Gujarat High Court Stays Proceedings Concerning GST Imposition On Transfer Of Leasehold Rights Of GIDC Land

The Gujarat High Court stayed the proceedings in respect of the issue related to the imposition of GST on the transfer of leasehold rights to Gujarat Industrial Development Corporation (GIDC) land and issued the notice to the department.

The bench of Justice Biren Vaishnav and Justice Mauna M. Bhatt passed this order while presiding over a petition in respect of several notices that had been issued by the state GST offices across Gujarat in the controversial matter of imposing GST on the transfer of leasehold rights of GIDC land by private parties.

A large number of MSMEs across Gujarat operate from GIDC and, to date, have benefited from the infrastructural platform provided by GIDC in the form of concessional rate land on a 99-year lease.

The state GST officials are keen on issuing summons, notices, and advisories to cover such long-term lease transfers between private parties under the purview of GST. In most cases, taxing such transactions has resulted in the unsettling of already-closed accounts with the purchaser, even after a lapse of 5 to 6 years. This is a genuine hardship on the part of MSME, who may have invested the proceeds of the transfer and moved on.

The petitioner contended that, in accordance with Schedule-II of the Central Goods and Service Tax Act, 2017, which deals with activities to be treated as a supply of goods and supply of services, any lease, tenancy, easement, or license to occupy land is a supply of services and would therefore come under the purview of the CGST Act. However, what is actually being taxed in the hands of the petitioner is the sale of land, which otherwise is an activity not falling within the supply of services in accordance with Schedule III of the GST Act.

The court, while listing the matter on December 7, 2023, granted interim relief in the form of a stay.

Counsel For Petitioner: Avinash Poddar

Counsel For Respondent: None

Case Title: Suyog Dye Chemie Pvt Ltd Versus Union Of India

LL Citation: 2023 LiveLaw (Guj) 169

Case No.: R/SPECIAL CIVIL APPLICATION NO. 17792 of 2023

Click Here To Read The Order