The assignment and sale of leasehold rights are classified as transfer of immovable property, not taxable as supply of services under GST.

ORDER :

PRANAV TRIVEDI, J.

1. The present petition preferred under Articles 226 and 227 of the Constitution of India assails the correctness and validity of order dated 27.02.2025 rendered under Sec.73 of the State Goods & Service Tax Act, 2017 (hereinafter referred to as ‘the Act’ for short), in FORM GST DRC-07 inter alia considering the assignment of lease deed by the petitioner in favour of various entities. The respondent has considered this as supply of service under Sec.7(1)(a)of the Act and classified under heading 9972 of classification scheme for services under GST.

2. The brief facts leading to filing of the present petition is that Gujarat Industrial Development Corporation (hereinafter referred to as ‘GIDC’) which is established under the Gujarat Industrial Development Act, 1962, acts as a nodal agency of Government of Gujarat for the purpose of development of industrial areas/estates. GIDC gives lands to industries on lease, generally for a period of 99 years. GIDC issues an allotment letter to the industry desiring to take plots developed by the GIDC. Allotment letter would set various terms and conditions on which the allotment is being made, including the method and manner in which premium is required to be paid.

2.1 It is the case of the petitioner that an information was received by respondent No.3 that the petitioner was allotted industrial plot No. 10 to 21 and 30 to 42/1-50 at GIDC-Bilimora, Ta: Chikhli, Dist: Navsari, on long lease from Mira Cycles and GIDC. The petitioner has subsequently sub-leased it to various persons/entities.

2.2 Based on aforesaid information, on 20.06.2023, Advisory No. AC1/ENF/DIV18/Surat/GIDC/2023-24 OW.35 was issued. In response to the same, petitioner filed a reply on 11.07.2023 and supplied the documents of final transfer order of GIDC regarding plots which were sub-leased and further provided lease deed and other relevant documents.

2.3 However, petitioner was served with summons dated 22.09.2023 under Sec.17(1) of the Act. Thereafter, the petitioner was served with a show-cause notice in FORM DRC-01 on 28.11.2024 which inter alia demanded total of Rs.1,48,48,766/- as GST on transfer fees received on transfer of lease hold rights on the premise that execution deed and subsequent lease is considered as a taxable value of supply of services.

2.4 In response, the petitioner filed a detailed reply on 03.02.2025.

2.5 Subsequent to the show-cause notice, the petitioner was served with order passed under Section 73 of the Act in FORM GST DRC-07 on 27.02.2025 by respondent No.3, which inter alia confirmed the proposal made in show-cause notice dated 28.11.2024. The show-cause notice as well as the order dated 27.02.2025 are subject matter of challenge of the present writ petition.

3. Mr.Hardik Vora, learned advocate for the petitioner has submitted that the issue is no more res integra pursuant to the decision of this Court in the case of Gujarat Chamber of Commerce, Industries & Ors Vs. Union of India & Ors., rendered in Special Civil Application No. 11345 of 2023.

4. Mr.Ankit Shah, learned advocate for the respondent, was unable to controvert the proposition that the issue is now covered by the decision of Gujarat Chamber of Commerce and Industry (supra).

5. This Court, in the case of Gujarat Chamber of Commerce and Industry (supra), held as under:

“51. This submission seems to be very attractive at the first blush, however, there are two transactions, one when the GIDC allots plot of land along with right to occupy, right to construct, right to possess on long term lease basis, it is nothing but supply of service as right of own