SC issues notice against HC judgment imposing GST on transfer of development rights to real estate developers by Joint Development Agreement

Last updated: 17 May 2024

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Quick Summary

The Supreme Court has issued a notice regarding a High Court judgment that classified the transfer of development rights to real estate developers under a Joint Development Agreement as a taxable service for GST purposes. While the High Court's decision stands and taxes are payable, the Supreme Court's review signals a significant development for the real estate sector.

Court :
Supreme Court of India

Brief :
The Hon'ble Supreme Court heard and issued notice in the case of Prahitha Constructions Pvt. Ltd. v. Union of India and Others [SLP (C) No. 11079/2024] on May 13, 2024, wherein the Hon’ble Telangana High Court in the case of Prahitha Construction v. Union of India and Others [Writ Petition No. 5493 of 2020 dated February 9, 2024] held that, the transfer of the development rights to real estate developers by way of Joint Development Agreement with the land owners, would fall within the purview of taxable service under GST.

Citation :
SLP (C) No. 11079/2024

The Hon'ble Supreme Court heard and issued notice in the case of Prahitha Constructions Pvt. Ltd. v. Union of India and Others [SLP (C) No. 11079/2024] on May 13, 2024, wherein the Hon’ble Telangana High Court in the case of Prahitha Construction v. Union of India and Others [Writ Petition No. 5493 of 2020 dated February 9, 2024] held that, the transfer of the development rights to real estate developers by way of Joint Development Agreement with the land owners, would fall within the purview of taxable service under GST.

However, the Hon’ble Supreme Court stated that the Impugned Judgement rendered by the Hon’ble High Court is not stayed, and therefore the Petitioner is required to pay the taxes.

OFFICIAL JUDGMENT COPY HAS BEEN ATTACHED

FAQ :

The Supreme Court is reviewing a Telangana High Court judgment that ruled the transfer of development rights to real estate developers via a Joint Development Agreement is subject to GST.

No, the Supreme Court has stated that the High Court's judgment is not stayed, meaning the petitioner is still required to pay the applicable taxes.

The case involves Prahitha Constructions Pvt. Ltd. as the petitioner and the Union of India and Others as respondents.

The Supreme Court issued notice on May 13, 2024.

The High Court held that the transfer of development rights to real estate developers through a Joint Development Agreement falls under taxable services for GST.

Attached File : 671907_5678_prahitha_constructions_pvt_ltd_.pdf

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Judgement posted by

Bimal Jain

Service

FCA, FCS LLB with21 Yrs of Experience inTaxation Indirect and Direct: Education Qualification: B.Com (Hons) Chartered Accountants Company Secretary LLB Qualified SAP FI/CO Consultants Professional Membership: Chairmanof Indirect Tax Committee of PHD Chamber of Commerce Member of Indirec ... Read more

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