Gujarat HC Grants Interim GST Relief to MSMEs in GIDCs

Ahmedabad : The Gujarat HC has provided interim relief to MSMEs operating within Gujarat Industrial Development Corporation (GIDC) estates by in the case that sought to apply GST on the transfer of Leasehold rights of GIDC Land.

The controversy emerged following the issuance of multiple notices by State GST offices across Gujarat concerning the application of GST on the transfer of Leasehold rights of GIDC Land by private parties. Many MSMEs across Gujarat have been operating from GIDC estates, availing the benefits of concessional-rate land with a lease period of 99 years, offered by the GIDC.

State GST officials have been diligently pursuing the issuance of summons, notices, and advisories to encompass long-term lease transfers between private parties within the ambit of GST. In certain cases, there have been reports of certain officials resorting to threats, pressure, and even the misuse of summons as a tool to collect GST on the transfer of leasehold rights in GIDC. This aggressive taxation approach has led to the reopening of previously settled accounts with the purchasers, even after a lapse of 5 to 6 years, causing genuine hardships to the affected MSMEs, which may have already reinvested the proceeds from the lease transfers.

The legal battle was waged by Dr. Avinash Poddar, Advocate, representing a group of industries (petitioners) led by CA Hardik Kakadiya. Following extensive deliberations, the Gujarat High Court found it appropriate to grant interim relief to the petitioners by staying the ongoing proceedings.

Private parties from various industrial estates, including Ankleshwar, Panoli, Jhagadia, Dahej, and Saykha, filed writ petitions before the Gujarat High Court, seeking a resolution to this contentious issue. The Court has already passed interim injunctions in two such cases, effective until the matter is resolved. Further injunctions are anticipated as the legal battle continues.