Case Details: Time Technoplast Ltd. Versus Union of India (2025) 29 Centax 396 (Guj.)
Judiciary and Counsel Details
- Bhargav D. Karia & D.N. Ray, JJ.
- Shri Hardik V. Vora, Adv., for the Petitioner.
- Ms Shrunjal Shah, AGP & Shri Ankit Shah, Adv. for the Respondent.
Facts of the Case
The petitioner, a company, had been allotted an industrial plot by the Gujarat Industrial Development Corporation (GIDC) under a leasehold arrangement. Subsequently, the assessee executed a Deed of Assignment, transferring the leasehold rights in the said industrial plot and building to its wholly owned subsidiary for a full and valuable consideration. In view of this transaction, the jurisdictional tax authority issued a show cause notice under Section 74 of the Central Goods and Services Tax Act, 2017, proposing to demand GST along with interest and penalty on the consideration received by the petitioner as a transfer fee for assigning the leasehold rights. The petitioner appealed the said order before the Hon’ble High Court, contending that such transfer constituted a complete assignment of leasehold rights and did not fall within the purview of supply under Section 7(1)(a) of the CGST Act, 2017.
High Court Held
The Hon’ble High Court held that the Deed of Assignment executed by the assessee in favour of its subsidiary was a complete transfer of the leasehold rights over the industrial plot and building for valuable consideration. Accordingly, the Court found that the transaction did not fall within the scope of Section 7(1)(a) of the CGST Act, 2017, when read in conjunction with Clause 5(b) of Schedule II and Clause 5 of Schedule III. It was further held that such an assignment of leasehold rights, being in the nature of a transfer or sale of immovable property, would not constitute a supply liable to GST under Section 9 of the CGST Act, 2017. The Court clarified that GST could not be levied on the transfer fee received in such transactions. As a result, the impugned show cause notice issued under Section 74 was set aside, reaffirming the principle that complete assignment of leasehold rights in land and building is not exigible to GST.
List of Cases Cited
- Alfa Tools Pvt. Ltd. v. Union of India — 2025: GUJ HC; 15785-C — Followed
- Gujarat Chamber of Commerce and Industry v. Union of India — 2025 (94) G.S.T.L. 113/(2025) 26 Centax 150 (Guj.) — Followed
