SC Upholds MIDC Leasehold Rights Transfer Not Taxable Under GST

Case Details: Assistant Commissioner (Anti Evasion) vs. Aerocom Cushions (P.) Ltd. - [2026] 186 taxmann.com 995 (SC)

Judiciary and Counsel Details

• Dipankar Datta & Satish Chandra Sharma, JJ.
• S. Dwarkanath, A.S.G., Gurmeet Singh Makker, AOR, Anmol Chandan, Padmesh Mishra, Shambhavi Sharma & Shaswat Parihar, Advs. for the Petitioner.
• Dev Agrawal, Shubh Gautam, Vinay Sharaff, Advs. & Divyanshu Rai, AOR for the Respondent.

Facts of the Case

The assessee was subjected to proceedings on the allegation that it had concealed a transaction involving assignment of leasehold rights in a plot allotted by MIDC in favour of a third-party assignee. The jurisdictional officer under CGST contended that such assignment of rights constituted supply of service under GST. It challenged the issuance of a notice before the High Court, contending that the transaction amounted to a transfer of leasehold rights in immovable property rather than a taxable supply under GST. It was further contended that the lease was for a long duration of 95 years and the transaction had been undertaken with the consent of MIDC, thereby constituting a transfer of benefits arising from immovable property. The matter was accordingly placed before the Supreme Court of India.

Supreme Court Held

The Hon’ble Supreme Court held that assignment by sale and transfer of leasehold rights in a plot allotted by MIDC constitutes transfer of benefits arising out of immovable property. It was held that such transaction does not amount to ‘supply of service’ within the meaning of Section 7(1) of the CGST Act as the essential requirement of supply in the course or furtherance of business was absent. The Court observed that the High Court had correctly appreciated that the transaction had no nexus with the business activity of the assessee and was purely a transfer of immovable property rights governed under Section 7 of the CGST Act. It further held that the issue stood covered by the decision in Gujarat Chamber of Commerce and Industry v. UOI and no interference was warranted. Accordingly, the Supreme Court declined to interfere with the judgment of the High Court and dismissed the Special Leave Petition.

List of Cases Reviewed

• Aerocom Cushions (P.) Ltd. v. Assistant Commissioner (Anti-Evasion), CGST & CX, Nagpur-1 [2026] 182 taxmann.com 432/106 GSTL 145 (Bombay) (Para 2) – SLP dismissed