Considering the Notification No.04/2018 – Central Tax (Rate) and the sale deed executed between the petitioner and the landowner, the Bombay High Court (Goa Bench) found that no GST liability falls on the petitioner at the time the Joint Development Agreement (JDA) was entered into, and therefore, directed the GST Department to refund Rs. 7 crores deposited by the petitioner under protest, along with interest at 6% per annum from the date of its deposit.
The Division Bench comprising Justice Bharati Dangre and Justice Nivedita P Mehta observed that the Notification No.04/2018 has no retrospective effect, as the Notification fixes the time of supply in the JDA agreement as the date on which the transfer of property takes place from the developer to the landowner through a conveyance deed, allotment letter, or similar instrument.
Pointing out that the Revenue Department had itself clarified in its recent affidavit that the GST liability does not arise at the time of entering the JDA but only when the property is conveyed to the landowner upon completion, the Bench directed the Revenue Department to ensure the grant of refund within six weeks from the date of the order.
Briefly, in this case, the petitioner, a real estate developer, had challenged the Notification dated July 01, 2017, as corrected by a Corrigendum dated July 29, 2019, as well as a summons issued on December 02, 2021, after the Directorate General of GST Intelligence initiated an investigation regarding GST liability on the construction services provided by the petitioner to the landowner under a Joint Development Agreement (JDA) entered on October 13, 2017. The petitioner was pressured into remitting Rs. 7 crores under protest, following threats of attachment of bank accounts. Thus, the petitioner had approached the High Court praying that no GST was due at the time of entering the JDA, relying on Sections 73 and 74 of the GST Act, and subsequent notifications that extended the time limits for issuing GST notices and passing orders.
Appearances:
Senior Advocate V Raghuraman, along with Advocates Bhanu Murthy and Gaurawardhan Nadkarni, for the Appellant/ Taxpayer
Advocate Asha Desai, for the Respondent/ Revenue
