COSIA has been at the forefront of advocating against the unjust imposition of GST on the assignment of leasehold rights in MIDC plots. The GST department has been treating such assignments as a supply of service, subjecting MSMEs to an additional 18% financial burden, despite the fact that land transactions are already subject to stamp duty and capital gains tax.
In response to multiple representations going unheard, COSIA took decisive legal action by filing a writ petition before the Hon’ble Bombay High Court. On 4th March 2025, the Court granted significant interim relief to MSMEs by staying adjudication of show cause notices and recovery actions related to GST on assignment of leasehold rights. The Bench also acknowledged the relevance of the Gujarat High Court’s ruling, which held that such assignments are a transfer of benefits arising from immovable property and should not attract GST.
The Court further observed that when a completed building standing on such plots is transferred post-occupation certificate, the transaction may fall under Schedule III of the CGST Act, thus making it exempt from GST. With these crucial observations, the Court has recognized the need for a thorough interpretation of the provisions under the GST Act and has listed the matter for final hearing directions on 10th March, 2025.
Mr. Sandeep Parikh, President of COSIA, stated “This is a crucial victory for MSMEs struggling under the burden of excessive taxation. The Hon’ble Bombay High Court’s observations align with our stand that the assignment of leasehold rights should not be subjected to GST. We will continue our fight to ensure that MSMEs are safeguarded from such unfair levies.”
COSIA remains committed to securing a favorable final verdict and will take all necessary steps to protect MSMEs from unjust taxation policies. The matter is now set to progress towards a final hearing, and we urge all affected members to stay updated with further developments.
