BVM Pharma Through Partner Alkaben Paneri Vs Union Of India & Ors. (Gujarat High Court)
Conclusion: Transfer or assignment of leasehold rights of industrial plots did not amount to a taxable supply under the Goods and Services Tax Act, 2017 as per provisions of Section 7(1)(a) read with Schedule II and Schedule III.
Held: Assessee had transferred Industrial Plot, Dahej II Industrial Estate to M/s Dayaram Pharma Chem through a final transfer order issued by GIDC in December 2019. Based on this transfer, the Department issued summons (17.04.2023), followed by intimation in DRC-01A (20.05.2024) and Show Cause Notice under Sec. 73 (28.05.2024) alleging GST liability of ₹25.32 lakh + interest + penalty on the on the ground that the transfer fees received for the assignment of leasehold rights were liable to GST. Department passed order in DRC-07 raising a demand of ₹49.26 lakh. Assessee contended that assignment of leasehold rights of land and buildings did not fall within the scope of “supply” under Section 7, and hence no GST could be levied. They relied on the Gujarat High Court’s earlier judgment in Gujarat Chamber of Commerce and Industry v. Union of India, which had explained that such transfer was essentially an assignment of immovable property and was not taxable under GST. It was also pointed out that the same principle was applied in the subsequent case of Alfa Tools Pvt. Ltd. v. Union of India. On appeal. It was held that following binding precedent in Gujarat Chamber of Commerce and Industry, the transaction could not be treated as a taxable supply. The court explained that provisions of Section 7(1)(a) read with Schedule II and Schedule III were not attracted to such a transaction, and no GST liability could arise. The court quashed both the show cause notice issued in May 2024 and the order of demand passed in August 2024.
