Top Stories GST not leviable on Assignment/Transfer of Leasehold Rights to third party: Gujarat HC [Read Order] It was viewed that the transfer of leasehold rights to third party would be transfer of immovable property and therefore question of ITC would not arise By Yogitha S. Yogesh – On January 4, 2025 11:40 am – 2 mins read The Gujarat High Court in a recent ruling held that Goods and Service Tax (GST) is not leviable on assignment/transfer of leasehold rights to third party.

The bench quashed  the notices issued by the GST department that sought to recover tax on the transfer of GIDC plots to third parties from their original allottees.  Complete Draft Replies of GST ITC Related Notices, Click Here The GST department had issued notices to 500 industries for the recovery of Rs 5,500 crore, including the original amount plus interest and penalty. The government had protested the petition, claiming it would incur a loss of a whopping Rs 8,000 crore in GST revenue. Now, the government is preparing to file an appeal before the Supreme Court. Last year, the High Court had issued notices to the Union government, Chief Commissioner of Central Tax, and Special Commissioner of State Tax, among others, in response to a petition filed by the Gujarat Chamber of Commerce and Industry (GCCI) and four industries against the notices issued to them by the GST department. Complete Draft Replies of GST ITC Related Notices, Click Here

The GST fee imposed on enterprises that have given third parties leasehold rights over GIDC-allocated lands is the main point of contention. Notices for the quantification of service tax were sent to the original allottees by the department, which regarded their transaction as a service subject to GST. Four industries, in addition to the GCCI, have contested the department’s notices. However, if the government moves further with the notice, 400 of these allottees in various GIDC districts throughout the state may be faced with substantial service tax liabilities. Complete Draft Replies of GST ITC Related Notices, Click Here Gujarat Industrial Development Corporation (GIDC) had leased lands to the GCCI’s members in various parts of the state, the organization brought up in court. According to GST law, the transferor (GIDC) was not required to pay any taxes because the original transaction was exempt from the law. However, after receiving approval from the GIDC in 2017, a large number of allottees gave their leasing rights to other parties. The division bench of the High Court held that the transfer of leasehold rights to third party would be transfer of immovable property and therefore question of ITC would not arise. To Read the full text of the Order CLICK HERE