Dhiraj Can Co. Pvt. Ltd. Vs Union of India & Ors. (Gujarat High Court)
The Gujarat High Court, in a significant ruling, has reiterated that the transfer of leasehold rights is not a taxable supply under the Goods and Services Tax (GST) regime, as it is akin to the sale of land, which is explicitly excluded under Schedule III of the GST Act. This judgment was delivered in the case of
Background of the Case
The petitioner, Dhiraj Can Co. Pvt. Ltd., was allotted an industrial plot by the Gujarat Industrial Development Corporation (GIDC). In 2020, the petitioner applied to GIDC to transfer these leasehold rights to M/s Acquire Chemicals, an application that was subsequently approved on March 16, 2020. A Deed of Assignment was executed on June 30, 2020, for which the petitioner received INR 75 lakhs as consideration. Notably, no GST was charged or collected on this transaction.
Subsequently, the petitioner received a summons under Section 70(1), a Show Cause Notice (SCN) in FORM GST DRC-01, and an Order in FORM GST DRC-07, confirming a demand under Section 73 of the GST Act. The basis for this demand was that the assignment of leasehold rights was considered a “supply of service” classifiable under SAC 9972.
