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IN THE HIGH COURT OF JUDICATURE AT BOMBAY NAGPUR BENCH
ANIL L. PANSARE, NIVEDITA P. MEHTA
Aerocom Cushions Private Limited – Appellant
Versus
Assistant Commissioner (Anti-Evasion), CGST & CX, Nagpur – Respondent
The legal issue concerns whether the transfer or assignment of leasehold rights in immovable property, specifically a long-term lease of land and building rights, constitutes a "supply of services" under the applicable GST law, thereby attracting Goods and Services Tax (GST). The petitioner, who holds a long-term lease from a government authority, transferred these rights to a third party for consideration. The respondents considered this transfer as a taxable service under GST, classifying it as a miscellaneous service subject to GST at 18%. However, the court analyzed the nature of the transaction and found that such transfer of leasehold rights is essentially a transfer of benefits arising out of immovable property, which under the law is not regarded as a supply of services but rather as a transfer of immovable property itself. The court emphasized that the transaction does not involve the supply of services in the course of or in furtherance of business, and is more akin to an assignment of benefits associated with immovable property, which is exempt from GST. Consequently, the court held that the transfer of leasehold rights in this context does not constitute a taxable supply of services under GST, and the show cause notice issued to the petitioner was quashed and set aside.
JUDGMENT :
ANIL L. PANSARE, J.
1. Heard.
2. Issue Rule, returnable forthwith. Mr. K.K. Nalamwar, learned Counsel waives service of Rule on behalf of the respondent. With consent of learned Counsels for the parties, the petition is taken up for final hearing.
3. The challenge is to the show cause notice dated 20-12-2024 issued by respondent No.1 calling upon the petitioner to show cause as to why goods and services tax amounting to Rs.27,00,000/- should not be demanded and recovered from the petitioner under sub-section (1) of Section 74 of the Central Goods and Services Tax Act, 2017 (for short “Act of 2017”) towards non payment of GST on transfer of leasehold rights.
4. The notice has been issued under Section 74 (1) of Act of 2017 on the ground that the petitioner has concealed a transaction where he has assigned his leasehold rights in the plot belonging to MIDC to Sumit Madanlal Pagariya, Proprietor of M/s. Rishita Industries for Rs.1,50,00,000/-. As such, it is undisputed that the leasehold rights have been assigned with consent of MIDC Hingna, Nagpur and that the petitioner has paid an amount of Rs.3,95,640/- by way of additional premium.
5. According to the respondents, this tr
The assignment of leasehold rights does not qualify as a supply of services under the Central Goods and Services Tax Act, 2017 and is thus not subject to GST.
The assignment of leasehold rights under the GST regime is deemed a transfer of immovable property, exempt from GST, contradicting the previous classification as a supply of service.
The assignment and sale of leasehold rights are classified as transfer of immovable property, not taxable as supply of services under GST.
Transfer of leasehold rights constitutes a sale of immovable property and is not considered a supply of services under the GST Act.
Transfer of leasehold rights constitutes transfer of immovable property and is not subject to GST, as clarified under the State Goods and Service Tax Act, 2017.
The assignment of leasehold rights does not constitute a supply under GST, and any notice issued beyond the limitation period is illegal.
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