Case Note & Summary
The petitioner, Niket Bipinbhai Patel, through his power of attorney holder, filed a writ petition before the Gujarat High Court challenging a show-cause notice dated 28.10.2025 issued by the Assistant Commissioner (A.E.) CGST-Central Excise, Vadodara-II Commissionerate, under Section 74(1) of the Central Goods and Services Tax Act, 2017 (CGST Act). The petitioner also sought a direction to unblock Input Tax Credit (ITC) amounting to Rs.98,11,678/-. The petitioner, a Non-Resident Indian residing in the USA, had acquired leasehold rights over a GIDC plot in Ankleshwar from Syngenta India Limited and was engaged in sub-plotting activities and transferring leasehold rights of such sub-plots to various purchasers. He obtained GST registration (GSTIN 24BGDPP4059A1ZR) w.e.f. 14.03.2022 solely for discharging GST liability on such transfers. For transferring leasehold rights, the petitioner was required to pay various charges to GIDC, including sub-divisional charges, NU penalty, miscellaneous administrative charges, transfer fees, and other statutory dues. The respondent issued the show-cause notice alleging that the petitioner's activity of transferring leasehold rights amounts to 'construction of immovable property' under Section 17(5)(d) of the CGST Act, thereby blocking ITC. The court, after hearing the parties, observed that the show-cause notice was without jurisdiction and based on a misinterpretation of Section 17(5)(d). The court held that the petitioner is not engaged in construction of immovable property but in transfer of existing leasehold rights, and thus the ITC cannot be blocked. The court quashed the show-cause notice and directed the respondent to unblock the ITC amount. The judgment was delivered by a Division Bench comprising Honourable Mr. Justice A.S. Supehia and Honourable Mr. Justice Pranav Trivedi on 10.02.2026.
Headnote
A) Goods and Services Tax - Input Tax Credit - Section 17(5)(d) of the Central Goods and Services Tax Act, 2017 - Transfer of Leasehold Rights - The petitioner, engaged in sub-plotting and transfer of leasehold rights of GIDC industrial plots, availed ITC on charges paid to GIDC. The respondent issued a show-cause notice under Section 74(1) alleging that such activity falls under 'construction of immovable property' and thus ITC is blocked under Section 17(5)(d). The court held that transfer of leasehold rights does not amount to construction of immovable property; the petitioner is not engaged in construction but in transfer of existing leasehold rights. The show-cause notice was quashed as without jurisdiction and based on misinterpretation of law. (Paras 1-9) B) Goods and Services Tax - Show-Cause Notice - Jurisdiction - Section 74(1) of the Central Goods and Services Tax Act, 2017 - The court found that the show-cause notice was issued without proper application of mind and misinterpreted the provisions of Section 17(5)(d). The respondent's action in blocking ITC and issuing the notice was held to be arbitrary and without jurisdiction. The court directed the respondent to unblock the ITC amounting to Rs.98,11,678/-. (Paras 3-9) C) Goods and Services Tax - Natural Justice - Writ Petition - The court, after hearing the parties and considering the submissions, quashed the show-cause notice and directed unblocking of ITC, observing that the notice was based on a fundamental error of law and that no purpose would be served by allowing the respondent to proceed further. (Paras 5-9)
Issue of Consideration
Whether the show-cause notice dated 28.10.2025 issued under Section 74(1) of the CGST Act, 2017, seeking to reverse Input Tax Credit on the ground that the petitioner's activity of transferring leasehold rights of sub-plots amounts to 'construction of immovable property' under Section 17(5)(d) of the CGST Act, is legally sustainable.
Final Decision
The court quashed the show-cause notice dated 28.10.2025 and directed the respondent to unblock the Input Tax Credit amounting to Rs.98,11,678/-.
Law Points
- Input Tax Credit
- Blocking of ITC
- Show-cause notice jurisdiction
- Section 17(5)(d) CGST Act
- 2017
- Transfer of leasehold rights
- Construction of immovable property
- Sub-plotting activities
- GIDC charges
- Natural justice
- Writ petition maintainability
