2025-VIL-363-BOM
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SGST High Court Cases

GST - Development agreement, GST on Transfer of Development Rights/FSI – Petitioner entered into an agreement of development with the owner of a land. Under the agreement, the petitioner was appointed as the developer to develop the land - Dept issued a notice to the petitioner proposing GST on the transaction under the agreement - Whether the transaction under the development agreement between the petitioner and the land owner falls within the scope of Entry 5B of the Notification dated 28.06.2017, as amended by the Notification dated 29.03.2019, which pertains to the "Services supplied by any person by way of transfer of development rights or Floor Space Index (FSI) for construction of a project by a promoter" – HELD - The transaction under the development agreement does not fall within the ambit of Entry 5B of the GST Notification. The entry 5B relates to the "transfer of development rights or Floor Space Index (FSI)", which refers to the concept of Transferable Development Rights (TDR). However, in the present case, the agreement does not involve any purchase or transfer of TDR or FSI by the petitioner or the land owner. The agreement merely grants the petitioner the right to develop the property and utilise its present FSI or any increases thereof - the TDR / FSI as contemplated by entry 5B of Notification dated 29.03.2019, cannot be related to the rights which a developer derives from the owner under the agreement of development for constructing the building for the owners, in lieu of the owner agreeing to permit the developer to transfer certain built up units for consideration to be appropriated by the developer - the transaction as contemplated in terms of the agreement does not fall within entry 5B of the Notification dated 28.6.2017, as it stand amended by the Notification dated 29.3.2019 - the show cause notice and the consequent order is quashed and set aside – The writ petition is allowed
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