Nirmal Lifestyle Developers Pvt. Ltd. Vs Union of India & Others (Bombay High Court)
Bombay High Court, in the case of Nirmal Lifestyle Developers Pvt. Ltd. vs. Union of India & Others, granted interim relief in a writ petition concerning the applicability of Goods and Services Tax (GST) on land development rights. The petitioner, Nirmal Lifestyle, sought a declaration that development rights under a revenue-sharing development agreement with L&T Asian Realty Project LLP do not constitute a “supply” of services under Section 7 read with Section 9 of the Central Goods and Services Tax (CGST) Act. They contended that such rights, being in the nature of a sale or transfer of land, fall outside the scope of GST as per Articles 246 and 246A of the Constitution and Schedule III of the CGST Act.
The core issue before the Court was whether the development rights, when exchanged under a revenue-sharing arrangement, attract GST. The Court noted the similarity of this case to a prior Gujarat High Court ruling where an assignment of leasehold rights was held to be a transfer of immovable property and therefore not taxable under GST. In the current case, the petitioner argued there was no transfer at all. However, even assuming a transfer existed, it would pertain to immovable property and would not be considered a taxable supply of services. Finding that the petitioner raised substantial and arguable questions of law, the Bombay High Court granted interim relief. It restrained the tax authorities from taking further steps based on the original assessment order until the final hearing of the matter.
