Assistant Commissioner of CGST & Central Excise Vs Associated Enterprise (GSTAT Surat)
Summary: The Goods and Services Tax Appellate Tribunal, Surat, dismissed the department’s appeal against the order dated 30 April 2025 of the Additional Commissioner (Appeals), Vadodara, and held that GST was not leviable on Associated Enterprise’s assignment of leasehold rights in a GIDC industrial plot. The Tribunal followed the binding jurisdictional judgment in Gujarat Chamber of Commerce and Industry v. Union of India. It also corrected the portal cause title, which named Vijay Devdattbhai Shah personally, to identify the appellant by the official designation Assistant Commissioner of Central GST, Division XI, Vadodara-II.
Associated Enterprise, an unregistered lessee/licensee of Plot No. 203/1 at GIDC Estate, Panoli, assigned its lease to Sayona Crop Care, proprietary concern of Harishbhai M. Patel. GIDC issued its Final Transfer Order on 1 March 2018. A show cause notice dated 30 July 2024 treated the transaction as “Other Miscellaneous Services” under SAC 99979, taxable at 18% under serial No. 35 of Notification No. 11/2017-CT (Rate), dated 28 June 2017. The department valued the alleged supply using GIDC’s rate chart under Section 15(4) read with Rule 31, demanded tax and interest, and alleged suppression based on non-registration, non-issuance of invoices and non-reporting in GSTR-3B. The adjudicating authority confirmed tax and interest and imposed a penalty equal to tax under Section 74(1).
The respondent maintained that the assignment agreement was executed on 18 March 2017, possession was delivered on 21 March 2017 and the transfer application was filed with GIDC that day, before GST commenced on 1 July 2017. It also submitted that the transfer was between brothers Bipinbhai M. Patel and Harishbhai M. Patel without financial consideration, and that only a rectification deed was executed after GST, on 22 December 2017. The adjudicating authority treated the provisional transfer order dated 10 October 2017, rectification deed and final transfer order as establishing an effective transfer in FY 2017–18. The appellate authority accepted the pre-GST contention as well as the Gujarat High Court ruling; the department challenged the timing finding by relying on the final transfer order.
The Tribunal noted that the Gujarat High Court had treated assignment of GIDC leasehold rights as transfer of benefits arising from immovable property, outside the GST levy in the circumstances considered. The Bombay High Court had agreed in Aerocom Cushions (P.) Ltd. v. Assistant Commissioner and rejected classification of such assignments as miscellaneous services under the notification. The Supreme Court dismissed the departmental SLP in Aerocom Cushions on 22 May 2026 and the SLPs concerning Gujarat Chamber of Commerce and Industry on 21 July 2026. These dismissals were recorded as such; the Tribunal’s substantive reasoning rested on the binding High Court precedent.
The department stated that it was preparing a review petition. The Tribunal held that this intention did not dilute the binding effect of the jurisdictional High Court judgment in the absence of any stay or recall. Having held that GST was not leviable on the transaction, it did not decide whether the taxable event occurred before GST or whether Section 74 and Sections 122(1)(xi) and 122(2)(b) were rightly invoked. The departmental appeal was dismissed and the Order-in-Appeal upheld; the operative part was pronounced in open court on 29 September 2026.
Cases Discussed
- Union of India v. Gujarat Chamber of Commerce and Industry — 117 GST 159; 111 GSTL 97; SLPs, Diary No. 33270/2025; 21 July 2026 (Supreme Court). The SLPs were dismissed in view of the earlier dismissal of the similar Aerocom Cushions SLP.
- Assistant Commissioner (Anti Evasion) v. Aerocom Cushions (P.) Ltd. — 116 GST 80; 109 GSTL 289; SLP (C) No. 18772/2026; 22 May 2026 (Supreme Court). The Court declined to interfere with the Bombay High Court judgment and dismissed the SLP.
- Aerocom Cushions (P.) Ltd. v. Assistant Commissioner — [2026] 106 GSTL 145; 2026:BHC-NAG:348-DB; 9 January 2026 (Bombay High Court). The High Court agreed with the Gujarat High Court and rejected classification of leasehold assignment as miscellaneous services.
- Gujarat Chamber of Commerce and Industry v. Union of India — 94 GSTL 113; R/Special Civil Application No. 11345 of 2023; 3 January 2025 (Gujarat High Court). Followed as binding jurisdictional precedent holding that the assignment described did not attract GST.
FULL TEXT OF THE ORIGINAL GSTAT ORDER SURAT
1. This appeal has been filed by the department against Orderin-Appeal No. VAD-CGST-002-APP-ADC-54-2025-26, dated 30.04.2025 passed by the Additional Commissioner of CGST & C. Excise, Appeals Vadodara. Following the judgment dated 03.01.2025 of the Hon’ble Gujarat High Court in Gujarat Chamber of Commerce and Industry v. UOI [2025] 170 94 GSTL 113 (Gujarat)/(R/Special Civil Application No. 11345 of 2023 ) the Appellate Authority held that GST is not leviable on the transaction and set aside the Order-in-Original passed by the Adjudicating Authority.
2. Before proceeding further, we wish to clarify that the name of the Appellant in the cause title appearing on the GSTAT Portal is erroneous. It shows the name of the officer instead of official designation. We are informed that this is on account of the present design of the portal and that the Registry is unable to correct it. We have, therefore, corrected the cause title as follows:
- Cause Title as appearing on the portal: Vijay Devdattbhai Shah Versus Associated Enterprise
- Cause Title as corrected in this order: Assistant Commissioner of Central GST, Division XI, Vadodara-II Versus Associated Enterprise
3. Briefly stated, the facts of the case are that the Respondent was a lessee/licensee of Gujarat Industrial Development Corporation (GIDC), in the Plot no. 203/1 situated at GIDC Estate, Panoli, Ankleshwar 393001; and was not registered with GST. It entered into an agreement to assign the lease in favour of one Sayona Crop Care (Propritor Shri Harishbhai M. Patel). On application by the Respondent, GIDC issued Final Transfer Order (FTO) on 1st March 2018. The Respondent neither obtained registration nor paid GST on the transaction.
4. A Show Cause Notice (SCN) dated 30.07.2024 was issued alleging that the transaction amounted to supply of service classifiable under Services Accounting Code 99979 as “Other Miscellaneous Services” and that tax at the rate of 18% was leviable thereon under Sr. No. 35 of Notification No. 11/2017-CT (Rate), dated 28.06.2017. The notice, accordingly, demanded tax along with interest. The value of the alleged supply was determined on the basis of the rate chart of GIDC by invoking Section 15(4) of the CGST Act, 2017 read with Rule 31 of the CGST Rules, 2017.
4.1. The SCN alleged that the Respondent was aware that the transaction was not an outright sale of land but a transfer of leasehold rights liable to GST; that it had failed to obtain regular GST registration; had failed to issue tax invoices/bills of supply; and had failed to report the transaction in its monthly return in Form GSTR-3B returns. On that basis, the notice alleged suppression of facts with intent to evade tax, and invoked Section 74(1) of the CGST Act, 2017 and proposed penalties under Section 74(1) read with Sections 122(1)(xi) and 122(2)(b).
4.2. The Adjudicating Authority confirmed the demand of tax along with interest and imposed penalty equal to tax under Section 74(1) of the CGST Act, 2017. The Appellate Authority allowed the Respondent’s appeal, relying on the judgment of the Hon’ble Gujarat High Court in Gujarat Chamber of Commerce and Industry, (supra).
4.3. We may also note that, among other contentions, the Respondent submitted before the Adjudicating Authority that the agreement for assignment had been executed with the assignee (Sayona Crop Care) on 18.03.2017; that physical possession of the plot was handed over to the buyer on 21.03.2017; and that a formal transfer application was submitted to GIDC on 21.03.2017. According to the Respondent, the transaction had thus taken place before the GST law came into force on 01.07.2017 and fell entirely outside its purview. It was further submitted that the transaction was between two brothers – Bipinbhai M. Patel (Associated Enterprise) and Harishbhai M. Patel (Sayona Crop Care); that no financial consideration was involved; and that only the deed of rectification was executed after the introduction of GST, on 22.12.2017. The Adjudicating Authority rejected this contention. It held that although physical possession was handed over and the transfer application was made in March 2017, GIDC issued the provisional transfer order on 10.10.2017, the deed of rectification was executed on 22.12.2017, and the FTO was issued on 01.03.2018; the effective legal transfer, and hence the time of supply, therefore fell in FY 2017–18, under the GST regime. The Appellate Authority accepted the Respondent’s contention, observing:
5.7. I also find that the appellant has contended that there was a formal transfer of GIDC plot between two brothers for which agreement was executed prior to the implementation of GST and also application was submitted before GIDC before implementation of GST, hence GST liability does not exist. In this regard, the appellant submitted copy of Agreement dated 18.3.2017 and copy of Application dated 21.3.2017 made before GIDC. Here I am in a view that since provisioning of service is prior to GST era, hence GST is not applicable in the present matter.
4.4. This finding has been challenged by the department contending that the date of GIDC’s Final Transfer Order (01.03.2018) governs the transaction, placing the taxable event firmly within the GST period.
5. Mr. Maya Shanker Prabhat, learned Superintendent (Authorised Representative), appearing for the department, reiterates the grounds raised in the appeal memo and submits that the appeal was filed because the department had filed a Special Leave Petition (SLP) before the Hon’ble Supreme Court against the judgment in Gujarat Chamber of Commerce and Industry, (supra). He further submits that although the SLPs filed by the department have since been dismissed by the Hon’ble Supreme Court, the department is in the process of filing a review petition.
6. Mr. K. K. Desai, learned Advocate appearing for the Respondent, submits that the judgment of the Gujarat Chamber of Commerce and Industry, (supra) squarely covers the issue and is binding on this Tribunal.
7. We have heard both sides and perused the record.
8. It is not in dispute that the present case is squarely covered by the judgment in Gujarat Chamber of Commerce and Industry, (supra). In that case, the issue was whether GST is leviable on assignment of leasehold rights of the plot of land allotted on lease by Gujarat Industrial Development Corporation (GIDC) and building constructed thereon, by the lessee or its successor (assignor) to a third party (assignee) on payment of lump-sum consideration considering the same as supply of service under the provisions of Central/State Goods and Service Tax Act, 2017. The Hon’ble High Court held:
83. In view of foregoing reasons, 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 GST 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 GST Act.
84. In view of above, question of utilisation of input tax credit to discharge the liability of GST on such transaction of assignment would not arise.
85. The petitions accordingly succeed and impugned show cause notices and orders in original or appeal as the case may be, are hereby quashed and set aside. Rule is made absolute to the aforesaid extent. No order as to costs.
8.1. The issue also came up before the Hon’ble Bombay High Court in Aerocom Cushions (P.) Ltd. v. Asstt. Commissioner [2026] 182 (Bombay)/[2026] 106 GSTL 145 (Bombay)/[2026:BHC-NAG:348-DB]. Agreeing with the decision of the Hon’ble Gujarat High Court in Gujarat Chamber of Commerce and Industry, (supra), the Hon’ble Bombay High Court by its judgment dated 09.01.2026, held:
13. ………. We subscribe to this view for the reasons quoted in earlier part of our judgment so also because the view, in our considered opinion, is in consonance with the provisions of law on supply of services.
14. ………. Further we subscribe to the finding of Gujarat High Court that the assignment by sale and a transfer of leasehold rights of the plot of land allotted by the Corporation like GIDC or MIDC 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 and in such circumstances, the transaction would not be subject to levy of GST in terms of the GST Act.
15 . The writ petition is accordingly allowed. Show cause notice No.47/AC/GST/NGP-I/2024 dated 2012-2024 issued by respondent No.1 is quashed and set aside.
8.2. On the question of applicability of Sr. No. 35 of Notification No. 11/2017-CT (Rate), the Hon’ble Bombay High Court observed1:
8. Our attention is invited to the entry at Sr.No.1 which includes other services (washing, cleaning and dyeing services; beauty and physical wellbeing services, and other miscellaneous services including services nowhere else classified). As could be seen, the services include miscellaneous services like washing, cleaning, dyeing, beauty, physical well-being, etc. Such petty services, in our view, cannot be extended to assignment of leasehold rights in an immovable property, to term it to be other miscellaneous services as classified under clause at Sr. No.35 of the Notification.
8.3. The Asstt. Commissioner (Anti Evasion) v. Aerocom Cushions (P.) Ltd. 116 GST 80/109 GSTL 289 (SC)/Special Leave Petition (SLP (C) No. 18772/2026) filed by the department against the judgment in Aerocom Cushions was dismissed by the Hon’ble Supreme Court by order dated 22nd May 2026, which reads:
We are not inclined to interfere with the impugned judgment and order of the High Court, hence, the special leave petition is dismissed.
8.4. The Union of India v. Gujarat Chamber of Commerce and Industry 117 GST 159/111 GSTL 97 (SC)/Special Leave Petitions (Diary No. 33270/2025), filed by the department against the judgment in Gujarat Chamber of Commerce and Industry, (supra), were dismissed by the Hon’ble Supreme Court by order dated 21st July 2026, which reads:
1. Delay condoned.
2. This Court, vide order dated 22.05.2026, has already dismissed a Special Leave Petition, being SLP (C) No. 18772/2026.
3. In view of the fact that a similar SLP has been dismissed, the instant special leave petitions are dismissed.
4. Pending application(s), if any, shall stand disposed of.
8.5. In view of the above, the judgment of the Hon’ble Gujarat High Court, which is the jurisdictional High Court, holds the field and binds the Tribunal. The department’s stated intention to seek a review does not dilute its binding effect, there being no order staying or recalling it.
9. We accordingly hold that GST is not leviable on the transaction in question.
10. In view of this finding, the questions whether the taxable event occurred in the pre-GST regime, and whether Section 74, and Sections 122(1)(xi) and 122(2)(b) were rightly invoked in the facts of this case, do not survive for our consideration.
11. The appeal filed by the department is dismissed, and the Order-in-Appeal is upheld.
(Operative part of the order pronounced in open court on 29th September 2026).
