Assignment Of Leasehold Rights Not Taxable As Service | HC

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Assignment Of Leasehold Rights Not Supply Of Service

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.

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Author: Taxmann

Taxmann Publications has a dedicated in-house Research & Editorial Team. This team consists of a team of Chartered Accountants, Company Secretaries, and Lawyers. This team works under the guidance and supervision of editor-in-chief Mr Rakesh Bhargava.

The Research and Editorial Team is responsible for developing reliable and accurate content for the readers. The team follows the six-sigma approach to achieve the benchmark of zero error in its publications and research platforms. The team ensures that the following publication guidelines are thoroughly followed while developing the content:

  • The statutory material is obtained only from the authorized and reliable sources
  • All the latest developments in the judicial and legislative fields are covered
  • Prepare the analytical write-ups on current, controversial, and important issues to help the readers to understand the concept and its implications
  • Every content published by Taxmann is complete, accurate and lucid
  • All evidence-based statements are supported with proper reference to Section, Circular No., Notification No. or citations
  • The golden rules of grammar, style and consistency are thoroughly followed
  • Font and size that's easy to read and remain consistent across all imprint and digital publications are applied