BackgroundGujarat Industrial Development Corporation (GIDC), a nodal agency of the Government of Gujarat, acquires and develops industrial estates and allots plots of land on long-term lease of 99 years to industrial entities, initially by a licensing agreement and subsequently by a registered lease deed, on payment of premium and periodic lease rent. The lease deed permits the lessee to assign leasehold rights to a third party with GIDC's approval. After implementation of GST, the department issued summons and show cause notices to members of the Gujarat Chamber of Commerce and Industry who had assigned their leasehold rights along with buildings constructed thereon on the GIDC plots to third party assignees for lump-sum consideration, demanding GST at 18% by treating such assignment as "supply of service" under the CGST/SGST Act, 2017. The petitioner Chamber made representations contending that such assignment is a transfer of immovable property excluded from GST under Entry 5 of Schedule III, and alternatively, that ITC would be admissible if GST is levied. Since representations were not considered, a batch of 60+ writ petitions were filed, with SCA No. 11345 of 2023 treated as the lead matter.Court Observations (Verbatim)"When such leasehold right is transferred by the lessee-assignor in favour of a third person-assignee by execution of deed of assignment, it would be nothing but transfer of an 'immovable property' in view of the settled legal position to the effect that lease for 99 years or for a long term in consideration of premium paid is as much an alienation as sale or mortgage.""Interest in the immovable property in form of leasehold rights cannot be said to be different than the immovable property itself.""Leasehold rights which are to be considered as sale of land would be out of purview of the provisions of scope of supply as per section 7 of the GST Act.""The scope of 'supply of services' would not include transfer of leasehold rights as supply of service as it would be transfer of 'immovable property' being a benefit arising out of immovable property consisting of land and building.""Clause 5 of Schedule III of the GST Act clearly provides that sale of land cannot be treated as supply of goods or services. Therefore, leasehold rights which are to be considered as sale of land would be out of purview of the provisions of scope of supply as per section 7 of the GST Act.""Under the Service Tax Act, even the development rights which are the benefits arising from land were not liable to tax. Leasehold right is in fact a greater right and interest in land than development rights and the principle under the service tax regime would therefore, continue even to apply under the GST regime as the object of introduction of GST is to subsume the existing taxes.""When the lessee/assignor transfers the land having leasehold rights and building to the assignee, same cannot be considered as supply of service as it would be a transfer of immovable property. Therefore...assignment of leasehold rights equal to the renting of immovable property as per clause 5(b) of the Schedule II would be contrary to such legislative intent.""When the legislature in its wisdom has chosen to exclude the sale of land and building from purview of GST Act, there is no ambiguity that section 7(1)(a) would be applicable to the sale of immovable property and once it is held that assignment of the leasehold rights being the benefit/interest arising out of immovable property would partake the character as such, cannot be covered under the scope of supply of services by any stretch of imagination.""Transfer charges paid by the assignee would be subject to levy of GST but at the same time consideration paid by the assignee to the lessee/assignor would amount to transfer of immovable property which would be out of purview of provision of section 7(1)(a) of the GST Act read with Schedule II and Schedule III thereof."Final VerdictAssignment/sale/transfer of leasehold rights of GIDC-allotted industrial plot along with building by lessee/assignor to third party/assignee for consideration is a transfer of immovable property covered under Clause 5 of Schedule III of the GST Act and not a "supply of service" — hence not liable to GST. All impugned show cause notices and orders/appeals were quashed and set aside. Rule made absolute. Stay of operation of the judgment was also rejected by the Court. 

BACKGROUNDThe assessee, a manufacturer of CTD/Round bars, was subjected to simultaneous searches at its premises and at the premises of its associate concern. Three note-books and one pen-drive were recovered allegedly containing details of illicit clearances. A further search at the premises of a transporter yielded parallel invoices purportedly issued by the assessee. Statements of several persons connected with the manufacturing activities were recorded, but all were retracted almost immediately after recording. On the basis of this material, a Show Cause Notice was issued demanding Central Excise duty of Rs.1,93,26,138/-, comprising approximately Rs.1.85 Crores based on data in the note-books and pen-drive, and approximately Rs.8.25 lakhs based on parallel invoices recovered from the transporter's premises. The Order-in-Original confirmed the entire demand. The Commissioner (Appeals) also confirmed the demand and imposed matching penalties. The assessee approached CESTAT, which set aside the demand of Rs.1.85 Crores while confirming the demand of Rs.8.25 lakhs along with penalties under Section 11(c) of the Central Excise Act. The Revenue challenged the CESTAT order before the High Court. FACTSThe CESTAT, while dealing with the demand of Rs.1.85 Crores, found that the entire basis for the same rested only on retracted confessional statements and data in the note-books/pen-drive recovered from the associate concern's premises, without any independent corroborating evidence in the form of excess raw material purchases, shortage of finished goods, excess electricity consumption or cash seizure. Further, the opportunity of cross-examination of the person in-charge of records of the associate concern was not made available by the Department. In contrast, for the demand of Rs.8.25 lakhs, the parallel invoices recovered from the transporter's premises were confirmed not only by the proprietor of the transporter but also by independent evidence, and hence this demand was sustained by the CESTAT. The Revenue's appeals before the High Court challenged the CESTAT's decision to set aside the larger demand. COURT OBSERVATIONS (Verbatim)"The Tribunal rightly concluded that in the case of clandestine removal of excisable goods, there needs to be positive evidences for establishing the evasion, though contended by the Revenue.""In absence of any material reflecting the purchase of excessive raw material, shortage of finished goods, excess consumption of power like electricity, seizure of cash, etc., the Tribunal noted and held that there was nothing to bank upon except the bare confessional statements of the proprietor and of some of the persons connected with the manufacturing activities and such statements were retracted within no time of their recording.""not permitting the cross examination of a person in-charge of records of M/s. Sunrise Enterprises and absence of other cogent and positive evidences, would not permit it to sustain the demand of Rs. 1.85 Crores raised in the Demand notice and confirmed by both the authorities below.""Confessional statements solely in absence of any cogent evidences cannot make the foundation for levying the Excise duty on the ground of evasion of tax, much less the retracted statements.""Appeals since do not raise any question of law, much less substantial question of law, deserves no consideration." FINAL VERDICTAll Tax Appeals filed by Revenue were dismissed. The High Court upheld the CESTAT order setting aside the demand of Rs.1.85 Crores (based on note-books and pen-drive) for want of positive corroborating evidence. The confirmed demand of Rs.8.25 lakhs (backed by independent evidence from the transporter's premises) was upheld.👍 IN FAVOUR OF ASSESSEE