Luna Chemical Industries Pvt. Ltd. Vs Union of India (Gujarat High Court)
Gujarat HC Quashes GST Demand Because Assignment of GIDC Leasehold Rights Is Transfer of Immovable Property; GST Demand on Leasehold Rights Assignment Set Aside Because It Is Not a Supply of Service; Gujarat HC Rules Long-Term Leasehold Rights Transfer Not Taxable Because It Amounts to Property Transfer; GST Not Applicable on GIDC Plot Assignment Because Leasehold Rights Are Interests in Immovable Property.
The petition was filed under Articles 226 and 227 of the Constitution challenging a show cause notice dated 29.12.2023 issued under Section 74 of the State Goods and Services Tax Act, 2017 and an Order-in-Original dated 15.02.2024. The authorities had treated the assignment of leasehold rights by the petitioner in favour of M/s. Jal Aqua International as a supply of service under Section 7(1)(a) of the GST Act and raised a GST demand of ₹1,45,80,000.
Gujarat Industrial Development Corporation (GIDC), established under the Gujarat Industrial Development Act, 1962, functions as the nodal agency for development of industrial estates in Gujarat. GIDC generally grants industrial plots on lease for 99 years through allotment letters containing various terms and conditions, including payment of premium.
The petitioner acquired Industrial Plot No. 620 situated at Panoli, GIDC, Ankleshwar through an assignment deed dated 28.03.2018 executed with Debts Recovery Tribunal-I, Mumbai. Thereafter, the petitioner agreed to transfer its interest in the plot to M/s. Jal Aqua International through an assignment deed dated 24.10.2018. A provisional transfer order dated 20.09.2018 was also issued, subject to fulfillment of specified conditions.
