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The imposition of goods and services tax (GST) on the transfer of plots within the GIDC estates in Gujarat has met with resistance from industrial units situated in the region. Chartered accountants have revealed instances where micro, small, and medium enterprises (MSMEs) have incurred greater GST debts than their earnings as they opted to transfer their assets to another company within a short period of time due to the financial infeasibility of the business.
Several professional organizations intend to bring a legal case to the upper court as they object to the GST authority's decision to impose GST on GIDC land transfers while not permitting input tax credit (ITC) to be applied. The Gujarat Chamber of Commerce and Industry (GCCI) has communicated to the state's chief minister, Bhupendra Patel, and the Union finance minister, Nirmala Sitharaman, that GIDC plots, being leasehold, should not be classified as products or services liable to GST.
According to reports, the GST department is gathering data on GIDC plot transfers directly from GIDC. As a result, numerous businesses are receiving GST notifications for the taxation of payments received for leasehold land assignments.
According to Ajit Shah, the GCCI's GIDC committee chairman, notices have been issued since 2017-18 pertaining to cases where sellers and buyers have no communication or are embroiled in disputes over GST liability with added penalties and interest. Numerous small and medium-sized enterprises have been issued notifications concerning tax payment for the compensation obtained from the transfer of a leasehold property, which is deemed inappropriate.
Jashu Chaudhari, who serves as the president of the Ankleshwar Industries Association, expressed his disapproval regarding the imposition of GST on the transfer of leases without providing the ability to claim input tax credit. We have recommended to our members to refrain from paying GST when transferring leases. The state government has given us their word that they will bring up the matter with the GST council. However, if the matter remains unsettled, our next course of action would be to take it to court. According to Karim Lakhani, a CA, several MSME units have been issued GST notices after transferring their GIDC plots to other entities.
The Gujarat Industrial Development Corporation (GIDC) was founded in accordance with the Gujarat Industrial Development Act of 1962 to expedite the process of industrialization in the Indian state of Gujarat. The primary function of the GIDC is to pinpoint viable areas for industrial growth and develop industrial parks that have requisite facilities like road networks, drainage systems, electricity, water sources, street lighting, and readily accessible factory spaces. Some housing areas have been designed with particular industries in mind when constructing the necessary infrastructure.
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