Case Summary
Case Title: M/s Kabir Instrument and Technology v. Union of India & Ors.
Court: High Court of Gujarat at Ahmedabad
Petition No.: R/Special Civil Application No. 13526 of 2024
Category of Dispute: Levy of GST on assignment of leasehold rights / Input Tax Credit
Date of Judgment: 22 January 2025
Relevant Sections: Section 7(1)(a), Section 9, Section 16 of the CGST Act, 2017; Clause 5(b) of Schedule II; Clause 5 of Schedule III.
Facts (Paras 1–2)
The petitioner, M/s Kabir Instrument and Technology, challenged a Show Cause Notice dated 09.07.2024 issued by the tax authorities demanding GST on assignment of long-term leasehold rights. The petitioner argued that such assignment of rights over land is not a supply under GST. Alternatively, if GST is payable, then ITC should be allowed under Section 16 of the CGST Act and reversal already made should be re-credited.
Questions Before Court (Para 2)
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Whether assignment of leasehold rights in land amounts to “supply” liable to GST under Section 7 read with Schedule II and III?
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If taxable, whether ITC is admissible on such transactions?
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Whether the show cause notice issued without jurisdiction can be sustained?
Observations (Paras 3–4)
The Court noted that the issue was no longer res integra due to its recent ruling in Gujarat Chamber of Commerce and Industries v. Union of India (SCA No. 11345 of 2023, decided on 03.01.2025). In that case, it was held that assignment of leasehold rights of land allotted by GIDC amounts to transfer of immovable property and is not a “supply” under Section 7(1)(a). Consequently, GST is not leviable under Section 9, and the question of ITC utilisation does not arise.
Judgment (Para 4)
Applying the above precedent, the Court quashed the impugned Show Cause Notice as the transaction involved transfer of immovable property and was outside the scope of GST. The petition was disposed of, and Rule was made absolute. No order as to costs.
Table of Cases Referred
| Case | Citation/Reference | Verdict |
|---|---|---|
| Gujarat Chamber of Commerce and Industries v. Union of India & Ors. | SCA No. 11345 of 2023, decided on 03.01.2025 (Gujarat HC) | Assignment of leasehold rights of land is transfer of immovable property; not supply under GST; GST not leviable; ITC question does not arise. |
Between Fine Lines
For businesses, this ruling clarifies that transfer of long-term leasehold rights in industrial plots is treated as a transfer of immovable property, not a supply under GST. Therefore, GST demands on such assignments are unsustainable, and any reversed ITC on these transactions may be contested. It brings certainty to industries dealing with transfer of GIDC and similar leasehold rights.
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