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.
The bench noted that in such circumstances provision of Section 7(1)(a) of GST Act providing for scope of supply read with clause 5E of Schedule II and clause 5 of Schedule III would not be applicable to the transaction of assignment of leasehold rights of land and building and the same would not be subjected to the levy of GST as provided under Section 9 of GST Act.
The petitioner submitted that, though in accordance with Schedule-II of the Central Goods and Service Tax Act, 2017, which deals in activities to be treated as supply of goods and supply of services, any lease, tenancy or easement, license to occupy land is a supply of services and would therefore come under the purview of CGST Act, what is actually being taxed in the hands of the petitioner is a sale of land which otherwise is an activity not falling within the supply of services in accordance with Schedule III of the Act.
The court allowed the petition in favour of the petitioner/assessees/
Case Details
Case Title: Suyog Dye Chemie Pvt Ltd Versus UOI
Case No.: Special Civil Application – No. 17792 Of 2023
Date: 03/01/2025
Counsel For Petitioner: Avinash Poddar
Counsel For Respondent: PY Divyeshvar
