Order Date – 04 July 2025

Parties: Quilon Real Industries Pvt. Ltd. Vs Union of India & Ors.

Facts –

• The Petitioner, Quilon Real Industries Pvt. Ltd., was allotted an industrial plot by GIDC in 2015. In 2017, the petitioner assigned the leasehold rights of the plot to M/s Jay Chemical Industries through an agreement and received consideration. GST was neither charged nor paid on this transaction.
• Department issued a show cause notice on 26.07.2024, and passed an order demanding GST on the assignment of leasehold rights, treating it as a taxable supply of service.

 Issue –

• Whether the transfer of leasehold rights in industrial land amounts to “supply of service” under Section 7(1)(a) of the CGST/SGST Act and is liable to GST?

Order –

• The Division Bench of Hon’ble High Court  observed that the Court has already decided in the case of Gujarat Chamber of Commerce that assignment by sale and transfer of lease hold right of the plot of land allotted by GIDC to the lessee in favour of third party – assignee for a consideration shall be assignment/sale/transfer of benefits arising out of “immovable property” by the lessee – assignor.
• In such circumstances, the provision of Sec.7(1)(a) of the Act providing for scope of supply read with Clause 5(b) of Schedule 2 and Clause 5 of Schedule 3 would not be applicable to such transaction of assignment of lease hold rights and the same would not be subject to levy of GST as provided under Sec.9 of the Act.
• In view of the same, the present petition succeeds.