KP Green Engineering Limited & Anr. Vs Union of India & Ors. (Gujarat High Court)
Gujarat High Court heard the petition filed by KP Green Engineering Limited and another under Articles 226 and 227 of the Constitution of India. The petition challenged a show cause notice dated 29 December 2023, issued under Section 74 of the Gujarat State Goods and Services Tax (GST) Act, 2017. The notice treated the petitioner’s assignment of leasehold rights in an industrial plot to M/s Hindustan Enviro Life Protection Services Limited as a taxable supply of service under Section 7(1)(a) of the Act, classified under Heading 9972 of the GST Tariff, and demanded ₹39,60,000 as GST on the transaction.
The matter was taken up for hearing with the consent of the parties. Learned counsel Mr. Mrudul Barot appeared for the petitioners, Ms. Shrunjal Shah, Assistant Government Pleader, appeared for the State, and Mr. Deepak Khanchandani, Senior Standing Counsel, appeared for the Union of India and other respondents.
Facts of the Case
The Gujarat Industrial Development Corporation (GIDC), established under the Gujarat Industrial Development Act, 1962, functions as the nodal agency for developing industrial areas and estates in the State. GIDC leases industrial plots for periods generally extending to 99 years, with allotment letters specifying the terms, conditions, and method of payment of premium.
The petitioner, formerly known as M/s K.P. Buildcon Private Limited, was allotted Industrial Plot No. 1716 at Panoli, GIDC, Ankleshwar, through an allotment order dated 14 December 2007. The petitioner subsequently agreed to transfer its leasehold interest in the plot to M/s Hindustan Enviro Life Protection Services Limited through a deed of assignment. Upon application for transfer, GIDC issued a provisional transfer order on 25 March 2019, subject to fulfillment of specified conditions. The final transfer order was issued on 22 April 2017 after compliance.
The sale deed between the petitioner and the transferee was executed on 28 March 2017, and the petitioner received ₹2.20 crore as consideration for the transfer of leasehold rights.
Later, the Directorate General of GST Intelligence (DGGI), Vadodara Regional Unit, initiated proceedings alleging non-payment of GST on the transfer consideration. Summons were issued to the petitioner under Section 17(1) of the Act on 24 May 2021. The petitioner submitted the required documents in response. Subsequently, the show cause notice dated 29 December 2023 was served, demanding GST on the transfer of leasehold rights. The petitioner filed a reply to the notice on 15 October 2024.
