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TMI BlogAssignment of GIDC rights: A comic episodeX X X X Extracts X X X X X X X X Extracts X X X X ..... Assignment of GIDC rights: A comic episode - By: - pooja jajwni - Goods and Services Tax - GST - Dated:- 10-1-2025 - Humour is the best medicine, as the greatest minds have always said. However, humour from the wrong place may behave like an expired medicine! The recent source of my humour is judgements pertaining to land and its rights, some humour due to the bold and brilliant judgements writte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n such as the Mineral Development Authority one and some humour due to the portrayal of grave misunderstandings in judgement such as the one delivered by Hon ble Gujarat High Court in the context of assignment of leasehold rights in GIDC plots. So, the controversy before the court was what would be the GST liability on transfer of leasehold rights from one person to another person. The High Court ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... held that; GIDC gives plots on lease which is a supply of service as per Schedule II of the GST Act ; However, the activity of transfer of such leasehold rights to another person by the lessee would be constituted as a supply of immovable property which is not exigible for GST. In the whole judgement, the below points substantiate that the judgement is clumsy since; The judgement at one point hold ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s that leasehold rights are akin to the incorporeal ownership rights. While the court rightly held that land is a bundle of rights, however, this much has always been clear that all those rights hold different relevance interse. Even CBIC has recognized that and clarified that tenancy, being one of the rights, cannot be equated with ownership. However, the court seemed to have erred in holding tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t leasehold rights are akin to ownership rights since clearly, ownership rights are a summation of all the rights whereas leasehold rights exclude certain rights, the main being a right to sell such land. Thus, holding both rights apart is something the judiciary ought not have done! The court has equated sale of land with sale of leasehold rights which is grossly erroneous considering that leaseh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... old rights fall short of being considered as a summation of all the rights and also is contrary to the principles upheld in the case of Mineral Development Authority of India wherein it has been held that land is land and rights in land are not land. It has always been clear that every statute works on a different footing. Thus, comparing the treatment of a transaction in stamp duty to say that th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assignment of leasehold rights is akin to the sale of land is something which cannot be expected from the judiciary. The utterly unbelievable principle is holding that the lease of land from GIDC to the lessee is service but assignment of such leasehold rights is immovable property! Firstly, leasing is itself a right in an immovable property. So, then how the Hon ble Court thought that service s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hould not include immovable property while holding that Schedule II can treat such immovable property as service, is beyond any logic! Secondly, when a right at its origin is a service then, how that right becomes a non-service merely upon its transfer is unexplainable. Thirdly, since it has been held that a lease is a service how the transfer of the same lease can manufacture an immovable propert ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y is also not clear. Fourthly, the court itself said that one cannot transfer what one doesn t have, so assuming what the judgement says is right, what I received from GIDC is a service, so how can I transfer an immovable property, when I have none of it! It appears that the court has taken reference of all the places wherein the immovable property is mentioned under the GST Act schema. However, w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hile doing so, the court has co-related definition of immovable property in the General Clauses Act with the immovable property mentioned in the place of supply provisions, which is grossly erroneous since the place of supply provisions have been written with a way different intent than the levy provisions. The judgement is per-incurriam since it has not considered the principles pronounced by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Hon ble Supreme Court in Mineral Development Authority s case. Additionally, the court ought to have analysed [1] what is assignment of rights, [2] the interplay of its treatment in the contract act vis- -vis GST and, [3] whether such assignment itself qualifies as a service etc. However, such hopes were clearly unmet. Having said the above, there is a need to apply abundant caution in following ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the judgement of the high court. Thus, one needs to ensure that the mockery does not become a tragedy in times to come! (Authored by CA Pooja Jajwani Gogia, can be reached at [email protected]) - Scholarly articles for knowledge sharing authors experts professionals Tax Management India - taxmanagementindia - taxmanagement - taxmanagementindia.com - TMI - TaxTMI - TMITax ..... X X X X Extracts X X X X X X X X Extracts X X X X
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