GSTAT Surat Holds Assignment of GIDC Leasehold Rights Not Taxable Under RCM; Jurisdictional Gujarat High Court Ruling Binding on Tribunal

The Goods and Services Tax (GST) regime, introduced in 2017, sought to subsume multiple indirect taxes under a single umbrella while clarifying the taxability of transactions. However, ambiguities persist, particularly in classifying transactions involving immovable property. One such contentious issue has been whether the assignment of leasehold rights in industrial plots — such as those allotted by the Gujarat Industrial Development Corporation (GIDC) — constitutes a “supply of service” under GST or a transfer of immovable property, which falls outside the GST levy.

The dispute gained prominence after the Gujarat High Court’s landmark judgment in Gujarat Chamber of Commerce and Industry v. Union of India (2025 Taxo.online 1), which held that such assignments are not taxable under GST. Despite the Supreme Court’s dismissal of the department’s Special Leave Petitions (SLPs) against this ruling, the GST authorities continued to issue show-cause notices and demand tax under Section 74 of the CGST Act, 2017, invoking fraud, wilful misstatement, or suppression of facts.

The GSTAT Surat’s decision in Assistant Commissioner of CGST v. Pragna Chemical Industries (2026 Taxo.online 3355) now settles this controversy, reinforcing the binding nature of High Court precedents and curtailing the department’s attempts to re-litigate settled legal positions.