Gujarat High Court Rules GST Not Applicable On GIDC Leasehold Rights Transfer

Gandhinagar, Jan 7 (KNN) The Gujarat High Court has issued a significant ruling declaring that Goods and Services Tax (GST) cannot be applied to the transfer of leasehold rights in land granted by the Gujarat Industrial Development Corporation (GIDC) to third parties.

The judgment, delivered in the case of Suyog Dye Chemie versus Union of India, provides substantial relief to businesses facing retrospective GST demands of approximately Rs 8,000 crore in Gujarat and Maharashtra alone.

The verdict addresses a fundamental legal question regarding the taxation of leasehold and industrial land transfers, which are already subject to state stamp duty.

The petitioners successfully argued that these transactions should be classified as land sales, a category specifically exempt from GST.

Prior to this ruling, companies faced an 18 percent GST levy on subsequent transfers, creating what many described as an unsustainable tax burden.

The decision's impact extends beyond Gujarat, potentially influencing similar pending cases, including a notable petition before the Bombay High Court filed by the Chamber of Small Industry Associations.

Legal experts suggest this ruling could set a precedent for resolving comparable disputes across the country.

Abhishek A Rastogi, counsel for petitioners in the Bombay High Court case, emphasised that the GST framework explicitly excludes land and building sales, arguing that any deviation would result in tax cascading and double taxation.

The court's decision marks a pivotal moment in addressing concerns over multiple taxation layers in industrial land transactions, potentially streamlining future business operations and reducing litigation over tax demands.

This development particularly benefits companies that have received demand notices and faced the burden of pre-deposit requirements for appeals.

(KNN Bureau)