The assignment of leasehold rights does not constitute a supply under GST, and any notice issued beyond the limitation period is illegal.

JUDGMENT :

D.N.RAY, J.

1. Heard learned advocate Mr.Monaal J. Davawala for the Petitioner and learned advocate Mr. Deepak N. Khanchandani for the Respondent No.2.

2. Rule returnable forthwith. Learned advocate Mr.Deepak N. Khanchandani waives service of notice of rule on behalf of the Respondent No. 2. With the consent of learned advocates for the respective parties, the matter is taken up for hearing, as the issue involved is very short.

3. The petition has been filed under Article 226 of the Constitution of India with the following prayers :-

a) quash and set aside the impugned SCN dated 11.07.2024 issued by the Respondent No. 2 and declare both to be ex-facie illegal and without jurisdiction; and/or at Annex-A.

b) hold and declare that the Respondents are not entitled to charge Goods and Service Tax on the transaction entered into by the petitioner of relinquishment/assignment of the long-term leasehold rights under the provisions of the Goods and Service Tax, 2017; and/or c) pending the hearing, admission and final hearing of the petition, be pleased to stay the inquiry and/or further proceedings and all other consequential action being or likely to be undertaken by the Respondents pursuant to the Impugned SCN; and/or d) any other and further relief deemed just and proper be granted in the interest of justice;

e) to provide cost of the petition.

4. The brief facts of the case are as follows:

4.1 The Petitioner is a private limited company, inter alia engaged in the business of manufacturing Cutting Tools. In furtherance of its business, the Petitioner was allocated an industrial plot, bearing Plot No. 179, vide a Lease Deed dated 27.09.1978, executed with the Gujarat Industrial Development Corporation (GIDC) for a period of 99 years, commencing from 27.03.1978.

4.2 After enjoying the possession of this plot for over 39 years, the Petitioner assigned its leasehold rights in the Demised Premises to one Beta Poly Plast Private Limited, vide a Deed of Assignment dated 28.03.2018, for a consideration of Rs.75,00,000/-. In furtherance of this, the GIDC issued the final transfer order dated 30.03.2018, which confirmed the aforesaid transfer of the demised premises to Beta Poly Plast Pvt. Ltd.

4.3 Subsequently, the Petitioner applied for suo motu cancellation of its GST Registration, which was accepted by the Commercial Tax Officer vide an order of cancellation of the registration dated 18.01.2021.

4.4 The Petitioner was served with a letter dated 27.06.2024, issued by the Respondent No. 2, after more than 3 years from the date of cancellation of the GST registration, whereby, the Petitioner was called upon to deposit the GST by 03.07.2024, on the consideration amount received by the Petitioner towards assignment of leasehold rights in the favour of the Assignee vide the Deed of Assignment.

4.5 In response to the aforesaid communication and in compliance with the letter dated 27.06.2024, the Petitioner addressed an email to Respondent No. 2 on 03.07.2024, requesting a period of 4 weeks to reply to the letter.

4.6 The Respondent No.2 issued the Impugned Notice seeking further explanation with a further period of 30 days as to why such tax together with the interest and penalty should not be levied on the Petitioner. The Petitioner, with a prayer to quash and set aside the said notice, has filed this Petition.

5. Mr. Monaal J.Davawala, learned Counsel for the petitioner submitted that the issue of transfer of leasehold rights, not falling within the scope and ambit of “supply” with reference to Section 7 of the CGST Act stands concluded by the recent decision of this Court in the case of Gujarat Chamber of Commerce and Industry Vs. Union of India reported in 2025 SCC Online Guj 537, which is clearly in the petitioner’s favour. In the further hearing of the matter, Mr. S.N.Soparkar, learned Senior Advocate appearing for and on behalf of Mr. Monaal Davawala further submitted that, in any case, the impugned show cause notice dated 11.07.2024 is barre