2025-VIL-21-GUJ
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SGST High Court Cases

GST - Section 7 and clause 5(a) of Schedule-II of the CGST Act, 2017 - Assignment of leasehold rights, Immovable property - Levy of GST on assignment of leasehold rights by the lessee in whose favour plot of land has been leased GIDC for industrial purpose - Whether the assignment of leasehold rights of the land along with the building thereon would be covered by the supply of goods or supply of services as per the provision of Section 7(1)(a) of the CGST Act, 2017 – HELD – The assignment of leasehold rights by the lessee-assignor in favor of the third party-assignee would amount to transfer/sale of "immovable property" and not "supply of services" under the CGST Act - the leasehold rights are nothing but a "benefit arising out of land" which is an immovable property as per the definition under various statutes like the General Clauses Act, 1897, the Transfer of Property Act, 1882 and the Registration Act, 1908. The assignment of leasehold rights along with the building constructed on the plot of land by the lessee would be an absolute transfer of rights and interest in immovable property and not a mere transfer of possession or occupation - assignment by sale and transfer of leasehold rights of the plot of land allotted by GIDC to the lessee in favour of third party-assignee for a consideration shall be assignment/sale/ transfer of benefits arising out of “immovable property” by the lessee-assignor in favour of third party-assignee who would become lessee of GIDC in place of original allottee-lessee. In such circumstances, provisions of section 7(1)(a) of the CGST Act providing for scope of supply read with clause 5(b) of Schedule II and Clause 5 of Schedule III would not be applicable to such transaction of assignment of leasehold rights of land and building and same would not be subject to levy of GST as provided under section 9 of the CGST Act - the assignment of leasehold rights by the lessee-assignor in favor of the third party-assignee would not be subject to levy of GST under the provisions of the CGST Act – The petitions are allowed
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