NAGPUR: The Nagpur bench of the Bombay High Court has ruled that transferring plots allotted by the Maharashtra Industries Development Corporation (MIDC) to third parties does not incur goods and services tax (GST).
This decision aligns with a previous ruling from the Gujarat High Court concerning the transfer of land from the Gujarat Industries Development Corporation (GIDC) to a third party. The Gujarat court referenced a June 2017 notification that set a zero rate for a one-time charge on long-term leases (exceeding 30 years) by state government industrial development corporations to businesses. The court noted that if the original allottee transfers the land, the third party effectively becomes the new lessee of GIDC, maintaining the nil rate under this new arrangement.
This ruling provides relief to businesses across the state who faced GST liability notices. Frequently, land initially allotted to one entity is transferred to a third party following MIDC’s prior approval and the payment of a fee. However, GST authorities have recently begun issuing notices to recover dues, according to sources.
A local company, Aerocom Cushions Private Ltd, challenged the Central GST department’s actions. M/s Rishita Industries, the original allottee, transferred the land to Aerocom, prompting a GST payment notice for the transfer.
Julfesh Shad, chairman of the Chamber of Small Industries Association (COSIA), stated that this ruling clarifies a long-standing issue and alleviates the undue tax burden on legitimate business transfers. COSIA has actively raised this issue in various forums.
