🧩 Q1. What was the real issue before the Bombay High Court?
The burning question is: Should GST apply when someone transfers their leasehold rights of land/buildings to someone else?
👉 Tokheim India (P.) Ltd. argued that they were just assigning rights in immovable property—which is not taxable under GST.
📌 The tax department, however, said this is a “supply of service” and hence subject to GST.
Example:
Imagine you’ve leased an industrial plot from a government body for 99 years. Years later, you transfer this lease to another company for a price. Is this real estate business (not GST-applicable) or a service (GST applies)? That’s the crux.
⚖️ Q2. What’s the specific case that triggered this stay?
The case is Tokheim India (P.) Ltd. v. Union of India [Writ Petition No. 4487 of 2025, dated April 03, 2025].
đź“ť Tokheim challenged a January 2025 order that slapped them with GST on their leasehold rights transfer.
👨‍⚖️ The Bombay High Court responded with an interim stay—putting the GST demand on hold for now.
🧠Q3. What past judgments influenced the court’s stay?
The Gujarat High Court in GIDC v. Union of India (Jan 2025) ruled:
👉 “Assignment of leasehold rights is a transfer of benefits in immovable property, not a supply under GST law.”
đź“š Other helpful precedents:
Chambers of Small Industries Association v. Maharashtra
Siemens Ltd. v. Union of India
All signal a growing judicial pushback against GST on such transfers.
🏗️ Q4. So how does immovable property fit into all this?
Under GST law, “supply” includes sale, lease, rent, etc. of goods or services.
But if the subject is immovable property—like land or rights attached to it—GST does not apply.
🔎 Argument: Assignment of leasehold rights = transfer of immovable property benefits → Not a supply.
đź“ś Q5. Which parts of the GST Act are under scrutiny?
The main sections in play are:
Section 7(1)(a): Defines “supply”
Schedule II, Clause 5(b): Renting of immovable property = supply of service
Schedule III, Clause 5: Sale of land = not a supply
đźš« Petitioners argue their transactions fit under Schedule III (sale of land-type rights), not under Schedule II (services).
đź“š Q6. Have other High Courts ruled definitively before?
âś… Yes! The Gujarat High Court (2025, GIDC case) ruled that assignment of leasehold rights in land is not liable for GST.
📌 It held that such transactions are simply a transfer of immovable property—outside the GST net.
🏢 Q7. What happened in the Time Technoplast case?
In Time Technoplast Ltd. v. Union of India [March 26, 2025], the court ruled:
🧾 A full transfer of leasehold rights for valuable consideration = transfer of immovable property → No GST.
💥 This judgment went beyond a stay—it quashed the GST demand entirely.
🔒 Q8. What’s the current status of Tokheim India’s case?
🎯 Interim stay granted—Tokheim doesn’t have to pay GST for now.
🗓️ The case is grouped with others for a final hearing to decide whether lease transfers are taxable under GST law.
🌟 Key Takeaways
🔍 Nature of transaction Transfer of leasehold rights = immovable property = not a supply
đź“š Legal support Strong precedents from Gujarat HC and others
🏛️ Current status Bombay HC granted stay in Tokheim case; clarity awaited
💡 Practical tip Don’t blindly pay GST on leasehold assignments—evaluate the transaction
FAQs on GST & Leasehold Rights
Q1. Is transfer of leasehold rights considered a sale of land?
👉 Yes, many courts have held that assignment of long-term leasehold rights is akin to transfer of immovable property.
Q2. Do I need to pay GST if I transfer my industrial plot lease?
👉 Depends on the structure. If it’s a full assignment of rights, courts say GST does not apply.
Q3. Can the Income Tax Department question such transfers?
👉 Yes, the Income Tax Department may still examine capital gains, TDS, and stamp duty implications—separate from GST.
Q4. What should businesses do until the final verdict?
👉 Evaluate case law, maintain documentation, and take professional advice before deciding on GST liability.
CA Bhavesh Panpaliya 8888755557