GST on Transfer of Development Rights (TDR) – Bombay High Court admits Writ

The Hon’ble Bombay High Court has admitted a Writ Petition challenging the levy of GST on Development Rights.

1. After the introduction of GST, levy of GST on Development Rights is a big challenge for the real estate sector due to wide scope of definition of the term “Service”.

2. Under Notification No. 4/2018 – Central Tax (Rate)/State Tax (Rate) dated January 25, 2018, the Government has provided the time of supply in case of an agreement where the owner of the land gives Development Rights to a Developer as consideration for construction service to the owner.

3. Recently, the Advance Ruling Authority in its order (although the final order is somewhat ambiguous) has relied on the above said notifications to decide the issue of taxability on Development Rights.

4. Now, the Bombay High Court has admitted a Writ Petition filed by M/s. Nirman Estate Developers Private Limited challenging the Notifications No. 4/2018 – CT(R), dealing with levy of GST on transfer of development rights and construction service to supplier of such rights, on the ground that the impugned notifications seeks to bring tax on an activity (Development Rights) which does not amount to supply of service.

-Authored by:
Adv. Pawan Arora, Joint Partner,
ALA Legal
-Co-Authored by:
Adv. Arpit Paliwal, Associate,
ALA Legal

GST Law India is a blog on GST and allied commercial laws managed by members of the law firm ALA Legal.

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