SC Upholds Bombay HC Ruling: No GST on MIDC Leasehold Rights Transfer
The Supreme Court has dismissed the tax authorities’ special leave petition against a Bombay High Court order that had quashed a GST demand on the assignment of long term industrial leasehold rights, effectively leaving intact the High Court’s finding that the transaction was a transfer of benefits arising out of immovable property and not liable to GST under the CGST framework.
In an order dated May 22, 2026, a bench of Justice Dipankar Datta and Justice Satish Chandra Sharma dismissed the Special Leave Petition filed by the Assistant Commissioner, Anti Evasion, CGST & CX, Nagpur, challenging the Bombay High Court's ruling in the case of Aerocom Cushions Private Limited versus Assistant Commissioner, Anti Evasion, CGST & CX, Nagpur 1.
"We are not inclined to interfere with the impugned judgment and order of the High Court, hence, the special leave petition is dismissed," the SC bench said.
The dispute arose when the tax authorities issued a show cause notice to Aerocom Cushions demanding GST of INR 27 lakh on the assignment of its leasehold rights, held under a 95 year lease from MIDC, Hingna, Nagpur, to a third party, M/s Rishita Industries, for a consideration of INR 1.5 crore.
The Revenue contended that such an assignment amounted to a supply of service under Section 7(1) of the Central Goods and Services Tax Act, 2017, read with Schedule II, and was therefore taxable at 18 percent under the category of "other miscellaneous services."
