Giving respite to entrepreneurs, the Supreme Court dismissed the Revenue Department’s Special Leave Petition (SLP) challenging the Bombay High Court’s ruling that had set aside Goods and Services Tax (GST) on assignment of leasehold rights in industrial land transactions. The apex court’s decision effectively sets aside the Goods and Services Tax (GST) levy on the assignment of leasehold rights in industrial land. The bench, comprising Justice Dipankar Datta and Justice Satish Chandra Sharma, observed that such an assignment - done with MIDC’s permission - is not in the course or furtherance of business. The court rejected reliance on other pending challenges, emphasizing that each legal matter turns on its unique facts. Advocate Divyanshu Rai represented the assessee, while

 

AOR Gurmeet Singh Makker appeared for the Revenue Department. The decision is being viewed as a major victory for entrepreneurs having MIDC leasehold plots in Maharashtra. The dispute revolved around whether transfer of leasehold rights by an original lessee to another party should attract GST. The Bombay High Court had earlier ruled that such transactions amount to transfer of immovable property rights and cannot be treated as a taxable ‘supply of service’ under GST law. The High Court had observed that when leasehold rights are permanently assigned, the original holder’s rights are extinguished completely, making the transaction similar to transfer of property rights rather than leasing services. After the Bombay High Court verdict, the Revenue

 

Department approached the Supreme Court seeking to overturn the ruling. However, the apex court has now reportedly refused to interfere, strengthening the relief granted to industries. The detailed order copy is still awaited. The ruling is expected to directly benefit industrial units in Nagpur’s MIDC areas including Hingna, Butibori, Kalmeshwar and other manufacturing zones where companies operate on long-term leasehold industrial land. It is important to note that over the past few years, several businesses had received GST notices demanding 18 per cent tax on transfer or assignment of industrial plots and factory properties. This had created massive financial uncertainty for industries, investors and business owners.