The Bombay High Court has granted interim relief on the contentious issue of levy of GST on the assignment of leasehold rights of the plots allotted by Maharashtra Industrial Development Corporation (MIDC), from the lessee-assignor to a third party-assignee.
The bench of Justice B. P. Colabawalla and Justice Firdosh P. Pooniwalla has granted a stay to the members of the MSME Associations from adjudication of show cause notices and recovery actions in pursuance of orders issued by GST Authorities.
The issue involved in the present Petition is whether the Goods and Service Tax can be levied on the assignment of leasehold 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 Authorities consider the same as a supply of service under the provisions of the Central/ State Goods and Services Tax Act, 2017. According to the Petitioners, the issues raised in the present Petition are squarely covered by a Division Bench decision of the Gujarat High Court in the case of Gujarat Chambers of Commerce and Industry & Others v/s. Union of India & Others.
The Division Bench of the Gujarat High Court has taken a view 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 Gujarat High Court 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 court held that where any show cause notice has been issued and not adjudicated, the adjudication of the show cause notice, shall remain stayed. If any adjudication orders have already been passed, (in relation to the entities mentioned at Exh. E), then the adjudication orders shall also remain.
The Court listed the matter on 10th March, 2025 to fix these matters for hearing and final disposal.
Case Details
Case Title: TTC MIDC Industries Association Versus Union of India
Case No.: Writ Petition No. 957 Of 2025
Date: March 04, 2025
Counsel For Petitioner: Adv. Rohan Shah
Counsel For Respondent: Ms. S. D. Vyas, Addl. G. P.
