Transfer of Leasehold Rights Not Liable to GST | Gujarat HC

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  • Last Updated on 8 July, 2025

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leasehold rights GST applicability

Case Details: Saurashtra Tin and Metal Industries vs. Union of India - [2025] 175 taxmann.com 943 (Gujarat)

Judiciary and Counsel Details

  • Bhargav D. Karia & P. M. Raval, JJ.
  • Dhaval Shah & Paresh V Sheth for the Petitioner.
  • Pradip D Bhate for the Respondent.

Facts of the Case

The Petitioner was allotted an industrial plot by the Gujarat Industrial Development Corporation (GIDC), pursuant to which a lease deed, conveyance deed, and license agreement were executed. The Petitioner subsequently applied to GIDC for transfer of the said plot to a third party, which was duly approved by GIDC. A deed of assignment was executed between the Petitioner and the third party, whereby the Petitioner received a consideration for the same. No GST was charged or collected by the Petitioner on the said transaction. The jurisdictional officer under CGST issued a demand, asserting that the execution of the deed of assignment amounted to a supply of service and that the consideration received constituted the taxable value under Notification No. 11/2017-State Tax (Rate), dated 30-06-2017, specifically under Entry No. 16, Heading No. 9972 as ‘Real Estate Services’ taxable at 18%. The Petitioner contended that the transaction was a mere assignment or transfer of leasehold rights in immovable property, and did not amount to a taxable supply. The matter was accordingly placed before the Gujarat High Court.

High Court Held

The Gujarat High Court held that the assignment, sale, or transfer of benefits arising out of immovable property by the lessee-assignor in favour of a third party-assignee, who would thereafter become the lessee in place of the original allottee-lessee, did not fall within the scope of ‘supply’ under Section 7 of the CGST Act read with the Gujarat GST Act. The Court noted that the leasehold rights originally vested in the Petitioner were simply being transferred to the third party, with no additional elements involved. It further held that the transaction was not covered under Notification No. 11/2017-State Tax (Rate), dated 30-06-2017, and relied upon the precedent set in Gujarat Chamber of Commerce and Industries v. Union of India [2025] 94 GSTL 113 (Guj.). Consequently, the impugned order demanding GST was quashed.

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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