🚧 The Problem
Many businesses and individuals in Gujarat were getting tax notices demanding 18% GST when they transferred their 99-year lease rights on industrial plots. These plots were given by the GIDC (Gujarat Industrial Development Corporation), and people were selling or assigning these long-term leases to someone else.
The government said this was a “service” and should be taxed under GST. But businesses disagreed, saying it’s more like selling property, not giving a service.
🧑‍⚖️ What the Gujarat High Court Said
The Gujarat High Court recently gave a clear decision:
âś…No GST needs to be paid when someone transfers leasehold rights of land and property (like a building) to another person.
Here’s what the court explained in simple terms:
- It’s like selling property
When you transfer a 99-year lease with full rights over the land or building, it’s very similar to selling it — even if you technically don’t “own” the land. You’re handing over control for almost a lifetime. - Not a service
The court said: This is not a service like renting or leasing. You're not earning rent every month — you're giving it away completely in exchange for one-time money. So GST rules on services don’t apply. - Already taxed through stamp duty
People already pay stamp duty (like a property transfer tax) when they assign lease rights. Adding GST on top would mean double taxation — which the GST law was designed to avoid.
đź“Ś Real-World Example
Imagine you got an industrial plot from GIDC and built a small factory on it. Years later, you want to sell your rights to another business. You sign a deal, they pay you, and they take over the land and factory.
Under this court ruling:
- You don’t have to pay 18% GST on the amount you receive.
- You just need to pay regular stamp duty, like in a property deal.
đź’Ľ What This Means for You
- If you've transferred lease rights in the past and paid GST, you might be able to apply for a refund (check with a tax expert).
- If you’re planning to buy or sell leasehold property, this ruling can help you save a lot of tax.
- This decision gives clarity and relief to thousands of plot holders, developers, and businesses across Gujarat (and maybe even other states).
⚠️ One Caveat
The GST department may appeal this decision in the Supreme Court, so the final word is still pending. But for now, the Gujarat High Court’s decision gives solid legal protection.
đź“ť Bottom Line
Transferring lease rights for industrial plots (like a 99-year GIDC lease) is not a service, it’s like selling property — so no GST is applicable, says the Gujarat High Court.
