Bombay HC strikes down GST demand on TDR used by real estate developer

Dated on: Tuesday 29th April 2025

The Nagpur bench of the Bombay High Court has quashed a Goods and Services Tax (GST) demand against Shrinivasa Realcon, a real estate developer in Maharashtra. The GST demand stemmed from a development agreement dated April 7, 2022, for constructing a residential complex on an 8,000 sq ft plot in Mouza Lendra. The developer was appointed by the landowner for a consideration of Rs 7 crore and two flats. The court ruled that the agreement did not involve the transfer or purchase of Transferable Development Rights (TDR) or Floor Space Index (FSI) from external sources, thus falling outside the taxable scope under Entry 5B of the GST notification dated June 28, 2017, amended on March 29, 2019. The court emphasized that the GST law lacks a definition for 'transfer of development right' and found no reference to such a transfer in the development agreement. Consequently, the court quashed both the show-cause notice and the final GST order issued to the developer.