The Nagpur Bench of the Bombay High Court has provided relief to the business community, especially in Maharashtra, by holding that GST is not applicable on the transfer of plots allotted by the MIDC to third parties. This judgment clears long-standing confusion caused by GST notices issued to several companies over the years.
The ruling of the court follows a similar decision delivered earlier via the Gujarat High Court in a case of land allotted by the Gujarat Industries Development Corporation (GIDC). The Gujarat court analysed a central tax notification issued in June 2017, which specified a zero GST rate on one-time charges paid for the grant of long-term leases, defined as leases surpassing 30 years, by state industrial development corporations.
The court said that when land is transferred via the original allottee to a third party, the transferee serves with the role of the lessee, and the original tax treatment continues to apply.
Key Takeaways from the Bombay HC Ruling on MIDC Plot Transfers
- GST Exemption Confirmed: Bombay High Court Rules that Transfers of MIDC Plots to Third Parties Are Not Within GST, Ending Long-Standing Uncertainty.
- Legal Consistency: Aligns with Gujarat High Court on GIDC land; transfer is ministered as an assignment of lease, not a new taxable supply.
- Business Relief: Companies following MIDC procedures are safeguarded from retrospective tax notices, thereby facilitating a lighter compliance load.
GST Clarity Achieved on MIDC Land Transfers Following Nagpur Bench Ruling
- Towards the same logic, the Nagpur Bench decided that the transfer of plots of MIDC does not equate to a fresh taxable supply under GST.
- The same decision has provided relief for those entities that have been following the procedure laid down by the MIDC, including making payments for transfer charges.
- In recent years, Maharashtra-based companies have witnessed GST demand notices issued because of the transfer of MIDC land.
- These advisories created a strong impression of vagueness and fear in small and medium-scale enterprises (SMEs).
- Such land transfer exercises are normally performed towards restructuring, expansion, or a change of ownership.
- Industry representatives said that the complexity of compliance and the rise in the cost of doing business have arisen from these GST demands.
Aerocom Cushions Private Ltd, a Nagpur-based company, is one of the concerned case which claimed a notice issued via the GST authorities after the company acquired land from the original allottee, Rishita Industries. The company mentioned that the trader was legal and in the form of the transfer of the leasehold rights, and thus not a supply. The decision of the HC upheld the claim of the company.
Industry associations admired the ruling as a welcome step. “This ruling has removed an area of grey uncertainty and prevents genuine business activity from being unnecessarily taxed,” according to Julfesh Shad, Chairman of the Chamber of Small Industries Association (COSIA).
As per him, the association has brought this problem to the attention of the government and judicial forums, as the impact of the prohibition of such treatment in the GST law was being experienced by the industrial units.
The implications of this judgment are important. The MIDC land is a vital part of the industrial framework in Maharashtra, so it must clarify taxation matters related to it. The court’s ruling that no GST applies to this transaction has relieved businesses of any burden associated with retrospective taxes.
Legal experts recommended that this ruling may serve as a reference point for the GST department, facilitating disputes over the transfer of industrial lands. Overall, the decision supports the principle that GST cannot be applied in the absence of new supplies or services.
Read Also: Bombay HC: GST Returns of Companies Cannot Be Revealed Under RTI Act
By aligning with the judgment of the Gujarat High Court, the Bombay High Court has ensured a consistent interpretation of the law, providing businesses with clarity and helping to maintain Maharashtra’s status as a top investment destination for industries.
| Applicant Name | Aerocom Cushions Private Limited vs. Assistant Commissioner (Anti-Evasion) |
| Case Number | NO. 2145 OF 2025 |
| For the Petitioner | Mr Vinay Shraff and Ms Darshana Bhaiya |
| For Respondent | Mr. K.K. Nalamwar |
| Bombay High Court | Read Order |