Decided 21 January 2025. The Bombay High Court has set aside a GST order levying tax on a deed of assignment of leasehold land and building because the officer recorded that no reply had been filed, when in fact a reply was on record. The matter was sent back for fresh adjudication, with a direction to consider the Gujarat High Court ruling that such assignments are not taxable.
Case at a glance
| Case | M/s Panacea Biotec Limited v. Union of India & Ors. |
| Forum | Bombay High Court (Justice B.P. Colabawalla and Justice Firdosh P. Pooniwalla) |
| Case No. | Writ Petition No. 13587 of 2024 |
| Date of order | 21 January 2025 |
| Key provisions | Schedule II item 2 and Schedule III item 5, CGST Act |
| Result | Order set aside; fresh adjudication with personal hearing |
Facts of the case
Under a deed of assignment, the petitioner, a lessee, transferred leasehold land and the building on it to a third party. The department issued an SCN on 16.07.2024 proposing GST on the transaction.
The petitioner replied on 22.07.2024, contending that the transaction is a sale of land and building under Schedule III. The order dated 19.08.2024 confirmed the demand, recording that no submissions had been made.
Issue before the High Court
Can an order stand when it wrongly records that no reply was filed and does not deal with the taxpayer's main contention?
What the High Court held
- The reply filed on 22.07.2024 had been received by the Assistant Commissioner the same day. The order's statement that no submissions were made was factually incorrect.
- The contention under Schedule III was not dealt with at all. Without going into merits, the order was set aside.
- The petitioner may file a detailed reply within two weeks; the officer must give a personal hearing before deciding.
- The officer must also consider the Gujarat High Court's decision holding such transactions not taxable under GST.
Practical takeaways for taxpayers
- Always keep proof of filing and receipt of your reply to an SCN; it can get an order set aside.
- If you are transferring leasehold industrial land and building, rely on the Gujarat High Court ruling that assignment of leasehold rights is not taxable.
- An order that ignores your reply violates natural justice and can be challenged directly in a writ.
Frequently asked questions
Is assignment of leasehold land taxable under GST?
The Gujarat High Court has held it is a transfer of immovable property and not taxable. The Bombay High Court directed the officer to consider that decision.
What if the officer says no reply was filed?
If you can prove the reply was filed, the order can be set aside for violating natural justice, as happened here.
Facing a similar GST dispute?
GST Folio prepares replies to show cause notices, appeals before the Appellate Authority and GSTAT, refund claims and ITC reconciliations for businesses across India. Call or WhatsApp +91 80513 31315 or email gstfolio@zohomail.in.
This summary is based on the order of the Bombay High Court in Writ Petition No. 13587 of 2024. It is general information, not legal advice; the outcome of any case depends on its own facts and the full text of the order.