logo
Bombay HC strikes down GST demand on TDR used by real estate developer

Bombay HC strikes down GST demand on TDR used by real estate developer

Time of India29-04-2025

NAGPUR
: In an important ruling for
Maharashtra's real estate sector
, the Nagpur bench of Bombay high court set aside a GST demand issued to a city-based developer, holding that no taxable transfer of development rights occurred under the agreement in question. The decision offers clarity on the tax implications of development agreements in the real estate sector.
The division bench of justices Avinash Gharote and Abhay Mantri delivered the ruling while allowing a petition filed by Shrinivasa Realcon, which challenged a show-cause notice issued on August 14, 2024, and a consequent GST order dated December 10, 2024. The demand pertained to a development agreement executed on April 7, 2022, for constructing a residential complex on an 8,000 sq ft plot at mouza Lendra. The developer was appointed by the landowner for a consideration of Rs7 crore and two flats.
Senior counsel Akshay Naik, assisted by Abhishek Bhoot, argued that the project did not involve any transfer or purchase of development rights or floor space index (FSI) from external sources. Instead, the construction was based solely on the existing FSI or any statutory increase.
Entry 5B of the GST notification dated June 28, 2017, amended on March 29, 2019, allows taxation of services involving the transfer of TDR or FSI for construction purposes. However, the court noted the GST law does not define a 'transfer of development right'. It referred to Clause 11.2 of the Unified Development Control and Promotion Regulations, which outlines TDR as compensation in FSI granted by a planning authority, not applicable in the present case.
The bench concluded that the development agreement lacked any reference to the transfer of such rights and rejected the department's reliance on Clause 18 of the contract, which merely required compliance under the Maharashtra Apartment Ownership Act, 1970.
Declaring the transaction outside the purview of Entry 5B, the court quashed both the show-cause notice and the final order. "The transaction contemplated does not fall within Entry 5B of the notification of June 28, 2017, as amended by another notification of March 29, 2019. Neither the show-cause notice nor the consequent order can be sustained," the judges stated in their order, thereby setting them aside.
Key takeaways from HC verdict:
- There was no actual trading of transfer of development rights (TDR) in the agreement
- Entry 5B of GST notification could not be invoked in case
- GST Act does not define 'transfer of development rights'
- Developer used existing FSI or statutory increase, not external TDR
- Clause 18 of agreement was not proof of transfer
- Set aside both show-cause notice and final tax order

Orange background

Try Our AI Features

Explore what Daily8 AI can do for you:

Comments

No comments yet...

Related Articles

CBI arrests CGST superintendent, seizes 17 property documents worth crores
CBI arrests CGST superintendent, seizes 17 property documents worth crores

Business Standard

time3 hours ago

  • Business Standard

CBI arrests CGST superintendent, seizes 17 property documents worth crores

The CBI has arrested a Central Goods and Services Tax (CGST) superintendent in Uttar Pradesh for allegedly accepting a Rs 1 lakh bribe for waiving penalty on a private company, officials said. During searches at the premises of Nishan Singh Malli post arrest, the CBI seized 17 property documents, in his and his family members' name, worth crores. "These properties include three residential flats in Ghaziabad and Moradabad; one commercial shop in Moradabad; 12 residential plots in Rampur and Gajraula. One Creta vehicle in the name of accused public servant was also seized," a CBI spokesperson on Tuesday said. Rs 3 lakh in cash aside from the alleged bribe amount of Rs 3 lakh was confiscated during the searches, the CBI added. "During search of official premise of accused public servant, relevant documents pertaining to the case were seized and are being scrutinised," the spokesperson added. The other person arrested by the agency is a tax lawyer who was representing the complainant in the case, the agency said. Both were produced before a special court in Ghaziabad which remanded them to judicial custody. CGST Superintendent Malli allegedly issued a penalty notice to a businessman, who controls the private firm, on account of non-filing of GST returns. Malli, who is posted in Gajraula with additional charge of Amroha in UP, allegedly demanded Rs 4 lakh in collusion with tax lawyer Amit Khandelwal from the businessman for waiving penalty on his company. "The tax advocate was representing the complainant. However, he entered into a conspiracy with superintendent, CGST, Amroha and pressured the complainant to deliver the demand of undue advantage of Rs 4 lakh to the accused superintendent," the CBI spokesperson said. Reluctant to pay the bribe, the businessman approached the CBI with a complaint, the CBI said. The agency claimed of laying a trap following which the superintendent and the advocate were caught red handed receiving Rs 1 lakh as an installment of the total bribe demand of Rs 4 lakh.

CBI arrests CGST superintendent, seizes assets worth crores
CBI arrests CGST superintendent, seizes assets worth crores

Hindustan Times

time5 hours ago

  • Hindustan Times

CBI arrests CGST superintendent, seizes assets worth crores

New Delhi, The CBI has arrested a Central Goods and Services Tax superintendent in Uttar Pradesh for allegedly accepting a ₹1 lakh bribe for waiving penalty on a private company, officials said. During searches at the premises of Nishan Singh Malli post arrest, the CBI seized 17 property documents, in his and his family members' name, worth crores. "These properties include three residential flats in Ghaziabad and Moradabad; one commercial shop in Moradabad; 12 residential plots in Rampur and Gajraula. One Creta vehicle in the name of accused public servant was also seized," a CBI spokesperson on Tuesday said. ₹3 lakh in cash aside from the alleged bribe amount of ₹3 lakh was confiscated during the searches, the CBI added. "During search of official premise of accused public servant, relevant documents pertaining to the case were seized and are being scrutinised," the spokesperson added. The other person arrested by the agency is a tax lawyer who was representing the complainant in the case, the agency said. Both were produced before a special court in Ghaziabad which remanded them to judicial custody. CGST Superintendent Malli allegedly issued a penalty notice to a businessman, who controls the private firm, on account of non-filing of GST returns. Malli, who is posted in Gajraula with additional charge of Amroha in UP, allegedly demanded ₹4 lakh in collusion with tax lawyer Amit Khandelwal from the businessman for waiving penalty on his company. "The tax advocate was representing the complainant. However, he entered into a conspiracy with superintendent, CGST, Amroha and pressured the complainant to deliver the demand of undue advantage of ₹4 lakh to the accused superintendent," the CBI spokesperson said. Reluctant to pay the bribe, the businessman approached the CBI with a complaint, the CBI said. The agency claimed of laying a trap following which the superintendent and the advocate were caught red handed receiving ₹1 lakh as an installment of the total bribe demand of ₹4 lakh.

Airlines seek govt support to revive air travel demand to Kashmir
Airlines seek govt support to revive air travel demand to Kashmir

Hindustan Times

time5 hours ago

  • Hindustan Times

Airlines seek govt support to revive air travel demand to Kashmir

New Delhi: The Federation of Indian Airlines (FIA), representing major Indian carriers, including Air India, IndiGo, and SpiceJet, has requested the government to provide immediate support to revive air travel demand to and from Srinagar airport. In a letter addressed to Samir Kumar Sinha, the secretary of the civil aviation ministry, the FIA highlighted the sharp decline in tourism in the Kashmir region following the Pahalgam terror attack. 'After the Pahalgam incident tourists are terrified and no one is travelling to Kashmir region for tourism purposes. There is no demand for air travel to and from Kashmir. Hotels are empty there,' said the letter dated May 29. The federation requested Sinha to waive off the User Development Fee (UDF) and GST for Srinagar, believing that eliminating these charges, along with existing safety and security efforts by the government, will encourage more people to fly to the region. 'Currently every departing passenger pays Rs. 1,050 as UDF and Rs. 200 as Aviation Security Fee (ASF), plus GST. May we request, if the government can waive both UDF and ASF for every departing passenger from Srinagar airport for a period of one year with immediate effect. It will boost air travel demand to and from Srinagar airport,' the letter said. The federation also appealed to the MoCA to coordinate with the finance ministry to implement the waiver and streamline passenger data requirements with the Bureau of Immigration. 'Airlines have played a vital role in connecting India and contributing to nation-building, especially in promoting tourism in Kashmir over the years,' the FIA said. 'However, the current situation has severely impacted passenger traffic,' it added.

DOWNLOAD THE APP

Get Started Now: Download the App

Ready to dive into the world of global news and events? Download our app today from your preferred app store and start exploring.
app-storeplay-store