The Finance Ministry is considering filing a special permission petition in the Supreme Court against the Gujarat High Court’s decision not to implement GST on lease hold transfer. This information has been given by a government official on the condition of keeping the name secret.
The Gujarat High Court ruled in January that GST does not apply when the Gujarat Industrial Development Corporation (GIDC) has transferred the rights of lease hold in the land given to the third party. This decision was given in the case of Suyog Dye vs India Union. Due to this, many companies facing the demand for 18 percent GST in the case of lease transfer were relieved. The liabilities in this item in Gujarat and Maharashtra were around Rs 8,000 crore.
In such a situation, the main legal issue was what GST should be imposed on the transfer of leasehold or industrial land. Such transactions are already subject to the stamp duty levied by the state. The High Court had accepted the petitioner’s argument that such transfer plots should be seen as the sale and it is clearly excluded from GST.
The official said, “The government may face potential revenue losses due to the Gujarat High Court’s decision. We are in the process of filing a special petition against the order of the court. Such cases are also pending in other courts. In this sequence, the case is also pending in the Bombay High Court. In view of these pending cases, we are planning to appeal against the decision of the Gujarat High Court.
Khaitan & Company partner Mayank Jain commented on the development, saying that the challenging of the Gujarat High Court’s decision in the Supreme Court will definitely increase the concerns for the taxpayers facing such demands. He said, ‘The Supreme Court should give priority to this issue and should not leave it as a safari retreat. The Safari Retreat was legally rejected through amendment of the previous date.
Abhishek Rastogi, the founder of Rastogi Chambers, said that the GST format does not apply to plots and the sale of the building. He said, “There may be a significant decline in tax and double taxation due to any change in keeping it out.”
First Published – February 9, 2025 | 10:04 pm IST