Article
When are development rights actually transferred: A one-time grant on date of agreement or a continuous supply?
By Nupoor Agrawal, Kunal Nikumbh and Anitta Jose
In recent times, real estate transactions have become increasingly complex, and with that, the GST implications surrounding such transactions have also grown more intricate. Among the various arrangements in the real estate and construction sector, one of the most nuanced and challenging to interpret under GST law is the development agreement. The article in this issue of Indirect Tax Amicus focuses on a specific aspect of such agreements — determining the time of transfer of development rights in the context of a joint development arrangement. Discussing as to why determining time of transfer of development rights is crucial, the authors also examine judicial analysis of transfer of development rights. According to them, a careful examination of the development agreement is essential, both from a GST standpoint and from the perspective of overall project cost management.
Goods and Services Tax (GST)
Notifications and Circulars
- Grant of registration within 3 days, electronically
Ratio decidendi
- No negative blocking of credit ledger under Rule 86-A – Plain reading of Rule and not legislative intent important – Bombay HC relies on Gujarat and Delhi HCs decisions while differs with Calcutta HC
- No GST on reinsurance service of exempt insurance schemes as regularized for period from 1 July 2017 to 24 January 2018 – Delhi High Court
- Compensation Cess payable on transaction value and not on MRP – Notification No. 2/2023-Compensation Cess (Rate) quashed – Karnataka High Court
- Recovery of GST from Electronic Credit Ledger is valid – Chhattisgarh High Court
- No GST liability on charges paid by electricity distribution licensee to Municipal Corporation for restoration of roads dug up for laying distribution lines – Gujarat High Court
- Refund is not time-barred when relevant notifications imposing tax held ultra vires by Court – Gujarat High Court
- No ITC on inputs used for generation of electricity supplied to own township for employees – Chhattisgarh High Court
- GST Returns of third parties cannot be disclosed under RTI – Bombay High Court
- Interest is payable on refund of IGST on ocean freight, as tax was collected without authority of law – Bombay High Court
- Payment made during search when not voluntary under CGST Section 74(5) – Karnataka High Court
- Printing of content furnished by customers with own paper and ink is a composite supply with supply of service being predominant – Kerala High Court
- Joint Development Agreements – Supreme Court stays GST demand
Customs and FTP
Notifications and Circulars
- Customs notifications simplified – 31 notifications merged in one with effect from 1 November 2025
- Voluntary Revision of Entries in Bill(s) of Entry and Shipping Bill(s) – Mechanism notified
- Yellow peas – BCD and AIDC increased for B/L issued from 1 November 2025
Ratio decidendi
- FSSAI provisions are not applicable for export goods unless specifically mentioned in FTP – Supreme Court
- Customs clearance cannot be withdrawn without due process – DRI Officer’s action of recalling goods back held not correct – Bombay High Court
- Valuation – Royalty paid for technical know-how when not includible in value of components – CESTAT New Delhi
- Valuation – Proforma invoices recovered from phone of Director when cannot be relied upon – CESTAT Kolkata
- EOU – ‘Export of service’ to be interpreted as per definition under Foreign Trade (Development and Regulation) Act – CESTAT Hyderabad
- PCB cards and modules used in optical transport network equipment are classifiable as ‘parts’ under TI 8517 70 10/90 and not as independent equipment – CESTAT New Delhi
Central Excise, Service Tax and VAT
Ratio decidendi
- Delhi VAT – Purchasing dealer entitled to ITC despite seller’s default in tax payment – Supreme Court
- Appellate Authority does not become functus officio after dismissing appeal for non-deposit of mandatory pre-deposit – Jharkhand High Court
- EOU – DTA clearance – Similar goods – Pharmaceutical product for treating one disease is similar to other pharma product which treats different disease – CESTAT Mumbai
- Dredger used for providing dredging service is eligible for Cenvat credit as ‘input’ – CESTAT Hyderabad
- Partial Completion Certificate is at par with Completion Certificate for exemption from service tax on sale of residential premises – CESTAT Kolkata