X X X X Extracts X X X X X X X X Extracts X X X X ..... VIL APPLICATION NO. 19418 of 2023 With R/SPECIAL CIVIL APPLICATION NO. 118 of 2024 With R/SPECIAL CIVIL APPLICATION NO. 21840 of 2023 With R/SPECIAL CIVIL APPLICATION NO. 21932 of 2023 With R/SPECIAL CIVIL APPLICATION NO. 17214 of 2023 With R/SPECIAL CIVIL APPLICATION NO. 17792 of 2023 With R/SPECIAL CIVIL APPLICATION NO. 2630 of 2024 With R/SPECIAL CIVIL APPLICATION NO. 2655 of 2024 With R/SPECIAL CIVIL APPLICATION NO. 18222 of 2023 With R/SPECIAL CIVIL APPLICATION NO. 18296 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/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ivedi with learned Assistant Government Pleader Mr. Vinay Bairagra and learned advocate Mr. Raj Batada and learned advocate Ms. Nidhi Vyas for the respective respondents. 2. Rule returnable forthwith. Learned Assistant Government Pleader Mr. Vinay Bairagra, learned advocate Mr. Raj Batada and learned advocate Ms. Nidhi Vyas waives service of notice of rule on behalf of the respective respondents. 3. In this group of petitions, the issue pertains to levy of goods and service tax on assignment 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ure of Mandamus and hold that the notices/summons (Annexure A) issued by the Respondent Authorities are ex-facie illegal and without jurisdiction and further be pleased to hold and declare that the 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; And in the alternate, (C) Your Lordships be pleased to issue a writ of mandamus and hold and declare that the Respondent 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 inte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for which a separate consideration is charged; [Explanation. - For the removal of doubts, it is hereby clarified that the expression "services" includes facilitating or arranging transactions in securities;]" [5] section 2 (105) defines "supplier" as under: ""supplier" in relation to any goods or services or both, shall mean the person supplying the said goods or services or both and shall include an agent acting as such on behalf of such supplier in relation to the goods or services or both supplied:" [6] Section 2 (107) defines a "taxable person" as under: "(107) "taxable person" 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 transac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5 of Schedule II refers to supply of services as per sub-section (1A) of section 7 pertaining to construction of a complex building, civil structure 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 were required by the competent authority or after its first occupation whichever is earlier. Paragraph no. 5 of Schedule II reads as under: "5. Supply of services The following shall be treated as supply of services, namely:- (a) renting of immovable property; (b) construction of a complex, building, civil structure 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-requ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Section 65B (44) of the Finance Act, 1994 defines "Services" as under: "(44) "service" means any activity carried out by a person for another for consideration, and includes a declared service, but shall not include- (a) an activity which constitutes merely,- (i) a transfer of title in goods or immovable property, by way of sale, gift or in any other manner; or (ii) such transfer, delivery or supply of any goods which is deemed to be a sale within the meaning of clause (29-A) of Article 366 of the Constitution; or (iii) a transaction in money or actionable claim; (b) a provision of service by an employee to the employer in the course of or in relation to his employment; (c) fees taken in any court or tribunal established 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 per ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t charges or by any other name) leviable in respect of the service, by way of granting long term (thirty years, or more) lease of industrial plots, provided by the State Government Industrial Development Corporations or Undertakings to industrial units." 11. On conjoint reading of above provisions and notifications, it is required to be determined as to whether the transfer/assignment of leasehold rights is a transaction of sale pertaining to immovable 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. 12. Learned advocates for the petitioners have made submissions referring to various 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 T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the tenant, "Assignment", it has been stated in Black's Law Dictionary, Special Deluxe Ed., p. 106, "is a transfer or making over to another of the whole of any property, real or personal, in possession or in action, or of any estate or right therein". It has further been stated as "The transfer by a party of all its rights to some kind of property, usually intangible property such as rights in a lease, mortgage, agreement of sale or partnership." It has to be examined whether there was sub-letting or otherwise parting with possession in terms of Sec. 13(1)(e) of the Act." 12.3) Reliance was placed on the decision in case of State of West Bengal v. Gautam Sur reported in AIR 2008 Cal 1, wherein it is held as under: "2. The facts leading to the writ petitions are that the lease was originally 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 leas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that all rights of ownership are not transferred. The significance of those words as indicative of the limited estate transferred is apparent if contrasted with those in Section 54 where a sale is defined as a "transfer of ownership in exchange for a price." 13. An underlease is a grant by a lessee to another of part of his whole interest under the original lease reserving to himself a reversion: it differs from an assignment, which conveys the lessee's whole interest and passes to the assignee the right and liability to sue and be sued upon the covenants in the original lease (Wharton's Law Lexicon). In the case on hand, the lessee's whole interest having been assigned without reserving a reversion, the question of calling the impugned transfer an underlease or sub-lease, as contended by the learned advocate for the respondent, 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... food or drink placed at the command of the customer for the satisfaction of his desires, or actually appropriated by him in the process of appeasing his appetite or thirst. The customer does not become the owner of the food set before him, or of that portion which is carved for his use, or of that which finds a place upon his plate, or in side dishes set about it. No designated portion becomes his. He is privileged to eat, and that is all. The uneaten food is not his. He cannot do what he pleases with it. That which is set before him or placed at his command is provided to enable him to satisfy his immediate wants, and for no other purpose. He may satisfy those wants; but there he must stop. He may not turn over unconsumed portions to others at his pleasure, or carry away such portions. The true essence of the transaction is service in the satisfaction of a human 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s" and "includes" one. It is well settled that such definition is an exhaustive definition (see: P. Kasilingam and others v. P.S.G. College of Technology and others 1995 Supp (2) SCC 348 at para 19). There is thus, no scope to include "service' in such a definition. Further, even if we were to accept Mr. Bhatt's contention, Rule 4(3) would become ultra vires Section 6 of the Act inasmuch as it would prohibit the sale of cigarettes and other tobacco products in a smoking area in hotels, restaurants and airports, thus, adding one more exception to the two exceptions already contained in Section 6. It is, thus, clear that this condition would be ultra vires the Cigarettes Act and the Rules properly so read." 12.7) It was submitted that the term service has not been defined by the Legislature to include things not ordinarily covered within the meaning of the term and therefore, the term service 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e judgment of Hon'ble Supreme Court in case of Commissioner of Central Excise-I, New Delhi v. S.R. Tissues(P) Ltd. and another reported in (2005) 6 Supreme Court Cases 310. 12.11) It was further submitted that the reliance of the respondents on the Council Directive dated 28.11.2006 is not justified for the following reasons: i. As the title itself indicates, it is a Directive for adoption by members of the EU and not Law. ii. Article 25, which has been relied upon, states that a supply of service may consist in the assignment of intangible property which means that the same will have to be examined on case-to-case basis particularly since a sub-lease and assignment in some cases are used interchangeably. This can be distinguished with the language of Articles 24 and 26 which used the word "shall" while referring to Services. 12.12) It was therefore, submitted that the assignment of leasehold rights, which is an absolute transfer of 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. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... never the intention of the legislature to impose tax on transfer of immovable property. It was submitted that the Customs Excise and Service Tax Tribunal, Chandigarh bench in the case of DLF Commercial Projects Corporation v/s Commissioner of Service Tax, Gurugram reported in 2019 SCC Online CESTAT 9281 held that development rights are "benefits arising from land" and therefore not liable for service tax. It was submitted that while the Government has filed appeal before Hon'ble Supreme Court for challenging such decision, the operation of the order has not been stayed. It was submitted that while holding that development rights are "benefits arising from land", the CESTAT has followed judgement of Hon'ble Bombay High Court in the case of Cheda Housing Development Corporation v/s Bibijan Shaikh reported in 2007 SCC Online Bom 130. It was further submitted that leasehold right is in fact a greater right and interest in land than development right and 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 submit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... words, something which was constructed on the land is also transferred along with the rights and interest in land. The petitioners thus earned benefit out of the land by way of constructing and operating factory building/shed. This constitutes "profit a pendre" which is an immovable property and transfer of such immovable property cannot be subjected to tax under the GST Acts. 13.6) Reliance was placed on the following judgements of Hon'ble Supreme Court wherein different types of rights have been considered to be profit a pendre or benefits arising from land: (1) In case of Anand Behera v/s State of Orissa AIR 1956 SC 17, wherein it is held as under: "9. The facts disclosed in paragraph 3 of the petition make it clear that what was sold was the right to catch and carry away fish in specific sections of the lake over a specified 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 ri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is an interest in land and for this reason any disposition of it must be in writing. A profit a prendre which gives a right to participate in a portion only of some specified produce of the land is just as much an interest in the land as a right to take the whole of that produce... "242. What may be taken as a profit a prendre. The subject matter of a profit a prendre, namely the substance which the owner of the right is by virtue of the right entitled to take, may consist of animals, including fish and fowl, which are on the land, or of vegetable matter growing or deposited on the land by some agency other than that of man, or of any part of the soil itself, including mineral accretions to the soil by natural forces. The right may extend to the taking of the whole of such animal or vegetable matters or merely a part of them. Rights have been established as profits a prendre 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 sea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llustrates a benefit to arise out of land by stating that immovable property "includes...rights to ways, lights ferries, fisheries or any other benefit lo arise out of land". As we have seen earlier, the Transfer of Property Act, 1882, does not give any definition of "immovable property" except negatively by stating that immovable property does not include standing timber, growing crops, or grass. The Transfer of Property Act was enacted about fifteen years prior to the General Clauses Act, However, by section 4 of the General Clauses Act, the definitions of certain words and expressions, including "immovable property" and "movable property", given in section 3 of that Act are directed to apply also, unless there is anything repugnant in the subject or context, to all Central Acts made after January 3 1968, and the definitions of these two terms, therefore, apply when they occur in the Transfer of 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 meani ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ak of the consideration payable by the forest contractor, the Bamboo Contract provides for payment of royalty. "Royalty" is not a term used in legal parlance for the price of goods sold. "Royalty" is defined in Jowitt's Dictionary of English Law, Fifth Edition, Volume 2, page 1595, as follows. "Royalty, a payment reserved by the grantor of a patent, lease of a mine or similar right, and payable proportionately to the use made of right by the grantee. It is usually a payment of money, but may be a payment in kind, that is, of part of the produce of the exercise of the right. Royalty also means a payment which is made to an author or composer by a publisher in respect of each copy of his work which is sold, or to an inventor in respect of each article sold under the patent." We are not concerned with the second meaning of the word H "royalty" given in Jowitt. Unlike the Timber Contracts, the Bamboo Contract is not an 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 ag ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he industry. It was pointed out that lessee had transferred the leasehold rights along with the ownership of the building for a consideration. It was therefore, submitted that as per Entry No.4 in Schedule III of the GST Act, such transaction cannot be considered as supply of goods or services for levy of GST. It was further submitted that the leasehold rights are nothing but benefits arising out of the land. Reference was also made to section 54 of the Transfer of Property Act which defines sales of immovable property to mean transfer of ownership in exchange for a price paid or promised or part-paid or part-promised and such transfer in the case of tangible immovable property of the value of one hundred rupees and upwards or in the case of reversion or other intangible thing, can be made only by a registered instrument. It was therefore, submitted that the transfer of leasehold rights of the land in question along with the immovable property constructed thereon is by a registered deed liable to be compulsorily registered under section 17 of the Registration Act, 1908. 14.1) Reliance was also placed on section 2 (6) of the Registration Act which defines immovable property which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The mere fact that rent is payable by the permanent lessee does not make a permanent lease any the less an alienation than a sale." 15. Learned advocate Mr. Manav Gupta appearing for the petitioner in Special Civil Application No. 7108 of 2024 referred to the show cause notice, offer of allotment, form of agreement, Notification no. 28/2019, Notification dated 28.06.2017 and subsequent deed to point out that there is a transfer of leasehold rights which cannot be subjected to levy of GST as the same would amount to transfer of immovable property which cannot be considered as supply of either goods or services as perpetual lease of 99 years along with right to construct building thereon on the plot of land, would only suggest that the lessee was de-facto owner and word 'lessee' is a misnomer. In support of his submission, reliance was placed on decision of Delhi High Court in case of M/s. Housing & Urban Development Corporation Ltd. v. Municipal Corporation of Delhi reported in ILR (1999) II Delhi wherein it was held that section 120 (1) (c) of the Delhi Municipal Corporation Act would not apply to the Housing Urban Development Corporation as allotment of land was made merely to de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... land Revenue Code. Reliance was placed on the decision of Hon'ble Apex Court in case of The Anant Mills Co. Ltd. v. State of Gujarat and others reported in AIR 1975 SC 1234, wherein the Apex Court held that word "land" has been defined in clause (30) of section 2 of the Corporations Act to include land which is being built upon or is built upon or covered with water, benefits to arise out of land, things attached to the earth or permanently fastened to anything attached to the earth and rights created by legislative enactment over the street. The definition is of inclusive nature and does not exclude from its ambit the underground strata of the land. It was therefore, submitted that the leasehold rights are nothing but benefits to arise out of land. 17.1) Reliance was also placed on the decision of Apex Court in case of UT Chandigarh Administration and another v. Amarjeet Singh and others reported in (2009) 4 Supreme Court Cases 660, wherein subject matter was auction of sites for grant of lease for 99 years and it involves neither sale of goods nor rendering of any service and act of leasing plots by auction did not result in the successful bidder becoming a consumer or the appe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9) 4 SCC 660. It is a case where a clear cut assurance was made to the purchasers as to the nature and the extent of development that would be carried out by the appellant-company as a part of the package under which sale of fully developed plots with assured facilities was to be made in favour of the purchasers for valuable consideration. To the extent the transfer of the site with developments in the manner and to the extent indicated earlier was a part of the transaction, the appellant-company had indeed undertaken to provide a service. Any deficiency or defect in such service would make it accountable before the competent Consumer Forum at the instance of consumers like the respondents." 17.5) Reliance was placed on the decision in case of State of Karnataka and others v. Pro Lab and others reported in (2015) 8 Supreme Court Cases 557, wherein it is held as under: "20. To sum up, it follows from the reading of the aforesaid judgment that after insertion of clause 29-A in Article 366, the Works Contract which was indivisible one by legal fiction, altered into a contract, is permitted to be bifurcated into two: one for "sale of goods" and other for "services", thereby making ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a High Court, the assessee let on lease for 99 years a portion of a Zamindari acquired by it. The lease related to the surface right together with nine mica mines located in that area. The consideration for the lease was the payment of a 'salami' and a reserve rent per year. The Income-tax Officer determined the cost to the assessee of the mineral rights and after deducting this amount from the salami, he assessed the balance to tax as capital gains under Section 12-B of the said Act. It was held by the Patna High Court that the gains arising from the said transaction were rightly taxed. This decision has been cited without comment by Kanga and Palkhivala in their commentary on the Law of Income-tax (7th Edition) at page 550 and no contrary case has been cited in the said text book or has been brought to our attention. It is true that the decision of the Patna High Court relates to a case of mining lease, but to our mind, the principle laid down in that case can well be applied to the case before us. In the first place, the lease is for a long period, namely, 99 years, hence it would appear that under the leases in question the assessee has parted with an asset of an enduri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hysical object and the various incorporeal ownership rights in the object, such as the rights to possess, to enjoy the income from, to alienate, or to recover ownership from one who has improperly obtained title to the object." 19.1) Referring to the above definition, it was submitted that the property includes the right of ownership or aggregate of rights that are guaranteed and protected by the Government. It was therefore, submitted that the leasehold rights is a property which is an incorporeal ownership right in the objects such as the rights to possess, to enjoy income from, to alienate, or to recover ownership. It was submitted that property is more than just the physical thing, the land, the bricks, the mortar, as it is also the sum of all the rights and powers incident to ownership of the physical thing, it is the tangible and intangible. Reliance was placed on decision in case of Union Pacific Railroad Company v. Santa Fe Pacific Pipelines reported in Inc., 231 Cal. App. 4Th 134. 19.2) Reliance was also made to the decision in case of Schweihs v. Chase Home Finance , LLC reported in 2015 IL App(1st) 140683, wherein it is held that a common idiom describes property as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o commentary on Law of Property by K. Krishna Menon in relation to sections 54 to 57 of the Transfer of Property Act pertaining to sale. Reference was made to analysis of the sale transaction where four points were noted with regard to the parties, the price, the subject matter and the manner of transfer. 19.7) Reference was made to the decision in case of Mohori Bibi reported in 30 Cal 539, P.C. wherein all the contracts by infants were declared to be void and infant cannot be a vendor of property. In that context it was pointed out that "in other words as Sulaiman, counsel for the appellant, put it, conveyance is something more than a contract; as soon as the sale deed is executed, the transaction passes from the domain of contract into that of conveyance. The former would be governed by the Contract Act, the latter by the Transfer of Property Act, and the Transfer of Property Act nowhere says that an infant is incapable of being a transferee." It was therefore, submitted that even as per Indian law, guardian of an infant is competent to bind the minor for its estate by contract or purchase of immovable property. 19.8) Reference was made to the above commentary to point out t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... w or in accordance with the terms of the agreement, as the case may be. If that be so, Guruswamy Naidu could have validly entered into a genuine partnership with others taking a 10 annas share in the business, though in fact as between the members of the family he has only a 2 annas share therein. He would have been answerable for the profits pertaining to his share to the divided members of the family, but it would not have affected the validity or genuineness of the partnership. So much is conceded by the learned Attorney-General. If so, we do not see why a different result should flow if instead of one member of the divided family two members thereof under some arrangement between the said members of the family took 10 annas share in the partnership. If the contention of the revenue was of no avail in the case of representation by a single member, it could not also have any validity in the case where two members represented the divided members of the family in the partnership. As the partnership deed was genuine, it must be held that the shares given to Guruswamy Naidu and Venkatasubba Naidu in the said partnership are correct in accordance with the terms of the partnership deed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t be said to be of a Hindu undivided family. There is nothing in the Indian income-tax law or the law of partnership which prevents the members of a Hindu joint family from dividing any asset." These observations support the conclusion we have arrived at. The division in the joint family does not change the position of the karta as a partner vis-a-vis the other partner or partners in a pre-existing partnership, because the law of partnership and Hindu law function in different fields. If so, on the same principle, a divided member or some of the divided members of an erstwhile joint family can certainly enter into a partnership with third parties under some arrangement among the members of the divided family. Their shares in the partnership depends upon the terms of the partnership; the shares of the members of the divided family in the interest of their representative in the partnership depends upon the terms of the partition deed." (2) In case of Vijaya Oil Mills v. State of Kerala reported in 1980 (45) STC (Ker), wherein it is held as under: "11. To pay tax is a duty. When it is levied it becomes a liability. Consequently, tax after it becomes due is a debt. It does not ce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... etation of the earlier Act are strict; both must be laws on the same subject and the part of the earlier Act which it is sought to construe must be ambiguous and capable of different meanings. For example, in Kirkness (Inspector of Taxes) v. John Hudson & Co. Ltd. [1955] AC 696, it was held by the House of Lords that the ordinary meaning of the word "sale" importing a consensual relation is to be attributed to the use of it in the context of section 17 (1) (a) of the Act of 1945. Since there was no ambiguity in the section, it was not permissible to seek guidance in its construction from later Finance Acts, although it was directed by Parliament to be construed as one with them. At page 714 of the report Viscount Simonds states: "I have looked at the later Acts to which the Attorney-General referred in order to satisfy myself that they do not contain a retrospective declaration as to the meaning of the earlier Act. They clearly do not, and I do not think that it has been contended that they do. At the highest it can be said that they may proceed upon an erroneous assumption that the word 'sold' in section 17 (1) (a) of the Income Tax Act, 1945, has a meaning which I hold ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of leasehold right would also be taxed on the building which was never leased by GIDC but constructed by lessee to run the industry on the leasehold land. It was further submitted that land apurtenant to building is also a building. Reliance was placed on the decision of Apex Court in case of Dr. K.A. Dhairayawan and others v. J.R. Thakur and others reported in 1959 SCR 799, wherein Hon'ble Apex Court while analysing the provisions of Bombay Rents, Hotel and Lodging House Control Act, 1947 held that upon a proper construction of lease, there was a demise only of the land and not of the building and consequently, the provisions of the Act did not apply to the contract for delivery of possession of the building as the ownership in the building was with the lessees and in which the lessors had no right while the lease subsisted. It was held that there was no absolute rule of law in India that whatever was affixed or built on the soil became part of it and was subjected to the same rights of property as the soil itself. It was therefore, submitted that the building transferred along with leasehold rights cannot be subjected to levy of GST as per Entry No.5 in Schedule-III of the GST A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r reference was made to the minutes of the 7th GST Council Meeting held on 22-23 December 2016 wherein the aforesaid agenda was considered and GST council decided not to introduce GST on land and building at this stage and agreed that this issue can be revisited after a year or so of the implementation of GST. It was therefore, submitted that there is no prescribed rate of GST on land and building but by virtue of Schedule III, Item No.5, land and building are excluded from the scope of supply of goods and services. It was therefore, submitted that the transfer of leasehold rights being one of the right of bundle of properties is nothing but an immovable property and therefore, would fall within the scope of land and building which is specifically excluded from the purview of scope of supply of goods and services by Schedule-III of the GST Act. 19.15) It was submitted that leasehold rights are nothing but a benefit arising out of the land which is allotted by GIDC and such interest in land is also to be regarded as immovable property. 19.16) It was therefore, submitted that as per the terms of the lease deed executed by GIDC, lessee can assign his interest in any lawful manner ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Act." 19.20) Referring to above, it was submitted that assignment of leasehold rights is transfer of intangible property with interest and possession of the land and building and therefore, the same can only be considered as sale of land and building which would be out of purview of scope of supply of goods and services under the GST Act. It was therefore, submitted that GST cannot be levied upon the transaction of assignment of leasehold rights of the land allotted by GIDC under 99 years of lease. 20. Learned Senior Advocate Mr. S.N. Soparkar appearing for the petitioner in Special Civil Application No. 3736 of 2024 adopted the submissions made by other learned advocates for the petitioners referred to conveyance deed executed by the original lessee for assignment of leasehold rights which comprises both the leasehold rights in land and ownership rights in building. It was therefore, submitted referring to the provisions of section 7 (1) read with section 2 (52) and section 2 (102) of the GST Act that transaction in question cannot be considered as supply of goods or services as it pertains to the immovable property being land and building which is excluded from the scop ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... efinition of the land in Section 3 (14) shows that it is not necessary for the land to fall within its purview that it must be actually under cultivation or occupied for purposes connected with agriculture. The requirement is amply satisfied even if the land is either held or occupied for the purposes connected with agriculture. The word "held" only means possession of legal title and does not require actual connected occupation. In State of Gujarat v. Kamla Ben Jivan Bhai, [1979] Supp. 2 SCC 440, this Court held that actual cultivation is not necessary to constitute an estate and the right to collect grass is a right annexed to land which was held to be an estate and abolition of the right to pay annual amount was an agrarian reform. In Sri Ram Ram Narain Medhi v. State of Bombay, [1959] Supp. 1 SCR 489, this Court held that the Code is a law relating to land tenures. The right in relation to an estate used in Article 31A has been noted in a very com-prehensive sense. In Digvijay Singh Hamirsinhji v. Manji Savda, [1969] 1 SCR 405, this Court interpreting Section 18 of Saurashtra Land Re-forms Act, 1951 held that the Girasdar to whom the ruler made the grant was bound by the provis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0.2) Referring to above analysis, it was submitted that the word "property" should be given liberal and wide connotation including the various types of interest which have characteristics of property right and therefore, the leasehold rights are nothing but property in land which is an immovable property. 20.3) Reliance was also made on the decision of Apex Court in case of Commissioner of Income Tax Assam, Tripura and Manipur v. Panbari Tea Co. Ltd reported in (1965) 57 ITR 422, wherein with regard to whether premium payable in installments in addition to rent of a leasehold property was a revenue or capital income, the Hon'ble Apex Court held as under by drawing distinction between the premium and rent: "2. The short question that arises in this appeal is whether the amount described as premium in the lease deed is really rent and, therefore, a revenue receipt. Before we look at the lease deed it will be convenient to notice briefly the law pertaining to the concept of premium, which is also described as salami. The distinction between premium and rent was brought out by the Judicial Committee in Raja Bahadur Kamakshya Narain Singh of Ramgarh v. Commissioner of Income-tax [ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... session resulting into grant of right to a portion of the capital of the lessor in the shape of a general right to the capital asset. It was therefore, submitted that leasehold rights are nothing but a capital asset in an immovable property which cannot be subjected to in form of land and building and therefore, will be out of scope of supply of goods and services as per the Schedule-III of the Act. 21. On the other hand, learned Advocate General Mr. Kamal Trivedi for the respondent State submitted that leasehold right with respect to the immovable property (I.e. land) is an "interest" in the immovable property. In fact, it is an intangible estate, which does not have physical existence or identity as being commonly understood. 21.1) It was submitted that when transfer of such a leasehold right takes place, it would be nothing but transfer of interest in the immovable property. 21.2) It was submitted that the question as to what is the meaning of the term "immovable property", more particularly when the said term is not defined under the CGST Act, 2017, or GGST Act, 2017, as per well settled legal position, in such an eventuality, meaning of the said term should be understood ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... anything attached to the land were to be treated as land itself ie immovable property by itself, as defined under Section 3 (26) of the General Clauses Act, 1897, or under Section 2 (6) of the Registration Act, 1908, then in that case, it would, in the first blush, seem to be highly illogical to treat growing crops, grass and things attached to the land as 'movable property under Section 2(52) of the GST Act. However, it is not so, because it has been deemed fit by the legislature to treat 'growing crops, grass and things attached to or forming part of the land, as movable, under the GST Act as well as the Transfer of Property Act, 1882, though the same is treated as immovable property under the above-referred General Clauses Act, 1897, and the Registration Act, 1908. 21.6) It was submitted that in the present case, GIDC being the owner of the land has bundle of rights qua the same, viz (i) right to own; (ii) right to construct: (iii) right to give a license; (iv) right to possess and occupy (v) right to give a lease, (vi) right to sue. (vii) right to compensation; etc. (viii) reversion right 21.7) It was therefore, submitted that now, when one of the ri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r commerce" to include use of immovable property as factories, office buildings, warehouses etc. and it has been declared that "renting of immovable property" includes allowing or permitting the use of space in an immovable property, irrespective of the transfer of possession or control of the said immovable property. 20. In view of the definition of expression of "renting of immovable property" read with Explanation, in our opinion, will include the lease of various plots allotted by the assessee for business/ commercial purposes and rent charged/ collected in respect of the lease so executed would necessarily be subjected to service tax. 21. We may record that the term/period of the lease whether it is for short duration or for 90 years or perpetuity makes absolutely no difference to the meaning of the expression "renting of immovable property". The contention of the assessee that since long term lease of 90 years/perpetuity would virtually amounts to transfer of ownership of the land does not appeal to us especially in view of the simple meaning of the language use in the aforesaid sections. 22. The judgment of the Apex Court in the case of R.K. Palshikar (HUF) vs. Commiss ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... activities to be treated as supply of goods or services. The substantive provision section 7 in clearest terms says that the activities specified in Schedule I made or agreed to be made without a consideration and the activities to be treated as supply of goods or supply of services referred to in Schedule II would be included in the expression "supply". However, clause (a) of sub-section (1) of section 7 includes 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. We referred to J.V. Salunke, PA 907-WP.12194.2017.doc the definitions simply to reinforce our conclusion that the CIDCO is a person and in the course or in furtherance of its business, it disposes of lands by leasing them out for a consideration styled as one-time premium. Therefore, if one refers to Schedule II, section 7, then, Item No. 2 styled as land and building and any lease, tenancy, licence to occupy land is a supply of service. Any lease or letting out of a building, including commercial, industrial or residential complex for business, e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... radesh and others reported in (2009) 14 Supreme Court Cases 716, wherein it is held as under : "25. It was also contended by him that the main condition for registration of an instrument is that it must be chargeable to duty on the market value and the same is possible in case of an out right sale. In case of lease, only partial rights are transferred and the right of reversion remains with the lessor whereas in case of sale, there is an absolute transfer of ownership. Therefore, we have to establish whether the documents presented for registration were, in fact, an out right sale or a deed of lease. 26. The learned counsel appearing on behalf of the respondent no 4. (i.e. being the Noida authorities) contended that the deed was a composite deed of assignment and sale owing to which both Articles 23 and 63 would be applicable. The Division Bench of the High Court in its impugned judgment also agreed to this contention. Thus, considering this, it becomes essential for us to determine the nature of the deed. 27. "Sale" has been defined under section 54 of the Transfer of Property Act. Although the Indian Stamp Act 1899 has not included the definition of "sale", Section 2, sub-s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the case of Byramjee Jeejeebhoy (P) Ltd. vs State of Maharashtra (AIR 1965 SC 590), where this Court formulated the following principles for determination of the aforesaid question: "8. Such a grant cannot be regarded as a lease, for a lease contemplates any right for a transfer of a right in a consideration price paid or promised or service or other things of value to be rendered periodically or on specified again to the transferor. The grant does not purport to demise a right of enjoyment of land. It confers right of ownership in then land. There is gain no contractual right reserved. It is specifically or by implication to determine the right. The reservation and reversion remained and remains yearly and runs, years and profits of all lands determine and property in the premise is of nature of a restriction upon the said transfer and does not restrict the equality of the said. The rent to be demanded was again not stipulated as consideration for the grant of the right to enjoy the land but expressly in consideration of granting freedom from liability to pay assessment." 32. The High Court in the present case decided that the document given for registration contained a compo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se deed executed between Noida and the sub-lessees that: "At the time of re-entry the demised premises shall not have been occupied any building constructed by the sub-lessee therein the sub lessee shall within a period of three months from the date of re-entry, removes from the demised premises all erections or buildings, fixtures and things which at any time and during the said terms shall be affixed or set up within or upon the said premises and leave the said premises in as good a condition as it was on the date of demise, in default whereof the same shall become the property of the lessor without payment of any compensation to the lessee/ sub lessee for the land and the building fixtures and things thereon, but upon the sub lessee removing the erection buildings, fixtures and things within the period hereinbefore specified, the demised premises shall be re-allotted and the lessee/ sub lessee may be paid such amounts as may works out in accordance." Therefore, the only question which comes to our mind is that if the lessee or the sub lessee has an absolute right over the constructions constructed by him and he can transfer it by an out right sale and not through an assignme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e said notification which reads as under: "(ii) Reference to "Chapter", "Section" or "Heading", wherever they occur, unless the context otherwise requires, shall mean respectively as "Chapter". "Section" and "Heading" in the annexed scheme of classification of services (Annexure)." 7) Thereafter reference was made to Annexure to the said notification providing Scheme of Classification of Services under Heading 9972. Reference was made to Serial no. 223, sub-heading 997212 prescribing rental or leasing services involving own or leased non-residential property. It was also pointed out that at Serial No.305 of the aforesaid Annexure, Group 99832, Architectural services, urban and land planning and landscape architectural services are classified and further at Serial No.338 Group 99836 Advertising services and provisions of advertising space or time includes sub-heading 998363 to 998366 as under: 998363 Sale of advertising space in print media (Except on Commission) 998364 Sale of television and radio advertising time 998365 Sale of internet advertising space 998366 Sale of other advertising space or time (Except on Commission) 8) Reference was made to Serial No.345 where ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l judgments of this Court. xxx 45. The concept of catering admittedly includes the concept of rendering service. The fact that tax on the sale of the goods involved in the said service can be levied does not mean that a service tax cannot be levied on the service aspect of catering. Mr. Mohan Parasaran, learned senior counsel for the appellant submitted that the High Court before applying the aspect theory laid down by this Court in the case of Federation of Hotel and Restaurant V/s. Union of India & Ors. (supra) ought to have appreciated that in that matter Art. 366 (29A) (f) of the Constitution was not considered which is of vital importance to the present matter and that the High Court ought to have differentiated the two matters. In reply, our attention was invited to paras 31 and 32 of the Judgement of the High Court in which service aspect was distinguished from the supply aspect. In our view, reliance placed by the High Court on Federation of Hotel and Restaurant (supra) and, in particular, on the aspect theory is, therefore, apposite and should be upheld by this Court. In view of this, the contention of the appellant on this aspect is not well founded. xxxx 53. It i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve and protect the eggs at a particular temperature. But the coming out of chicks from the eggs is an event of nature. The only difference seems to be that, by application of mechanical methods, the mortality rate of chicks is less and the assessee may got chicks more in number. This however, would not mean that the assessee produces chicks and that chicks are 'articles or things'. We are, therefore, of the opinion that the assessee is neither an industrial undertaking nor does the business of hatchery carried out by the assessee fall within the meaning of Sec. 32A and Sec. 88J of the Act. 18. It was then urged by the learned counsel for the assessee that the Act uses the words 'articles or things' at several places and the meaning assigned to them in other places of the Act should also be assigned under Sec. 32A and Sec. 88J of the Act. Fifth Schedule of the Act sets out a list of items which are treated as articles or things manufactured or produced for the purpose of Sec. 33 (1) (b) of the Act. In this Schedule we find that processed seeds which are products of plants have been shown as 'articles or things'. Similarly, Item No. (30) of the said Schedule ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , if read in the context of one provision of the Act, may mean or convey one meaning and another in a different context. The Legislature in its wisdom had chosen to place processed seeds and fish under the heading articles or things in the Fifth Schedule as Legislature is competent to give artificial meaning to any word. We are, therefore, of the opinion that the meaning assigned to words 'articles or things' in the Fifth Schedule cannot be assigned to the words 'articles or things' used in Sections 32A and 80J of the Act." 12) In case of Hotel & Restaurant Assn. and another v. Star India (P) Ltd. And others reported in (2006) 13 Supreme Court Case 753, wherein it is held as under: "41. An attempt has been made by Mr. Desai to contend that the 1986 Act is a cognate legislation. Section 2 (2) of TRAI Act provides that words and expression used and not defined in the said Act but defined in Indian Telegraph Act, 1885 or the Indian Wireless Telegraphy Act, 1933 shall have the meanings respectively assigned to them in those Acts. Thus, meaning of only such words which are not defined under TRAI Act but defined under those Acts could be taken into consideration. It i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... upon the provisions of the various statutes in which the same occurs but also upon the facts and circumstances of each case. The definition of the term in one statute does not afford a guide to the construction of the same term in another statute and the sense in which the term has been understood in the several statutes does not necessarily throw any light on the manner in which the term should be understood generally." 45. In Tata Consultancy Services V/s. State of A.P., 2005 1 SCC 308, this Court held: "40. Copyright Act and the Sales Tax Act are also not statutes in pari materia and as such the definition contained in the former should not be applied in the latter. See Jagatram Ahuja V/s. Commr. of Gift-tax, Hyderabad. 41. In absence of incorporation or reference, it is trite that it is not permissible to interpret a word in accordance with its definition in other statute and more so when the same is not dealing with any cognate subject" 46. Reliance has been placed upon a decision of this Court in Deputy Chief Controller of Imports and Exports, New Delhi V/s. K.T. Kosalram and Others, 1970 3 SCC 82 wherein the provisions of the Indian Tariff Act, 1934 were called in ai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct to any matter, and (iv) making available any other resources. [Export-Import Bank of India Act (28 of 1981), S. 2(j)]." 14) Reference was made to Council Directive of 2006 dated 28th November, 2006 on the common system of value added tax of the Council of the European Union wherein Chapter-3 refers to Supply of Services and Article 25 which consists of supply of services reads as under: "A. "supply of services may consist, inter alia, in one of the following transactions: (a) the assignment of intangible property, whether or not the subject of a document establishing title; (b) the obligation to refrain from an act, or to tolerate an act or situation; (c) the performance of services in pursuance of an order made by or in the name of a public authority or in pursuance of the law." 15) Reliance was placed on the decision of UP Authority for Advance Ruling in case of Remarkable Industries Private Limited reported in 2023 SCC Online UP AAR-GST 14, wherein it is held as under: "38. The activity of assignment is in the nature of agreeing to transfer one's leasehold rights. It does not amount to further sub-leasing, as the applicant's rights as per the Deed stan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is held as under: "8. The exemption notification should not be liberally construed and beneficiary must fall within the ambit of the exemption and fulfill the conditions thereof. In case such conditions are not fulfilled, the issue of application of the notification does not arise at all by implication. 8.1 It is settled law that the notification has to be read as a whole. If any of the conditions laid down in the notification is not fulfilled, the party is not entitled to the benefit of that notification. An exception and/or an exempting provision in a taxing statute should be construed strictly and it is not open to the court to ignore the conditions prescribed in the relevant policy and the exemption notifications issued in that regard. 8.2 The exemption notification should be strictly construed and given a meaning according to legislative intendment. The Statutory provisions providing for exemption have to be interpreted in light of the words employed in them and there cannot be any addition or subtraction from the statutory provisions. 8.3 As per the law laid down by this Court in a catena of decisions, in a taxing statute, it is the plain language of the provision tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as overlapping effect. 62. The principle is well-settled that two taxes/imposts which are separate and distinct imposts and on two different aspects of a transaction are permissible as "in law there is no overlapping". 63. A Constitution Bench of this Court in Federation of Hotel and Restaurant Associate of India, Etc. v. Union of India and others, (1989) 3 SCC 634 : (AIR 1990 SC 1637, Para 14), held that a law with respect to a subject might incidentally affect another subject in some way, but that is not the same thing. There might be overlapping but the overlapping must be in law. The fact that there is an overlapping does not detract from the distinctiveness of the aspects. Therefore, if the taxes are separate and distinct imposts and levied on the different aspects, then there is no overlapping in law. Following was laid down in paragraph 31: "31. Indeed, the law 'with respect to' a subject might incidentally 'affect' another subject in some way; but that is not the same thing as the law being on the latter subject. There might be overlapping; but the overlapping must be in law. The same transaction may involve two or more taxable events in its different ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t invalidity in the fiscal adventure save where other prohibitions exist." 65. Goods and Services Tax imposed under the 2017 Acts as noticed above and levy of cess on such intra-State supply of goods and services or both as provided under Section 9 of the CGST Act and such supply of goods and services or both as part of Section 5 of IGST Act is, thus, two separate imposts in law and are not prohibited by any law so as to declare it invalid. 66. We, thus, do not find any substance in the submission that levy of Compensation to States Cess on same taxable event is not permissible." -:Analysis:- 22. Interesting question which arises in this group of petitions pertains to levy of goods and service tax on assignment of leasehold rights by the lessee in whose favour GIDC has granted lease of the plot of land for industrial purpose. 23. Chapter III of the GST Act provides for levy and collection of tax. The GST Act is based upon levy of tax on the concept of "supply" of goods or services. Scope of supply is provided under section 7 of the GST Act. Sub-section(1)(a) thereof stipulates that for the purpose of the GST Act, the expression "supply" includes all forms of supply of goods ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of supply vis-a-vis the submissions canvassed by the respondent authority that such transactions would be covered within the scope of supply is required to be analyzed by referring to the various aspects which are highlighted by both the sides in support of their contentions along with the decisions which are relied upon. 29. Firstly, we have to consider as to what is the nature of transaction which is brought within the scope of supply and whether such transactions can be considered as supply of goods or supply of services. 30. GIDC is established under section 3 of Chapter II of Gujarat Industrial Development Act, 1962 which reads as under: "3. Establishment and incorporation. (1) For the purposes of securing and assisting in the rapid and orderly establishment, and organisation of industries in industrial areas and industrial estates in the State of Gujarat [and for the purpose of establishing commercial centres in connection with the establishment and organisation of such industries] [These words were inserted by Gujarat 11 of 1986, Section 4 (w.e.f. 01-07-1986).], there shall be established by the State Government by notification in the Official Gazette, a Corporation b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... service, by way of granting long term (30 years, or more) lease of industrial plots, provided by the State Government Industrial Development Corporations or Undertakings to industrial units. 36. Therefore, 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 the GST Act, charging of one time upfront amount as premium by the GIDC would attract Nil rate of tax as per the aforesaid notification. Therefore, when the industrial unit is allotted land by the GIDC, no GST is required to be paid under the provisions of GST Act as per entry no. 41 of Notification No. 12/2017. 37. As per the lease deed executed by GIDC in favour of industrial unit for allotment of plot of land, the industrial unit is entitled to transfer such leasehold land in favour of any third party with the prior permission of the GIDC on payment of transfer charges as prescribed by GIDC. However, such transfer fee would be subject to levy of GST at the rate of 18% under the GST Act as it would amount ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rowing crops nor grass." 40. The definition of immovable property as per the Registration Act, 1908 is an exhaustive definition. Section 17 of the Registration Act provides for documents of which registration is compulsory. Clause (d) of section 17 provides for compulsory registration of the leases of immovable property from year to year or for any term exceeding one year or reserving a yearly rent. Therefore, the lease deed executed by the GIDC is required to be compulsorily registered under section 17 of the Registration Act, 1908. 41. It is pertinent to note that what the petitioner has transferred by way of assignment/sale is leasehold rights which is over and above the actual physical plot of land and building, encompasses incorporeal ownership right in such land and building such as the right to possess, to enjoy the income from, to alienate, or to recover ownership of such right from one who has improperly obtained the title. Therefore, immovable property includes in addition to right of ownership, aggregate of rights that are guaranteed and protected by the further agreement or contract between the owner and the lessee. Therefore, as held in case of Schweihs v. Chase Home ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... : 2 (16). "Lease" means a lease of immovable property and includes also (a) a patta; (b) a Kabuliyat or other undertaking in writing, not being a counterpart of a lease, to cultivate, occupy, or pay or deliver rent for, immovable property; (c) any instrument by which tolls of any description are let; (d) any writing on an application for a lease intended to signify that the application is granted." 47. Gujarat Stamp Act 1958 with amendments made therein also defines lease in section 2(n) as under : "(n) "Lease" means a lease of immovable property and includes also (a) a patta; (b) a Kabuliyat or other undertaking in writing, not being a counterpart of a lease, to cultivate, occupy, or pay or deliver rent for, immovable property; (c) any instrument by which tolls of any description are let; (d) any writing on an application for a lease intended to signify that the application is granted." 48. The instrument of lease is liable to levy of stamp duty as per Article 30 of the Schedule-I of the Gujarat Stamp Act, 1958, where lease is more than ninety eight years, same duty is prescribed as is leviable for conveyance under Article 20.Therefore, as per the provisions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... axable person for construction of an immovable property. Section 12 of the Integrated Goods and Service Tax Act,2017 (for short 'the IGST Act') refers to place of supply of services in reference to section 2 (120) of the GST Act which applies to the IGST Act also and as per sub-section (3) of section 12, place of supply of services in relation to immovable property includes services provided by architect, interior decorators etc. and includes any service provided by way of grant of right to use immovable property or for carrying out or coordination of construction work by way of lodging accommodation by a hotel, by way of accommodation in any immovable property for organizing marriage or any services ancillary to the services referred to in other clauses, shall be the location at which the immovable property is located. 52. Therefore, the place of supply of service may be at the location of the immovable property, however when the lessee-assignor transfers absolute right by way of sale of leasehold rights in favour of the assignee, the same shall be transfer of "immovable property" as leasehold rights is nothing but benefits arising out of immovable property which according to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd, the case is not covered within the four corners of the taxing statute, no tax can be imposed by interference or by analogy or by trying to probe into the intention of the legislature and by considering what was the substance of the matter." 58. Considering the above conspectus of law for construing the provisions of the GST Act, relating to the scope of supply as per section 7, regard must be given to the clear meaning of the words as the entire issue is governed only by the language of the provisions. 59. Section 7 of the GST Act read with Schedule II and Schedule III thereof indicates wide scope for interpretation of concept of supply which is the basis to levy the tax as per the charging provision of section 9 of the GST Act. 60. Statement of object and reasons stated in Central Goods and Service Tax Bill, 2017 reads as under: "STATEMENT OF OBJECTS AND REASONS Presently, the Central Government levies tax on, manufacture of certain goods in the form of Central Excise duty, provision of certain services in the form of service tax, inter-State sale of goods in the form of Central Sales tax. Similarly, the State Governments levy tax on and on retail sales in the form of v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the seamless transfer of input tax credit from one stage to another in the chain of value addition, there is an in-built mechanism in the design of goods and services tax that would incentivise tax compliance by taxpayers. The proposed goods and services tax will broaden the tax base, and result in better tax compliance due to a robust information technology infrastructure. 5. The Central Goods and Services Tax Bill, 2017, inter alia, provides for the following, namely:- (a) to levy tax on all intra-State supplies of goods or services or both except supply of alcoholic liquor for human consumption at a rate to be notified, not exceeding twenty per cent. as recommended by the Goods and Services Tax Council (the Council); (b) to broad base the input tax credit by making it available in respect of taxes paid on any supply of goods or services or both used or intended to be used in the course or furtherance of business; (c) to impose obligation on electronic commerce operators to collect tax at source, at such rate not exceeding one per cent. of net value of taxable supplies. out of payments to suppliers supplying goods or services through their portals; (d) to provide fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. Simultaneously, the provisions of section 7 has to be read in terms of substantive provision and Schedules which treats the activity as supply of service, particularly, in relation to land and building and includes a lease. The consideration, therefore, as premium/one time premium is a measure on which tax is to be levied, assessed and recovered. Therefore, 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. 63. However, when such leasehold right is transferred by the lessee-assignor in favour of a third person-assignee by execution of deed of assignment, it would be nothing but transfer of an "immovable property" in view of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... efore, levy of GST on construction services are exclusive of 1/3rd of total amount charged for such supply which includes transfer by way of lease or sub-lease meaning thereby even for levy of GST on construction services, value of the land by way of lease is to be excluded considering such value being the value of immovable property which is transferred. 67. In such circumstances, the contention raised on behalf of the petitioner that leasehold rights are nothing but interest in immovable property as per the provision of section 105 read with section 108 (j) of the Transfer of Property Act constituting absolute transfer of right in such property because transfer of such leasehold right extinguishes the estate of the transferor-lessee-assignor in the immovable property and all legal relationships with lessor-GIDC are severed and third party-assignee becomes lessee liable for obligation under the assignment deed vis-à-vis the lessor-GIDC. As the assignor transfers leasehold rights after receiving the consideration as determined on the basis of value of such leasehold rights, such transaction therefore would of an "immovable property" and cannot be considered as "supply of se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s 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." 35. In the second paragraph of the Section, it is expressly stated that the price so paid in consideration of the transfer is called "the premium, and the money, share, service, or other thing to be so rendered, is called the rent." 36. The definition of "immoveable property" given in Section 3, para 1 of that Act is in the negative, and is not exhaustive. Therefore, the definition given in Section 3 (26) of the General Clauses Act (X of 1897) will apply to the expression used in this Act, except as modified by the definition in the first clause of Section 3. According to the definition given in section 3 (26) of the General Clauses Act, "immoveable 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." In short, the expression 'immoveable property' comprehends all that would be real property accord ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly reframed from including professional and technical colleges in the said definition. It has been urged that in Rule 2(b) the expression "means and includes" has been used which indicates that the definition is inclusive in nature and also covers categories which are not expressly mentioned therein. We are unable to agree. A particular expression is often defined by the Legislature by using the word 'means' or the word 'includes'. Sometimes the words 'means and includes' are used. The use of the word' ' indicate that "definition is a hard-and-fast definition. and no other meaning can be assigned to the expression that is put down in definition." [See Gough v. Gough, (1891) 2 QB 665; Punjab Land Development and Reclamation Corpn. Ltd. v. Presiding Officer, Labour Court, (1990 (3) SCC 682, at p. 717]. The word 'includes' when used, enlarges the meaning of the expression defined so as to comprehend not only such things as they signify according to their natural import but also those things which the clause declares that they shall include. The words 'means and includes', on the other hand, indicate "an exhaustive explanation of the mean ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ovable property on the ground that there was no constitutional embargo for imposing such tax and the stamp duty was leviable on a different aspect. 7th GST Council meeting held on 22nd and 23rd December, 2016 after a detailed discussion decided to defer imposition of tax on land and building and thereafter, clause 5 of Schedule III of the GST Act clearly excludes sale of land and building which fortifies the intention of the GST Council not to impose tax on transfer of immovable property continuing the underlying object of erstwhile service tax regime. 77. In case of Munjaal Manishbhai Bhatt v. Union of India reported in (2022) 104 GSTR 419 (Guj), this court has observed that the intention of introduction of GST regime was not to change the basis of taxation of the Value Added and Service Tax regime and that supply of land in every from was excluded from the purview of GST Act. 78. Moreover, in the facts of the various cases, 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 consi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uld be necessary whatever the value. The "sales" in this case were oral: there was neither writing nor registration. That being the case, the transactions passed no title or interest and accordingly the petitioners have no fundamental right that they can enforce." 80. In case of State of Orissa v. Titaghur Paper Mills Co. Ltd reported in (1985) Supp. SCC 285, it is held as under : "98. The meaning and nature of a profit a prendre have been thus described in Halsbury's Laws of England, Fourth Edition, Volume 14, paragraphs 240 to 242 at pages 115 to 117: "240. Meaning of 'profit a prendre' A profit a prendre is a right to take something off another person's land. It may be more fully defined as a right to enter another's land to take some profit of the soil, or a portion of the soil itself, for the use of the owner of the right The term 'profit a prendre' is used in contradistinction to the term 'profit a prendre', which signified a benefit which had' to be rendered by the possessor of land after it had come into his possession. A profit a prendre is a servitude. 241. Profit a prendre as an interest in land. A profit a prendre is an int ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s a right to take from the servient tenement some part of the soil of that tenement or minerals under it or some part of its natural produce or the animals ferae naturae existing upon it. What is taken must be capable of ownership, for otherwise the right amounts to a mere easement". In Indian law an easement is defined by section 4 of the Indian Easement Act, 1882 (Act No. V of 1882) as being ' a right which the owner or occupier of certain land possesses, as such, for the beneficial enjoyment of that land, to do and continue to do something, or to prevent and continue to prevent something being done, in or upon, or in respect of, certain other land not his own". A profit a prendre when granted in favour of the owner of a dominant heritage for the beneficial enjoyment of such heritage would, therefore, be an easement but it would not be so if the grant was not for the beneficial enjoyment of the grantee's heritage. 100. Clause (26) of section 3 of the General Clauses Act, 1897, defines "immovable property" as including inter alia "benefit to arise out of land". The definition of "immovable property" in clause (f) of section 2 of the Registration Act 1908, illustrates a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... income of immovable property; a right of way; a ferry; and a fishery; a lease of land". 102. Having seen what the distinctive features of a profit a prendre are, we will now turn to the Bamboo Contract to ascertain whether it can be described as a grant of a profit a prendre and thereafter to examine the authorities cited at the Bar in this connection. Though both the Bamboo Contract in some of its clauses and the Timber Contracts speak of "the forest produce sold and purchased under this Agreement", there are strong countervailing factors which go to show that the Bamboo Contract is not a contract of sale of goods. While each of the Timber Contracts is described in its body as "an agreement for the sale and purchase of forest produce", the Bamboo Contract is in express terms described as "a grant of exclusive right and licence to fell, cut, obtain and remove bamboos...for the purpose of converting the bamboos into paper pulp or for purposes connected with the manufacture of paper...." Further, throughout the Bamboo Contract, the person who is giving the grant, namely, the Governor of the State of Orissa, is referred to as the "Grantor." While the Timber Contracts speak of the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... covenant in the lease. While discussing this question, the Judicial Committee said (at pages 522-3): "These are periodical payments, to be made by the lessee under his covenants in consideration of the benefits which he is granted by the lessor. What these benefits may be is shown by the extract from the lease quoted above, which illustrates how inadequate and fallacious it is to envisage the royalties as merely the price of the actual tons of coal. The tonnage royalty is indeed only payable when the coal or coke is gotton and despatched: but that is merely the last stage. As preliminary and ancillary to that culminating act, liberties are granted to enter on the land and search, to dig and sink pits, to erect engines an machinery, coke ovens, furnaces and form railways and , roads. All these and the like liberties show how fallacious it is to treat the lease as merely one for the acquisition of a certain number of tons of coal, or the agreed item of royalty as merely the price of each ton of coal." Though the case before the Judicial Committee was of a lease of a coal mine and we have before us the case a grant for the purpose of felling, cutting and removing bamboos with var ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o the exclusive possession of the contract areas but has only a right to enter upon the land to take a part of the produce thereof for its own benefit. Further, it is also pertinent that while this right to enter upon the contract areas is described as a "licence", under clause XXV of the Bamboo Contract the Respondent (company has the right to take on lease a suitable site or sites of its choice within the contract areas for the erection of store houses, sheds, depots, bungalows, staff offices, agencies and other buildings of alike nature required fourth purpose of its business. The terms and conditions of the Bamboo Contract leave no doubt that it confers upon the Respondent Company a benefit to arise out of land and it would thus be an interest in immovable property. As the grant is of the value exceeding Rs. 100, the Bamboo Contract is compulsorily registrable. It is, in fact, not registered. This is, however, immaterial because it is a grant b the Government of an interest in land and under section Registration Act it is exempt from registration. The High Court was, therefore, right in holding that the Bamboo Contract was a grant of a profit prendre, though the grant of such r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the case as it related to the demand of service tax on renting of immovable property on lease for any period and the term of lease would not determine the character of service of renting on property under section 65 (105) (zzzz) of the Finance Act, 1994 as now under Schedule II, clause 5(a) renting of immovable property is deemed to be supply of services. Therefore, there is a thin line of distinction as to renting of immovable property and assignment of such leasehold rights in immovable property for a consideration. In facts of the case, therefore, such assignment of leasehold right for a consideration in immovable property would be out of scope of purview of the supply of service as it would amount to sale of immovable property in form of land and building which would not be covered by definition of section 7 (1) (a) read with clause 5 to Schedule III of the Act. (3) Therefore, merely because GIDC is having title of the ownership over the land in question would not be sufficient to exclude the assignment of leasehold rights to be included as supply of service as levy of GST would depend upon the nature of transaction in question. In facts of the case when the lessee/assignor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... property for consideration. Therefore, reliance placed on the decision in case of T.N. Kalyana Mandapam Assn.(supra), for levy of service tax on the mandap-keeper and caterer service provided by them cannot be applied in the facts of the case, as in case of catering service provided by mandap-keeper it was a tax on service and not a tax on sale or purchase of goods by applying doctrine of pith and substance whereas in the facts of the case there cannot be any element of service for assignment of leasehold rights of the land and building as interest in leasehold rights of land and building would be transfer/sale of the immovable property. (7) Reliance placed on the decision of Apex Court in case of Venkateswara Hatcheries (P) Ltd.(supra) wherein it is observed that as per principle of interpretation of statute that external aids to other statutes cannot be imported for definition of a word in the statute as the word occurring in the provisions of the Act must take its colour from the context in which they are so used. In other words, for arriving at the true meaning of a word, the said word should not be detached from the context. Therefore, in the facts of the case when legislat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ights transferred by lessee/assignee is with the concurrence of lessor GIDC in facts of the case and therefore, transfer charges paid by the assignee, would be subject to levy of GST but at the same time consideration paid by the assignee to the lessee/assignor would amount to transfer of immovable property which would be out of purview of provision of section 7 (1) (a) of the GST Act read with Schedule II and Schedule III thereof. (11) Contention of the respondent that activity of lessee/assignor to transfer the leasehold rights is in nature of compensation for agreeing to do the transfer in favour of the assignee is a service classifiable under other miscellaneous service under Group 999792 and taxable at the rate of 18% under serial no.35 of Notification No. 11/2017-Central Tax (Rate) dated 28.06.2017 would not cover the nature of transaction as consideration received by lessee/assignee is not in nature of premium but is a consideration for outright sale of leasehold rights which cannot be equated with subleasing in any manner as tried to be applied by Uttar Pradesh Authority for Advance Ruling (GST) in case of Remarkable Industries Private Limited reported in 2023 SCC OnLine ..... X X X X Extracts X X X X X X X X Extracts X X X X
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