GST
TRT-2025-
Gujarat High Court
Date:-03-01-25
In:-
Issue Favourable to Tax Payer ?:-
Order Date – 03 January 2025
Parties: Gujarat Chamber of Commerce and Industry & Ors Vs Union of India & Ors
Facts –
- The Petitioner Gujarat Chamber of Commerce and Industry & Ors, was issued with notices demanding GST at 18% on the transfer of leasehold rights by the Gujarat Industrial Development Corporation (GIDC) on long-term leases (99 years), treating them as a “supply of service” under the GST Act, 2017.
- It was submitted be the petitioner that this is a transfer of immovable property and should not attract GST.
Issue –
- Whether the assignment of leasehold rights for industrial plots constitutes a "supply of service" under the GST Act, 2017, or a transfer of immovable property, exempt from GST?
Order –
- The Divisional Bench of Hon'ble High Court observed that 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 consideration is not only the land allotted by GIDC on lease but the entire land along with Building thereon which was constructed on such land.
- The entire land and building is therefore, transferred along with leasehold rights and interest in land which is a capital asset in form of an immovable property and the lessee/assignor earned benefits out of land by way of constructing and operating factory building/shed which constitutes a “profit a pendre” which is also an immovable property and therefore, would not be subject to tax under the GST Act.
- Hence 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 transaction of assignment of leasehold rights of land and building and same would not be subject to levy of GST as provided under section 9 of the GST Act.
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