GST not leviable on assignment of GIDC leasehold rights; Tribunal follows jurisdictional High Court after Supreme Court dismisses SLP: GSTAT Surat

The Tribunal held that the transaction of assigning leasehold rights in GIDC plots constitutes a transfer of benefits arising out of immovable property and falls outside the scope of supply under the GST Act, a position now affirmed at every judicial level up to the Supreme Court.

The Goods and Services Tax Appellate Tribunal, Surat Bench, has dismissed three departmental appeals challenging the setting aside of GST demands on assignment of leasehold rights in industrial plots allotted by the Gujarat Industrial Development Corporation (GIDC), holding that the transaction is not liable to GST [Assistant Commissioner of CGST, Vadodara-II v. Pragna Chemical Industries and batch].

In each of the three cases, the Department had demanded GST from the assignees under the reverse charge mechanism on the transfer of leasehold rights in GIDC plots. The Appellate Authority had set aside the demands following the Gujarat High Court's judgment in Gujarat Chamber of Commerce and Industry v. Union of India, which held that assignment by sale and transfer of leasehold rights in GIDC plots constitutes a transfer of benefits arising out of immovable property, and that the provisions of Section 7(1)(a) read with Schedule II, Clause 5(b) and Schedule III, Clause 5 are not applicable to such transactions. The Department appealed to the Tribunal on the ground that an SLP had been filed before the Supreme Court.

The Bench of Sanjaykumar Dwivedi (Judicial Member) and Ramesh Kumar Hadvani (Technical Member) noted that the journey of this issue is now complete. The Bombay High Court in Aerocom Cushions Private Limited v. Assistant Commissioner (Anti-Evasion), Nagpur had concurred with the Gujarat High Court and additionally observed that the miscellaneous services entry at Sr. No. 35 of Notification No. 11/2017-CT (Rate), covering petty services like washing, cleaning and dyeing, cannot be extended to assignment of leasehold rights in immovable property. The Supreme Court dismissed the SLP against Aerocom Cushions on 22 May 2026, and subsequently dismissed the SLP against Gujarat Chamber of Commerce itself on 21 July 2026, expressly noting that a similar SLP had already been dismissed.

The Tribunal held that the Gujarat High Court judgment, being the jurisdictional High Court, holds the field and is binding. The Department's stated intention to file a review petition does not dilute its binding effect in the absence of any order staying or recalling it. Notably, the Tribunal also recorded that the show cause notices in these cases had invoked Section 74 and Section 122(2)(b) alleging deliberate suppression, even though the underlying transaction had taken place through an auction conducted by the Department itself and the transfer certificate was issued by the very officer who had jurisdiction under the CGST Act — an irony the order left without further comment, having resolved the matter on the substantive question of taxability.

2026-juristway.com-2833-GSTAT(Surat)-GST  |  GSTAT Surat  |  APL/59, 82, 83/SRT/2026  |  06.10.2026