Title: GST Not Applicable on Assignment of Leasehold Rights of Industrial Plots

Case Details

• Case Title: Frontline Roll Forms Pvt. Ltd. v. State of Maharashtra & Ors.

• Court: High Court of Judicature at Bombay (Civil Appellate Jurisdiction)

• Petition No.: Writ Petition No. 1596 of 2025

• Date of Judgment: 30 April 2025

• Coram: Justice B.P. Colabawalla & Justice Firdosh P. Pooniwalla

• Category of Dispute: Classification & Levy of GST

• Relevant Sections: Section 7(1)(a), Section 9 of CGST Act, 2017; Clause 5(b) of Schedule II; Clause 5 of Schedule III

Facts of the Case (Ref.: Para 1, 3)

• The petitioner was allotted a plot of land on lease by Maharashtra Industrial Development Corporation (MIDC).

• Petitioner assigned the leasehold rights and buildings constructed on the plot to a third party for a lump sum consideration.

• GST authorities treated this transaction as a supply of service liable to GST.

• Petitioner challenged the levy relying on the Gujarat High Court ruling in Gujarat Chambers of Commerce & Industry v. Union of India (2025), which held that such assignment is transfer of interest in immovable property and not supply of service.

• While the writ petition was pending, a show cause notice was adjudicated and order dated 28th February 2025 was passed against the petitioner, which was also challenged through amendment.

Question(s) in Consideration (Ref.: Para 1–3)

1. Whether assignment/transfer of leasehold rights of an industrial plot along with buildings constitutes a “supply of service” under GST?

2. Whether such assignment is outside the scope of Section 7 of CGST Act as it amounts to transfer of benefits of immovable property?

3. Whether levy of GST under Section 9 is sustainable in such transactions?

Observations of the Court (Ref.: Para 2–4)

• The Gujarat High Court held in Gujarat Chambers of Commerce & Industry that transfer of leasehold rights by the lessee to a third party amounts to transfer of immovable property and hence not liable to GST.

• Clause 5(b) of Schedule II and Clause 5 of Schedule III of CGST Act do not apply to such transfers.

• The issue has been raised in multiple writ petitions, including Siemens Ltd. v. Union of India (WP 14434 of 2023), where adjudication was stayed.

• Given the importance of the issue and existence of precedent, the Bombay High Court found it appropriate to stay the impugned order dated 28.02.2025.

Judgment of the Court (Ref.: Para 3–5)

• The adjudication order dated 28 February 2025 passed against the petitioner is stayed.

• The writ petition is clubbed with WP 14434/2023 (Siemens Ltd.) and other connected matters for hearing.

• The matter will be listed on 10 June 2025 for directions regarding final disposal.

Between Fine Lines (Simple Summary)

• GST authorities sought to levy GST on transfer of leasehold rights of MIDC land.

• Court noted Gujarat High Court already held such transfers are of immovable property, not taxable supply.

• Petitioner’s SCN had been adjudicated but order stayed by Bombay HC.

• Matter linked with similar pending petitions for final resolution.

• For now, GST demand on assignment of leasehold rights remains suspended.

Summary of Referred Cases

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