2026-VIL-246-GSTAT-SRT
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SGST Tribunal

GST - Leviability of GST on assignment of leasehold rights in industrial plot allotted by an industrial development corporation - Binding effect of jurisdictional High Court judgment - Respondent transferred its leasehold rights in an industrial plot to a third party for consideration and initially treated the transaction as non-taxable, but later issued a tax invoice and paid GST with interest through return and Form DRC-03 before issue of SCN - SCN invoked Section 74(1) alleging supply of service classifiable as other miscellaneous services, and the adjudicating authority confirmed the demand with penalties - FAA reclassified the demand under Section 73(1), set aside the penalties under Sections 74 and 122 - Whether GST is leviable on such assignment of leasehold rights and whether the penalties sought by the Revenue can be restored or enhanced - HELD - The case is squarely covered by the judgment of the jurisdictional High Court, which held that assignment of leasehold rights of a plot allotted by the industrial development corporation to a third party for consideration is a transfer of benefits arising out of immovable property and is not subject to levy of GST. The Bombay High Court agreed with that view and held that such an assignment cannot be classified as other miscellaneous services - The jurisdictional High Court judgment holds the field and binds the Tribunal, and the Revenue's intention to seek review does not dilute its binding effect in the absence of any order staying or recalling it. The Respondent having paid tax that was not payable at all, restoring or enhancing the penalty does not arise. The Respondent had not challenged the order of the FAA, so confirmation of tax, interest and the penalty under Section 73 is not before the Tribunal - The appeal filed by the Revenue is dismissed - Invocation of Section 74 and penalty - Whether intent to evade tax is established where taxpayer held a bona fide belief that the transaction was not taxable - Revenue's case rested on a delay of about six months in issuing the tax invoice and a further delay of one month in paying the tax after the invoice was issued - Whether the facts establish suppression with intent to evade tax so as to sustain invocation of Section 74 and the penalties sought - HELD - Where a taxpayer held a genuine and reasonable belief that no tax was payable, the element of intent to evade is absent, and an opinion founded on plausible interpretation of law supports the taxpayer's bona fides. The initial view of non-taxability later found support in the judgments of High Courts - Mere non-payment of tax is not suppression, and suppression alone is not sufficient to invoke Section 74, since it must be a deliberate act of non-disclosure aimed at evading tax. Following the Supreme Court, mere failure or negligence where there was scope for doubt as to whether goods or services were taxable does not attract the penal provisions, and penal provisions are meant to deter deliberate contravention and not to penalise bona fide taxpayers - The facts do not establish any intent to evade tax, and the appeal filed by the Revenue is dismissed.
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