GST Demand On Assignment Of Lease Hold Rights Of Land Allotted By MIDC Stayed: Bombay High Court
GST Demand On Assignment Of Lease Hold Rights Of Land Allotted By MIDC Stayed: Bombay High Court
The Bombay High Court has stayed the Goods and Services Tax (GST) demand on the assignment of lease hold rights of a plot of land allotted on lease by the Maharashtra Industrial Development Corporation (MIDC), and the buildings constructed thereon, by the lessee to a third party, on the payment of a lump sum consideration.
The bench of Justice B. P. Colabawalla and Justice Firdosh P. Pooniwalla has relied on the view taken by the Division Bench of the Gujarat High Court in the case of Gujarat Chambers of Commerce and Industry and Others Vs. Union of India and Others that the assignment by sale or transfer of leasehold rights of the plot of land allotted by the Gujarat Industrial Development Corporation (GIDC) to the lessee or its successor (assignor) in favour of a 3rd party (assignee) for consideration, shall be an assignment/sale/ transfer of benefits arising out of "immovable property" by the lessee-assignor in favour of a 3rd party who would then become a lessee of GIDC in place of the original allottee-lessee.
The bench relied on the judgement of Gujarat High Court by which it was held that the provisions of Section 7 (1) (a) of the GST Act providing for scope of supply read with clause 5 (b) of Schedule II and clause 5 of Schedule III would not be applicable to such a transaction and the same would not be subject to levy of GST as provided under Section 9 of the GST Act.
The petitioner/assessee raised the issue whether the Goods and Services Tax can be levied on the assignment of lease hold rights of a plot of land allotted on lease by the Maharashtra Industrial Development Corporation (MIDC), and the buildings constructed thereon, by the lessee to a third party, on the payment of a lump sum consideration.
The GST Authority considered this as a supply of service under the provisions of Central/State Goods and Services Act, 2017. A Show Cause Notice was issued to the Petitioner and adjudication order was also passed by Respondent/department.
The court stayed the effect and implementation of the order and listed the matter on 10th June, 2025.
Case Details
Case Title: M/s. B. Sorabji Versus UOI
Case No.: Writ Petition No.6041 Of 2025
Date: MAY 05, 2025
Counsel For Petitioner: Bharat Raichandani
Counsel For Respondent: S. D. Vyas
Mariya is the Senior Editor at JurisHour. She has 5+ years of experience on covering tax litigation stories from the Supreme Court, High Courts and various tribunals including CESTAT, ITAT, NCLAT, NCLT, etc. Mariya graduated from MLSU Law College, Udaipur (Raj.) with B.A.LL.B. and also holds an LL.M. She started as a freelance tax reporter in the leading online legal news companies like LiveLaw & Taxscan.
