No GST on Assignment of GIDC Leasehold Rights to Third Party; Jurisdictional High Court Ruling Binds Tribunal Despite Proposed Review: GSTAT Surat

1. Title of the Case

2. Summary of the Judgment

Facts of the Case: The Department filed two appeals against Orders-in-Appeal dated 29.08.2025, upholding orders that dropped demands of GST on the assignment, to a third party, of leasehold rights in plots allotted on lease by the Gujarat Industrial Development Corporation (GIDC) (para 1). Facts were taken from the Shreeji Enterprise appeal (para 3). The respondent, a proprietary concern of Shri Jamnadas Gordhan Mathukia, transferred for consideration its leasehold rights in a GIDC plot, and GIDC issued the Final Transfer Order on 24.10.2017 (paras 3.1 and 3.2). A show cause notice dated 18.07.2024 treated the transaction as “Other Miscellaneous Services” under SAC 99979 taxable at 18% under Sr. No. 35 of Notification No. 11/2017-CT (Rate), valued it on GIDC’s rate chart under Section 15(4) read with Rule 31, invoked Section 74(1) alleging suppression, and proposed penalties under Section 122(1)(i), (xi) and (xv) (para 3.2). The demand was dropped and the Department’s appeal under Section 107 failed (para 3.3).

Issues for Determination: Whether GST is leviable on assignment of GIDC leasehold rights to a third party, and whether the Department’s stated intention to seek review of the Supreme Court’s dismissal of its SLPs dilutes the binding force of the jurisdictional High Court’s judgment (paras 4, 7 and 7.5). The validity of invoking Sections 74 and 122 was a consequential issue (para 9).

Findings and Observations of the Court: The Authorised Representative conceded that the case was covered by Gujarat Chamber of Commerce and Industry v. UOI (R/SCA No. 11345 of 2023, decided 03.01.2025), where the Gujarat High Court held that such assignment is a transfer of benefits arising out of immovable property, falling outside Section 7(1)(a) read with Clause 5(b) of Schedule II, and not leviable under Section 9 (para 7). The Bombay High Court in Aerocom Cushions Pvt. Ltd. (2026:BHC-NAG:348-DB, dated 09.01.2026) concurred and held that Sr. No. 35 cannot be stretched to cover assignment of leasehold rights (paras 7.1 and 7.2). The Supreme Court dismissed the Department’s SLPs against Aerocom Cushions on 22.05.2026 and against Gujarat Chamber of Commerce on 21.07.2026 (paras 7.3 and 7.4). A proposed review, with no order staying or recalling the judgment, does not dilute its binding effect (para 7.5).

Verdict and Basis of the Judgment: The Tribunal held that GST is not leviable on the transactions (para 8), that the questions under Sections 74 and 122 did not survive (para 9), and dismissed both appeals, upholding the Orders-in-Appeal (para 10).

Analysis of the Judgment: The order is a clear application of judicial discipline: a tribunal bench within a High Court’s territory is bound by that Court’s judgments, and the mere prospect of a review petition is no ground to keep a demand alive. The Tribunal also corrected cause titles wrongly generated by the GSTAT portal (para 2).

Legal Takeaway: Taxpayers facing demands on transfer of GIDC or similar leasehold rights may rely on this order, Gujarat Chamber of Commerce and Aerocom Cushions to seek dropping of such notices, including those invoking Section 74.

3. Tabular Summary

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