Abhiram Ayodhyanath Swami vs. Union Of INDIA, Dept. Of Revenue, Ministry Of Finance And Ors

Facts

The Petitioner, Abhiram Ayodhyanath Swami, challenged a show cause notice dated January 14, 2025, issued by the Respondent authorities. The notice proposed to levy Goods and Services Tax (GST) on a lease transfer agreement between the Petitioner and the Maharashtra Industrial Development Corporation (MIDC). The Petitioner contended that this transaction, involving the assignment of leasehold rights in an MIDC plot to a third party for consideration, is not subject to GST. The Petitioner relied on a previous judgment by a Division Bench of the same High Court in the case of Aerocom Cushions Private Limited vs Assistant Commissioner (Anti-Evasion), CGST & CX, Nagpur-1 And Another, which dealt with a similar challenge to a show cause notice on identical grounds. The Respondent-State, through the AGP, conceded that the cited judgment held such transactions not subject to GST, though they argued the petition was premature as it only challenged a show cause notice.

Held

The Court held that the show cause notice issued to the Petitioner was unsustainable in law. The Court found no distinguishing feature between the facts of the present case and the facts in the case of *Aerocom Cushions Private Limited vs Assistant Commissioner (Anti-Evasion), CGST & CX, Nagpur-1 And Another*. In that precedent, the Division Bench had concurred with the Gujarat High Court's view in *Commissioner of Income-Tax, Vidarbha vs Smt. Godavari Devi Saraf*, which held that the assignment/sale/transfer of leasehold rights of a plot of land by MIDC to a lessee, and subsequently by the lessee in favor of a third party for consideration, constitutes an assignment/sale/transfer of benefits arising out of immovable property. Consequently, such transactions were held not to be subject to the levy of GST under the CGST Act. The Court noted that the dismissal of the Special Leave Petition against the *Aerocom Cushions* judgment by the Apex Court further solidified this position. Therefore, considering the settled position in law, the authorities ought not to have issued the show cause notice. The Court quashed and set aside the show cause notice dated January 14, 2025.

Key Issues

1. Whether the assignment/sale/transfer of leasehold rights in a plot of land by MIDC to a lessee, and subsequently by the lessee to a third party for consideration, is a transaction subject to levy of GST under the Central Goods and Services Tax Act, 2017 (CGST Act)? The Petitioner argued that the transaction in question, which involves the transfer of leasehold rights in an MIDC plot, is not taxable under the CGST Act. They relied on the Division Bench judgment in *Aerocom Cushions Private Limited vs Assistant Commissioner (Anti-Evasion), CGST & CX, Nagpur-1 And Another*, which held that such a transaction would not be subject to GST. The Petitioner further submitted that the dismissal of the Special Leave Petition against this judgment by the Apex Court settled the position of law, making the show cause notice liable to be quashed. The Respondent-State argued that the writ petition was premature as it challenged only a show cause notice and not a final order. However, the AGP fairly conceded that the High Court, in the *Aerocom Cushions* case, had indeed held that such transactions are not subject to GST levy.