Lupin Limited vs. Union Of INDIA

Facts

The petitioner, Lupin Limited, filed a writ petition before the Gujarat High Court challenging a recovery notice dated May 28, 2021, allegedly issued by the Directorate General of GST Intelligence, Vadodara. The petitioner sought to declare that a 99-year lease is a sale of land and building, not attracting GST, and to restrain recovery proceedings. The petitioner had purchased plots, executed a Deed of Assignment-cum-Slup Deed, and later sold the property to Siddharth Interchem Private Limited. The impugned notice, styled as a recovery notice by the petitioner, stated that the transfer of rights amounted to a service classifiable under SAC 999792, taxable at 18%, and requested payment of GST on the consideration received, along with interest and penalty. The respondent, in its affidavit, clarified that the notice was a simple communication requesting pending documents and informing the petitioner of legal provisions, not a formal recovery notice.

Held

The Court held that the communication dated May 28, 2021, issued by the Directorate General of GST Intelligence, Vadodara, was not a recovery notice but a mere communication. The Court relied on the affidavit-in-reply filed by the respondent, which explicitly stated that the petitioner had misconstrued the letter as a recovery notice. The affidavit clarified that the letter was issued to request pending documents and inform the petitioner about the legal provisions related to their transactions, requesting voluntary payment of GST. The Court found that there was no cause of action for the petition as the challenged notice was not a formal demand or recovery notice. Consequently, the Court did not delve into the merits of whether the 99-year lease attracted GST. The petition was dismissed as infructuous. No issue was expressly left undecided, as the core of the petition was based on a misinterpretation of the nature of the communication.

Key Issues

1. Whether the communication dated May 28, 2021, issued by the Directorate General of GST Intelligence, Vadodara, is a valid recovery notice attracting GST liability on the transfer of leasehold rights, or merely a communication requesting documents and information, as per Section 7 of the CGST Act, 2017, read with Entry 5 of Schedule III. Petitioner's contention: The petitioner argued that the transaction, a 99-year lease, should be considered a sale of land and building, which is outside the purview of GST as per Entry 5 of Schedule III to Section 7 of the CGST Act, 2017. They sought to quash the recovery notice and prevent any recovery. Revenue's contention: The respondent (Union of India and others) contended that the communication dated May 28, 2021, was not a recovery notice but a simple letter seeking pending documents and informing the petitioner of the legal provisions applicable to their transaction. They stated that the petitioner had misconstrued this communication as a recovery notice and filed the petition on an insignificant ground. The respondent indicated that the correct procedure would involve issuing a Show Cause Notice after investigation if GST liability was determined.