SURAT BENCH Archives - Tax Heal https://www.taxheal.com/tag/surat-bench Complete Guide for Income Tax and GST in India Thu, 15 Oct 2026 09:48:46 +0000 en-US hourly 1 https://wordpress.org/?v=7.1.3 Assignment of GIDC Leasehold Rights Is Transfer of Immovable Property Benefit and Not Taxable Supply https://www.taxheal.com/and-ramesh-kumar-gokalbhai-hadvani-technical-member.html Thu, 15 Oct 2026 09:48:46 +0000 https://www.taxheal.com/?p=142601 Assignment of GIDC Leasehold Rights Is Transfer of Immovable Property Benefit and Not Taxable Supply Issue Whether the assignment of leasehold rights in a GIDC plot by a lessee to a third party for consideration constitutes a taxable supply of services under GST (specifically under SAC 99979, Sr. No. 35 of Notification No. 11/2017-CT (Rate)).… Read More »

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Assignment of GIDC Leasehold Rights Is Transfer of Immovable Property Benefit and Not Taxable Supply

Issue

Whether the assignment of leasehold rights in a GIDC plot by a lessee to a third party for consideration constitutes a taxable supply of services under GST (specifically under SAC 99979, Sr. No. 35 of Notification No. 11/2017-CT (Rate)).

Facts

  • Background: The respondent, a proprietary concern registered under GST, held leasehold rights in an industrial plot allotted by the Gujarat Industrial Development Corporation (GIDC).
  • Assignment Transaction: The respondent assigned its leasehold rights in the plot to a third party for consideration, and GIDC issued a final transfer order approving the assignment.
  • Show Cause Notice (SCN): The Revenue issued an SCN alleging that the transaction was a taxable supply of services under SAC 99979 (Sr. No. 35 of Notification No. 11/2017-CT (Rate)) taxed at 18% GST. The SCN applied a residuary valuation based on the GIDC rate chart, alleged suppression of facts with intent to evade tax, and proposed penalties.
  • Adjudication & First Appeal: The Assessing Officer dropped the demand by relying on the High Court ruling in Gujarat Chamber of Commerce and Industry. The First Appellate Authority subsequently affirmed the dropping of the demand.
  • Departmental Appeal: Aggrieved by the order, the Revenue pursued a second appeal before the Tribunal.

Decision

  • Covered Issue: The issue is directly covered by the decision of the High Court in Gujarat Chamber of Commerce and Industry v. Union of India   (Guj.) and concurred with in Aerocom Cushions (P.) Ltd.   (Bom.).
  • Nature of Right: Transfer or assignment of leasehold rights in immovable property by a lessee constitutes a transfer of benefits arising out of immovable property, which falls outside the scope of taxable supply under GST.
  • Inapplicability of Residuary Entry: The entry for “other miscellaneous services” at Sr. No. 35 of Notification No. 11/2017-CT (Rate) cannot be stretched to cover the assignment of leasehold rights in immovable property.
  • Binding Precedent: Jurisdictional High Court decisions bind the Tribunal in the absence of a stay. Consequently, GST is not leviable on such assignments, and the Revenue’s appeals were dismissed. (In favour of assessee)

Key Takeaways

  • Non-Taxability of Lease Assignment: The assignment or transfer of long-term leasehold rights in industrial land (such as GIDC plots) by an existing lessee is treated as a transfer of benefit arising out of immovable property and is not subject to GST.
  • Entry 35 Limits: Residual entries like Sr. No. 35 (SAC 99979) cannot be invoked by the Revenue to tax transactions linked directly to land/immovable property rights.
  • Judicial Precedent Authority: Binding High Court decisions on the non-taxability of leasehold transfers govern lower adjudicating authorities and tribunals unless stayed or overturned by a higher court.
GOODS AND SERVICE TAX APPELLATE TRIBUNAL , SURAT BENCH
Assistant Commissioner of CGST & Central Excise
v.
Shreeji Enterprise
Sanjaykumar Dwivedi, Judicial Member
and Ramesh Kumar Gokalbhai Hadvani, Technical Member
APL/81 & 86/SRT/2026
OCTOBER  6, 2026
Maya Shanker Prabhat, Superintendent (Authorized Representative) for the Appellant.
ORDER
Sanjay Kumar Dwivedi, Judicial Member. – These two appeals have been filed by the department against Orders-in-Appeal by which the Appellate Authority has upheld the orders of the Adjudicating Authority. The Show Cause Notices had demanded GST on assignment by the Respondents, to a third party, of leasehold rights in the plots of land allotted on lease by the Gujarat Industrial Development Corporation (GIDC). Following the judgment dated 03.01.2025 of Hon’ble Gujarat High Court in Gujarat Chamber of Commerce and Industry v. Union of India  94 GSTL 113 (Gujarat)/(R/Special Civil Application No. 11345 of 2023 ) the Adjudicating Authority held that GST is not leviable on the transaction. The Appellate Authority upheld those orders.
2. Before proceeding further, we note that the names of the parties in the cause titles appearing on the GSTAT Portal are erroneous. We are informed that this is on account of the present design of the portal and that the Registry is unable to correct it. We have, therefore, corrected the cause titles as shown in the table below. Other details, such as the address and GSTIN etc. remain unchanged:
Sr. No. Appeal No. Cause Title as appearing on the portal Cause Title as corrected and mentioned in this order
1. APL/SRT/081/2026 K Dharamveer Chowhan Versus Shreeji Enterprise Assistant Commissioner of Central GST, Division- IX, Ankleshwar, Vadodara-II Versus Shreeji Enterprise
2. APL/SRT/086/2026 K Dharamveer Chowhan Versus …………………. (a blank) Assistant Commissioner of Central GST, Division- IX, Ankleshwar, Vadodara-II Versus Kajalben H. Malaviya

 

3. For convenience, the facts are taken from Appeal No. APL/SRT/081/2026 (Commissioner of CGST, Vadodara-II v. Shreeji Enterprise).
3.1. Briefly stated, the facts are that the Respondent Shreeji Enterprise is a proprietary concern of Shri Jamnadas Gordhan Mathukia registered under GST. Earlier, he also operated under the trade name J.G. Pharma Chem.
3.2. The Respondent transferred, for consideration, his leasehold rights in a plot of land leased by GIDC. GIDC issued the Final Transfer Order on 24.10.2017. A Show Cause Notice dated 18.07.2024 was issued alleging that the transaction amounted to supply of service classifiable under the Services Accounting Code 99979 as “Other Miscellaneous Services” and that tax at the rate of 18% was leviable thereon under Sr. No. 35 of the Notification No. 11/2017-CT (Rate), dated 28.06.2017. The notice, accordingly, demanded tax along with interest. The value of the alleged supply was determined on the basis of the rate chart of GIDC by invoking Section 15(4) of the CGST Act, 2017 read with Rule 31 of the CGST Rules, 2017. The notice alleged that the Respondent knew that the transaction was not a sale of land but transfer of leasehold rights, which is leviable to GST; that the Respondent neither raised bill or supply nor reported the transaction in their GSTR-3B; and that the fact of receipt of consideration for the transaction was suppressed with intent to evade tax. It was further alleged that he had not reported the transaction even as “Other outward supplies (Nil rated, Exempted) or as “non-GST outward supplies” in the form GSTR-3B. On that basis, the notice invoked Sec 74(1) of the CGST Act, 2017; and proposed penalty was proposed under Section 122(1)(i), 122(1) (xi) and 122(1) (xv) read with Section 74(1) thereof.
3.3. The Adjudicating Authority dropped the demand, relying on the judgment of the Hon’ble Gujarat High Court in Gujarat Chamber of Commerce and Industry, (supra). The appeal filed by the department under Section 107 was dismissed by the Appellate Authority. Hence, the present appeal.
4. Mr. Maya Shanker Prabhat, learned Superintendent (Authorised Representative) appearing for the department reiterates the grounds raised in the appeal memo and submits that the appeals were filed because the department had filed a Special Leave Petition (SLP) before the Hon’ble Supreme Court against the judgment in Gujarat Chamber of Commerce. He further submits that although the SLPs filed by the department have since been dismissed by the Hon’ble Supreme Court, the department is in the process of filing a review petition.
5. No one appeared for the Respondent.
6. We have heard the Authorised Representative for the department and perused the record.
7. The learned AR does not dispute that the present case is squarely covered by the judgment in Gujarat Chamber of Commerce and Industry, (supra). In that case, the issue was whether GST is leviable on assignment of leasehold rights of the plot of land allotted on lease by Gujarat Industrial Development Corporation (GIDC) and building constructed thereon, by the lessee or its successor (assignor) to a third party (assignee) on payment of lump-sum consideration considering the same as supply of service under the provisions of Central/State Goods and Services Tax Act, 2017. The Hon’ble High Court held:
83. In view of foregoing reasons, assignment by sale and transfer of leasehold rights of the plot of land allotted by GIDC to the lessee in favour of third partyassignee for a consideration shall be assignment/sale/ transfer of benefits arising out of “immovable property” by the lessee-assignor in favour of third party-assignee who would become lessee of GIDC in place of original allottee-lessee. In such circumstances, 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.
84. In view of above, question of utilisation of input tax credit to discharge the liability of GST on such transaction of assignment would not arise.
85. The petitions accordingly succeed and impugned show cause notices and orders in original or appeal as the case may be, are hereby quashed and set aside. Rule is made absolute to the aforesaid extent. No order as to costs.
7.1. The issue also came up before the Hon’ble Bombay High Court in Aerocom Cushions (P.) Ltd. v. Asstt. Commissioner (Anti-Evasion), CGST & CX, Nagpur-1  106 GSTL 145 (Bombay)/[2026:BHC-NAG:348-DB]. Agreeing with the decision of the Hon’ble Gujarat High Court in Gujarat Chamber of Commerce and Industry, (supra), Hon’ble Bombay High Court by its judgment dated 09.01.2026 held:
13. ……………………… We subscribe to this view for the reasons quoted in earlier part of our judgment so also because the view, in our considered opinion, is in consonance with the provisions of law on supply of services.”
14. ………………………. Further we subscribe to the finding of Gujarat High Court that the assignment by sale and a transfer of leasehold rights of the plot of land allotted by the Corporation like GIDC or MIDC 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 favour of third party and in such circumstances, the transaction would not be subject to levy of GST in terms of the GST Act.
15. The writ petition is accordingly allowed. Show cause notice No.47/AC/GST/NGP-I/2024 dated 2012-2024 issued by respondent No.1 is quashed and set aside.
7.2. On the question of applicability of Sr. No. 35 of Notification No. 11/2017-CT (Rate), the Hon’ble Bombay High Court observed1:
8. Our attention is invited to the entry at Sr.No.1 which includes other services (washing, cleaning and dyeing services; beauty and physical wellbeing services, and other miscellaneous services including services nowhere else classified). As could be seen, the services include miscellaneous services like washing, cleaning, dyeing, beauty, physical well-being, etc. Such petty services, in our view, cannot be extended to assignment of leasehold rights in an immovable property, to term it to be other miscellaneous services as classified under clause at Sr. No.35 of the Notification.
7.3. The Asstt. Commissioner (Anti Evasion) v. Aerocom Cushions (P.) Ltd. 116 GST 80/109 GSTL 289 (SC)/Special Leave Petition (SLP (C) No. 18772/2026) filed by the department against the judgment in Aerocom Cushions was dismissed by the Hon’ble Supreme Court by order dated 22nd May 2026, which reads:
“We are not inclined to interfere with the impugned judgment and order of the High Court, hence, the special leave petition is dismissed.”
7.4. The Union of India v. Gujarat Chamber of Commerce and Industry  117 GST 159/111 GSTL 97 (SC)/Special Leave Petitions (Diary No. 33270/2025) filed by the department against the judgment in Gujarat Chamber of Commerce, were dismissed by the Hon’ble Supreme Court by order dated 21st July 2026, which reads:
1. Delay condoned.
2. This Court, vide order dated 22.05.2026, has already dismissed a Special Leave Petition, being SLP (C) No. 18772/2026.
3. In view of the fact that a similar SLP has been dismissed, the instant special leave petitions are dismissed.
4. Pending application(s), if any, shall stand disposed of.
7.5. In view of the above, the judgments of Hon’ble Gujarat High Court, which is the jurisdictional High Court, holds the field and binds the Tribunal. The department’s stated intention to seek a review does not dilute its binding effect, there being no order staying or recalling it.
8. We accordingly hold that GST is not leviable on the transactions in question.
9. In view of this finding, the question whether provisions of Section 74 and 122(1)(i), 122(1) (xi) and 122(1) (xv) were rightly invoked in the facts of these cases, do not survive for our consideration.
10. The appeals filed by the department are accordingly dismissed, and the Orders-in-Appeal are upheld.
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