Gujarat HC Rules 18% GST on Leasehold Land Transfer Inapplicable
ECONOMY & POLICY

Gujarat HC Rules 18% GST on Leasehold Land Transfer Inapplicable

The Gujarat High Court has ruled that Goods and Services Tax (GST) does not apply to the transfer of leasehold rights on industrial land allocated by the Gujarat Industrial Development Corporation (GIDC). This decision provides significant relief to industries involved in such transactions, removing a contentious tax burden. The judgment addresses whether GST is applicable to leasehold land transfers, offering clarity on a long-debated issue. It is expected to influence similar disputes across courts, including cases in the Bombay High Court regarding industrial land transactions by the Maharashtra Industrial Development Corporation (MIDC). Petitioners argued that leasehold land transfers should be treated as sales of land, which are exempt from GST under the law. They highlighted that the 18% GST imposed on these transactions, in addition to state-imposed stamp duties, results in cascading taxes and makes deals economically unfeasible. The ruling, issued by Justices Bhargava D Karia and D N Ray on January 3, has been welcomed by legal and tax experts. Abhishek A. Rastogi, founder of Rastogi Chambers, noted that the issue of double taxation needed scrutiny, as GST demands and show cause notices often result in additional burdens for businesses. Saurabh Agarwal, Tax Partner at EY, called the decision a landmark ruling, bringing relief and clarity to businesses. He added that GIDC's retrospective demand for 18% GST had created liabilities amounting to approximately ?8,000 crore, severely impacting MSMEs. Agarwal emphasised the broader debate over whether long-term leases equate to land sales, which predates the GST regime. The ruling is expected to act as a strong precedent, but experts believe a final resolution will require intervention from the Supreme Court or clarification by the GST Council to ensure legal certainty and a more favourable investment environment. (CNBCTV18)

The Gujarat High Court has ruled that Goods and Services Tax (GST) does not apply to the transfer of leasehold rights on industrial land allocated by the Gujarat Industrial Development Corporation (GIDC). This decision provides significant relief to industries involved in such transactions, removing a contentious tax burden. The judgment addresses whether GST is applicable to leasehold land transfers, offering clarity on a long-debated issue. It is expected to influence similar disputes across courts, including cases in the Bombay High Court regarding industrial land transactions by the Maharashtra Industrial Development Corporation (MIDC). Petitioners argued that leasehold land transfers should be treated as sales of land, which are exempt from GST under the law. They highlighted that the 18% GST imposed on these transactions, in addition to state-imposed stamp duties, results in cascading taxes and makes deals economically unfeasible. The ruling, issued by Justices Bhargava D Karia and D N Ray on January 3, has been welcomed by legal and tax experts. Abhishek A. Rastogi, founder of Rastogi Chambers, noted that the issue of double taxation needed scrutiny, as GST demands and show cause notices often result in additional burdens for businesses. Saurabh Agarwal, Tax Partner at EY, called the decision a landmark ruling, bringing relief and clarity to businesses. He added that GIDC's retrospective demand for 18% GST had created liabilities amounting to approximately ?8,000 crore, severely impacting MSMEs. Agarwal emphasised the broader debate over whether long-term leases equate to land sales, which predates the GST regime. The ruling is expected to act as a strong precedent, but experts believe a final resolution will require intervention from the Supreme Court or clarification by the GST Council to ensure legal certainty and a more favourable investment environment. (CNBCTV18)

Next Story
Real Estate

Indian REITs Offer 6-7.5 per cent Yield, Surpassing Many Global Markets

Indian Real Estate Investment Trusts (REITs) are delivering average yields of 6–7.5 per cent for unitholders, outperforming many mature markets, including the US, according to a report by Credai and Anarock.Credai, the apex body of Indian real estate developers, and property consultant Anarock released the report Indian REITs – A Gateway to Institutional Real Estate at an event in India.Currently, India has five listed REITs – Brookfield India Real Estate Trust, Embassy Office Parks REIT, Mindspace Business Parks REIT, Nexus Select Trust, and Knowledge Realty Trust. Nexus Select Trust pr..

Next Story
Infrastructure Energy

Insolation Energy Wins 226 MW Solar Projects Under PM-KUSUM

Insolation Energy on Monday announced securing multiple solar projects totalling 226.45 MW, with an investment of Rs 7.5 billion, under the PM-KUSUM scheme. The orders were awarded to its wholly-owned subsidiary, Insolation Green Energy Pvt Ltd, by Jaipur Vidyut Vitran Nigam Limited for 20 sites and Ajmer Vidyut Vitran Nigam Limited for 115 sites, the company informed the exchanges.“The combined SPV solar power plants will total 226.45 MW under PM-KUSUM Component A, with the final levelised tariff at Rs 3.04 per unit for 16 sites, Rs 2.82 per unit for 5 sites, Rs 2.75 per unit for 53 sites, ..

Next Story
Infrastructure Energy

Numaligarh Refinery Awards EPC Contract for Rooftop Solar Projects

State-owned Numaligarh Refinery Ltd. (NRL) has awarded a Letter of Award to Solarium Green Energy Ltd. for the rate contract covering the Engineering, Procurement, and Construction (EPC) of grid-connected rooftop solar PV projects at various locations. The projects fall within the categories of 51–200 kW and 201–1000 kW. Notable projects include a 140 kW rooftop solar plant at NRL Assam, a 760 kW plant at NRL Assam, and a 280 kW plant at NRL West Bengal.The supply order covers ex-manufacturing works and the dispatch price for plant and equipment for the 140 kW, 760 kW, and 280 kW rooftop s..

Advertisement

Subscribe to Our Newsletter

Get daily newsletters around different themes from Construction world.

STAY CONNECTED

Advertisement

Advertisement

Advertisement

Talk to us?