NO GST ON TRANSFER OF LEASEHOLD RIGHTS: GUJRARAT HC
In a landmark ruling on 3rd January 2025, the Hon’ble High Court of Gujarat clarified that the transfer of GIDC leasehold land rights will not be subject to GST.
In other words, No GST is leviable on Assignment/Transfer of Leasehold Rights to third party since it would be transfer of immovable property and therefore question of ITC will not arise.
This decision has provided much-needed clarity and relief to businesses and individuals involved in such transactions, particularly in Gujarat’s industrial landscape.
Key Highlights of the same are as below:
Gujarat Industrial Development Corporation (GIDC) grants 99-year leasehold rights for industrial plots, crucial for industrial growth.
Tax authorities recently attempted to impose GST on the transfer of leasehold rights, sparking legal challenges from industries, including MSMEs and business chambers.
In the case of SUYOG DYE CHEMIE PVT LTD vs. Union of India, the Gujarat High Court issued a stay order, protecting businesses from immediate tax liabilities.
Practical Implications:
The ruling ensures that leasehold transfers are treated distinctly under GST laws, safeguarding the interests of industries in Gujarat.
It underscores the need for clear guidelines and stability in taxation policies to avoid uncertainty and support industrial development.
This judgment reinforces confidence among stakeholders and marks a significant step toward fair taxation practices.
The ruling may be relevant in a case before other High Courts as well. Let us hope the judiciary adopts the same view.
The Copy of the order is as under:
