Siemens Ltd. Vs Union of India & Ors. (Gujarat High Court)
The Gujarat High Court examined the validity of a show cause notice issued under Section 74 of the Central Goods and Services Tax Act, 2017, demanding GST on the assignment of leasehold rights by the petitioner to LM Wind Power Blades India Private Limited. The notice treated the assignment of leasehold rights as a supply of service under Section 7(1)(a) and classified the transaction under Heading 9972. The petitioner challenged this action through a writ petition under Articles 226 and 227 of the Constitution, asserting that the issue was already settled by the Court’s earlier decision in Gujarat Chamber of Commerce, Industries & Ors. v. Union of India & Ors., which held that assignment of leasehold rights amounts to transfer of immovable property and therefore does not constitute a taxable supply under GST.
The land in question had initially been allotted on a 99-year lease by the Gujarat Industrial Development Corporation (GIDC) to Hindustan Motors Limited, which subsequently assigned the leasehold rights to the petitioner through two deeds in 2011. In 2019, the petitioner further assigned these leasehold rights to LM Wind Power Blades India Private Limited through two separate Deeds of Assignment, covering land parcels of approximately 2,04,120.37 sq. m. and 1,37,710.47 sq. m. respectively. The petitioner received total consideration of Rs. 193.50 crore. In 2025, tax authorities initiated proceedings, sought documents, and later issued a show cause notice demanding GST of Rs. 34.83 crore on the premise that assignment of leasehold rights constitutes a taxable service.
