Shashi Ranjan Constructions Private Limited Vs Union of India (Patna High Court)
Patna High Court held that GST is leviable on construction service rendered in lieu of the development rights under the Development Agreement. Accordingly, the present writ application is not entertained.
Facts- Petitioner in the present writ application is a Private Limited Company engaged in the business of construction of buildings/apartments in the State of Bihar. By filing this writ application, the petitioner-company is questioning the order dated 30.11.2023 and the summary of order in Form GST DRC-07 passed by the Assistant Commissioner of Assistant Commissioner of State Tax, Muzaffarpur u/s. 73(9) of the Bihar Goods and Services Tax Act. The respondent no.4 has held the petitioner liable to pay a total amount of Rs.4,61,72,628/- on account of the CGST/BGST and IGST to the tune of Rs.2,37,59,706/-. The petitioner has been held liable to pay interest thereon at the rate of 1.5% per month i.e. Rs.20017554/- and penalty of Rs.2,39,5368/-.
Conclusion- Held that we are of the considered opinion that in fact the petitioner does not get any right on the said property until the completion of the project. After the project is completed and completion certificate is issued, the petitioner gets a right to sell the area of the property which is called “Developers Area”. We do not find any substantial material to establish that with execution of the development agreement, the petitioner got ownership in the land. It is held that the transfer of development rights as it stands is amenable to GST and cannot be brought within the purview of sale of land subject to clause (b) of Paragraph 5 of Schedule II, sale of building.
