Assignment Of Leasehold Rights Not Taxable As Service | HC

Case Details: Aerocom Cushions (P.) Ltd. vs. Assistant Commissioner (Anti-Evasion), CGST & CX, Nagpur-1 - [2026] 182 taxmann.com 432 (Bombay) 

Judiciary and Counsel Details

• Anil L. Pansare & Nivedita P. Mehta, JJ.
• Vinay Shraff, Counsel & Ms. Darshana Bhaiya for the Petitioner.
• K.K. Nalamwar, Counsel for the Respondent.

Facts of the Case

The petitioner received a notice under Section 74(1) of the CGST Act alleging concealment of a transaction in which it assigned its leasehold rights in a plot of land allotted to it. It was contended that the assignment of leasehold rights would amount to the supply of services under Section 7 of the CGST Act. The petitioner challenged the notice by filing the instant writ petition, asserting that the transaction constituted a transfer of immovable property rather than a supply of services. The matter was accordingly placed before the High Court.

High Court Held

The High Court held that the transaction on record constituted a transfer of immovable property, namely the assignment of leasehold rights in a plot allotted, and therefore did not involve any supply of services. It was observed that the transfer pertained exclusively to benefits arising out of immovable property and had no nexus with the business of the petitioner company, thus negating the essential element of supply of service in the course or furtherance of business. The Court held that such an assignment/transfer of leasehold rights is not subject to GST. The petition was allowed and the impugned order was set aside.

List of Cases Reviewed

• Gujarat Chamber of Commerce and Industry v. UOI [2025] 170 taxmann.com 251/94 GSTL 113 (Gujarat) (Para 14) followed

List of Cases Referred to

• Gujarat Chamber of Commerce and Industry v. UOI [2025] 170 taxmann.com 251/94 GSTL 113 (Gujarat) (para 10)
• CIT v. Smt. Godavaridevi Saraf [1978] 113 ITR 589 (Bombay) (para 14).