Elite Clothing Company Pvt Ltd Vs Union of India & Ors (Bombay High Court)
Bombay High Court has granted an interim stay on an order imposing Goods and Services Tax (GST) on the assignment of leasehold rights for a plot of land and buildings within a Maharashtra Industrial Development Corporation (MIDC) area. The ruling came in a writ petition filed by Elite Clothing Company Pvt Ltd, challenging the levy of GST on a lump-sum consideration received for such a transfer.
The core legal question before the High Court was whether the assignment of leasehold rights, along with the structures built by the lessee, to a third party constitutes a “supply of service” under the Central/State Goods and Services Tax Act, 2017.
Elite Clothing Company contended that its case was directly covered by a recent judgment of the Gujarat High Court. The Division Bench of the Gujarat High Court, in Gujarat Chambers of Commerce and Industry and Others v/s Union of India and Others (2025) (1) TMI 516 Gujarat High Court, ruled on January 3, 2025, that the assignment or transfer of leasehold rights of a plot of land allotted by the Gujarat Industrial Development Corporation (GIDC) to a third party for consideration is an assignment/sale/transfer of benefits arising from “immovable property.” The Gujarat High Court concluded that such transactions are not subject to GST under Section 7(1)(a) read with Clause 5(b) of Schedule II and Clause 5 of Schedule III of the CGST Act.
