The Bombay High Court has quashed the GST demand on assignment of rights for transfer of leasehold rights
The bench of Justice B. P. Colabawalla and Justice Firdosh P. Pooniwalla quashed GST on Leasehold Rights and directed to Consider Gujarat High Court decision in the case of Suyog Dye Chemie Pvt Ltd Versus UOI while remanding the matter back.
The issue involved is whether the GST Authorities can levy GST on a Deed of Assignment under which the land and the building constructed thereon is transferred by a Lessee to the 3rd party.
According to the Petitioner the transaction in question would fall within Item 5 of Schedule III of the Central Goods and Services Tax Act, 2017 and not under Item 2 of Schedule II of the same Act. This was a contention that was in fact raised in the reply to the show cause notice but the same has not been dealt with at all in the impugned order passed on 19th August 2024.
The court without going into the merits of the matter it would be in the fitness of things if the impugned order is set aside and the matter is remanded back to department for a fresh adjudication on the show cause notice.
Suyog Dye Chemie Pvt Ltd Versus UOI : Gujarat High Court
The Gujarat High Court while quashing the show cause notice and the order has held that no Goods and Service Tax is payable on the transfer of leasehold rights since it would be transfer of immovable property and therefore question of Input Tax Credit (ITC) would not arise.
The bench of Justice Bhargav D. Karia and Justice Niral R. Mehta has observed that assignment by sell in transfer of leasehold rights of the plot of land allotted by Gujarat Industrial Development Corporation (GIDC) to the lease in favour of the assignee for a consideration shall be assignment sale transfer of immovable property by assignor on favour of third party assignee would become lessee of GIDC.
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Case Details
Case Title: M/s Panacea Biotec Limited Versus Union of India & Ors.
Case No.: Writ Petition No.13587 Of 2024
Date: January 21, 2025
Counsel For Petitioner: Mr.Abhishek Rastogi a/w Pooja, Rastogi, Meenal Songire, Arya More
Counsel For Respondent: Ms.S.D.Vyas, Addl.G.P. a/w Aditya Deolekar
