The Bombay High Court (Goa Bench) has ruled that no tax liability on the construction services arises at the time of executing a Joint Development Agreements (JDA). The Court directed the GST department to refund Rs. 7 crore collected under protest along with 6% annual interest.
A Division Bench of Justice Bharati Dangre and Justice Nivedita P. Mehta held that liability to pay GST arises only upon transfer of possession or rights in the completed property, in line with Notification No. 4/2018-Central Tax (Rate). The department itself had admitted in an affidavit that the earlier demand at the JDA stage was unsustainable.
The Bench emphasized that since the landowner subsequently sold the entire land to the developer, all rights and claims under the JDA were extinguished by mutual agreement, eliminating any scope for GST liability.
The petitioner in the course of its business, entered into a joint development agreement (JDA) with M/s Trinitas Realtors India LLP (landowner) for the construction of a residential project on 13.10.2017. Upon this deal being struck, the Directorate General of GST Intelligence took up an investigation as regards the transaction involving the landowner and the petitioner as the developer and insisted for payment of GST on the premise that it is due and payable on the construction service provided by the petitioner to the landowner.
As a part of the inquiry, communications were addressed to the petitioner, directing it to furnish certain documents and details. Some statements of the authorised representatives of the petitioner were also recorded.
It is specifically pleaded by the petitioner that it was also orally informed that the bank accounts would be attached if the GST on the construction services, in the wake of the JDA is not paid. Succumbing to the pressure, ultimately on 21.12.2021, the petitioner remitted an amount of Rs.7 crores, of course under protest.
In the wake of clear admission on the part of the department, the liability did not arise for the petitioner on the date on which the JDA was entered into i.e. 13.10.2017, since the Revenue is of the opinion that in the wake of the Notification of 2018, it shall now arise only at the time of the conveying the property upon its construction in the wake of the JDA, the initial stand adopted by the Revenue, deserved to be overlooked.
Another important aspect which must take note of is that the landowner i.e. M/s Trinitas Realtors India LLP, has sold the entire land, which was made over for development to the petitioner and as per the arrangement between the parties, both the parties shall not claim any right or liability under the JDA.
Quoting its conclusion, the Court said, “We have no hesitancy in declaring that no liability actually fell upon the petitioner at the time when JDA was entered into… in light of the sale deed and subsequent notification, the tax liability did not fall upon the petitioner.”
The Court also accepted the assessee’s plea that any adjudication proceedings were barred by limitation under Sections 73, 74, and 75 of the CGST Act, as no valid show cause notice or order was passed within time. Consequently, proceedings stood concluded by operation of law.
The High Court directed the department to refund the Rs. 7 crore deposited under protest, pay 6% per annum interest from the date of deposit and ensure compliance within six weeks.
The order was made absolute, putting a final end to the matter.
Case Details
Case Title: Provident Housing Ltd. vs Union of India
Case No.: WP No. 5 of 2022
Date: 21/08/2025
Counsel For Petitioner: V. Raghuraman
Counsel For Respondent: Asha Desai
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