The Supreme Court has dismissed the Revenue's appeal (SLP) and confirmed that when a person transfers his full leasehold rights in industrial land (like MIDC, GIDC plots) to another party, GST is not payable on such transfer. The Bombay High Court had earlier ruled in favour of the taxpayer, and the Supreme Court has now allowed that decision to stand.
The Court agreed with the view that when the original allottee hands over his complete leasehold interest to a new party — with the approval of the development authority (MIDC) and after paying the required premium — the transaction is really a transfer of immovable property. It is not a service or a business activity on which GST can be charged.
The most important point considered by the Court was the condition in Section 7 of the CGST Act, which says a transaction can be called a "supply" only when it is done "in the course or furtherance of business". During the hearing, the Supreme Court asked the Revenue to show how the assignment of leasehold rights was connected to any ongoing business activity of the assignor. The Revenue could not prove this link.
Since there was no clear business connection, the Court found no reason to disturb the Bombay High Court's finding that such a transaction is outside the scope of GST. In simple words — if a transaction is not done as part of running a business, GST cannot be imposed on it.
The Supreme Court also rejected the Revenue's argument that the matter should be kept pending because similar issues are being heard by other High Courts (such as the Gujarat High Court in the Gujarat Chamber of Commerce case). The Court made it clear that every GST dispute has to be decided on its own facts and law, and cannot be delayed just because related cases are pending elsewhere.
This judgment brings major relief to industries operating from MIDC, GIDC, SIPCOT, MPIDC and similar industrial estates. Buyers acquiring plots through assignment of leasehold rights now have strong support that no GST is payable on the premium. Taxpayers who have received show-cause notices on this issue can use this order while drafting their replies. Those who have already paid GST under protest on past transactions may also explore the possibility of claiming a refund.
The final certified copy of the Supreme Court's order is awaited.
Case: Assistant Commissioner (Anti-Evasion) v. Aerocom Cushions Pvt. Ltd. Date: 23 May 2026 [Copy of order is awaited]
