Facts of the Case

Gulab Dattu Nage had assigned/transferred leasehold rights in a plot of land originally allotted to him by the City and Industrial Development Corporation (CIDCO). Out of a total sum of Rs.55,13,600/- collected from the petitioner in this connection, CIDCO sought to appropriate Rs.9,56,448/- towards Central and Maharashtra GST, communicated vide a letter dated 30.12.2021. The petitioner challenged this letter and sought a mandamus directing CIDCO to deposit the GST component to the credit of the government rather than retain it, essentially disputing that GST was leviable on the transaction at all.

Issues Involved

  1. Whether assignment/transfer of leasehold rights in a plot of land allotted by a development corporation such as CIDCO/MIDC/GIDC by the lessee to a third-party assignee, for consideration, is exigible to GST.
  2. Whether the impugned demand letter dated 30.12.2021 is sustainable in light of binding precedent on the point.

Petitioner's Arguments

  • The transaction in question — assignment of leasehold rights in land allotted by a development corporation — is a transfer of benefits arising out of immovable property and is not liable to GST.
  • Reliance was placed on the decision of the Nagpur Bench of the Bombay High Court in Aerocom Cushions Private Limited v. Assistant Commissioner (Anti-Evasion), CGST & CX, Nagpur-1, which followed the Gujarat High Court's ruling in Gujarat Chamber of Commerce and Industry v. Union of India.

Respondent's Arguments

  • CIDCO and the State respondents contested the petition, though the order does not record any distinguishing feature taking the case outside the ratio of Aerocom Cushions and the Gujarat Chamber of Commerce ruling.

Court Order / Findings

  • The Court held the issue squarely covered by Aerocom Cushions Private Limited, which, relying on the Gujarat High Court's binding pronouncement, held that assignment by sale or transfer of leasehold rights in a plot allotted by a corporation such as GIDC/MIDC/CIDC by the lessee to a third-party assignee, for consideration, constitutes an assignment/sale/transfer of benefits arising out of immovable property and is not subject to levy of GST.
  • The writ petition was allowed, and the impugned communication dated 30.12.2021 demanding Rs.9,56,448/- from the petitioner was quashed and set aside.

Important Clarification

  • Assignment of leasehold rights in land originally allotted by a public development corporation (CIDCO, MIDC, GIDC and similar bodies) to a third party for consideration is treated as a transfer of benefits arising out of immovable property, and is not a taxable supply of goods or services attracting GST.
  • The ruling of a co-ordinate High Court on a point of law, until overturned, is treated as binding guidance for other Benches within the State, even where the decision originates from another High Court, following the principle in CIT, Vidarbha v. Smt. Godavari Devi Saraf.

Sections Involved

  • Section 7, CGST Act, 2017 — scope of supply, and Schedule III exclusions relating to sale of land and building/immovable property transactions.

Decision – In Favour of

Assessee. Demand letter for GST on assignment of leasehold rights quashed.

Case Details

High Court of Judicature at Bombay, Bench at Aurangabad; Writ Petition No. 1506 of 2024 with Civil Application No. 10683 of 2024; Neutral Citation: 2026:BHC-AUG:10695-DB; Coram: Hon'ble Nitin B. Suryawanshi and Hon'ble Vaishali Patil-Jadhav, JJ.; Order dated 07.03.2026.

Link to Download the Order

Click here to view/download the full order

Disclaimer

This content is shared strictly for general information and knowledge purposes only. Readers should independently verify the information from reliable sources. It is not intended to provide legal, professional, or advisory guidance. The author and the organisation disclaim all liability arising from the use of this content. The material has been prepared with the assistance of AI tools.