Bombay High Court Grants Interim Relief in GST Dispute Over Real Estate Revenue Sharing Arrangement
Bombay High Court Grants Interim Relief in GST Dispute Over Real Estate Revenue Sharing Arrangement
The Bombay High Court has granted interim relief in the GST dispute over real estate revenue sharing arrangement.
The bench of Justice B. P. Colabawalla and Justice Firdosh P. Pooniwalla has directed the department to file the affidavit on the issue whether the revenue sharing arrangement under a development agreement entered into by the Petitioner with L & T Asian Realty Project LLP would be a supply of service and hence exigible to GST, within a period of two weeks.
The Petitioner, Nirmal Lifestyle Developers Pvt. Ltd. is filed seeking a declaration that the development rights under a revenue sharing arrangement are not a “supply” of services, leviable to GST under Section 7 read with Section 9 of the CGST Act and the transfer and development rights as “sale of land” are beyond the scheme of taxation under the GST Laws in terms of Articles 246 and 246A of the Constitution and under Section 7 read with Section 9 and Schedule III of the CGST Act.
The other relief sought in the present Writ Petition is also to quash and set aside the Order-in-Original dated 2nd January, 2025 issued in Form DRC-07 .
The issue in the present Writ Petition is whether the revenue sharing arrangement under a development agreement entered into by the Petitioner with L & T Asian Realty Project LLP would be a supply of service and hence exigible to GST.
The court noted that the issue is similar, though not identical, to the issue that was raised before the Gujarat High Court wherein the Gujarat High Court considered whether an assignment of a lease would fall within Schedule II of the CGST Act. The Gujarat High Court,in fact, took a view that an assignment by the original lessee to a third party would not fall within Schedule II and hence, would not be taxable under the GST Law.
The Gujarat High Court came to the conclusion that the assignment was actually a transfer of immovable property and hence no exigible to GST.
The court held that it is the case of the Petitioner that there is no transfer at all. Even if one would assume that there is a transfer, the same would be of immovable property and not taxable under the GST Law.
Case Details
Case Title: Nirmal Lifestyle Developers Pvt. Ltd., Versus The Union of India & Others
Case No.: Writ Petition (L)No.11011 Of 2025
Date: APRIL 09, 2025
Counsel For Petitioner: Adv. Prakash Shah, Sr. Advocate with Adv. Mihir Mehta and Adv. Jas Sanghavi
Counsel For Respondent: Adv. Subir Kumar with Adv. Niyanta Trivedi
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Mariya is the Senior Editor at JurisHour. She has 5+ years of experience on covering tax litigation stories from the Supreme Court, High Courts and various tribunals including CESTAT, ITAT, NCLAT, NCLT, etc. Mariya graduated from MLSU Law College, Udaipur (Raj.) with B.A.LL.B. and also holds an LL.M. She started as a freelance tax reporter in the leading online legal news companies like LiveLaw & Taxscan.
