Shrinivasa Realcon Private Ltd. Vs. Deputy Commissioner Anti Evasion Branch, CGST (Bombay High Court) (Nagpur Bench)
| COURT: | Bombay High Court |
| JUDGES: | ABHAY J. MANTRI J, AVINASH G. GHAROTE J |
| LEGISLATION(S): | Clause (5-B) of the Notification dated 28th June 2017 as it stands amended by the subsequent Notification dated 29th March 2019 |
| COUNSEL: | AA Naik |
| FILE: | Click here to download the file in pdf format |
| GST is not applicable to the transfer of development rights (TDR) or Floor Space Index (FSI) as part of a development agreement | |
GST is not applicable to the transfer of development rights (TDR) or Floor Space Index (FSI) as part of a development agreement
(i) Entry 5B of the Notification dated 28.6.2017 relates to services which can be said to be supplied by any person by way of transfer of development rights or Floor Space Index (FSI) [including additional FSI] for construction of a project by a promoter. The expression “transfer of development rights” read in conjunction with ‘FSI’ as indicated in entry 5B, would only relate to a TDR (Transferable Development Rights) as contemplated by clause 11.2.2 under the regulations for grant of TDR in the Unified Development Control and Promotion Regulations for the State of Maharashtra, clause 11.2.1 of which defines transferable development rights, to mean compensation in the form of Floor Space Index (FSI) or development rights, which shall entitle the owner for construction of built up area subject to the provisions in the said regulations. It therefore, follows, that the TDR / FSI as contemplated by entry 5B, 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.
(ii) In the instant case, the agreement dated 07.4.2022 is an agreement of development entered into between the petitioner and the land owner, in terms of which, the petitioner, has been granted right to develop the property in question by utilizing its present FSI or any increases thereof. In the execution of the agreement dated 07.4.2022 no TDR or FSI has been purchased by the owner or for that matter by the petitioner from any person / entity whomsoever. Therefore, the transaction as contemplated in terms of the agreement dated 07.4.2022 does not fall within entry 5B of the Notification dated 28.6.2017, as it stand amended by the Notification dated 29.3.2019.