Mala Sahni Seth & Anr. Vs Delhi Development Authority & Ors. (Delhi High Court)
The Delhi High Court heard a petition concerning the levy of GST on the conversion of immovable property from leasehold to freehold. The Petitioners own Units 601, 602 and 603 at DLF South Court Mall, Saket, purchased on a leasehold basis in 2012. In November 2023, they applied to the Delhi Development Authority (DDA) for conversion of these units to freehold. The DDA processed the applications and demanded several charges, including conversion fee, surcharge, processing fee, ground rent, and interest components. These amounts were paid.
Subsequently, on 24 June 2024, DDA raised a fresh demand of ₹78,75,423 on account of ground rent, interest on ground rent, conversion charges, and interest on conversion charges. The Petitioners objected but ultimately paid ₹51,32,500 under protest towards the balance conversion charges for the three units, bringing the total conversion-related payments to ₹1,54,98,554. No GST was mentioned at this stage.
On 14 August 2024, the DDA again issued revised demands adjusting interest amounts, still without reference to GST. Communication between the parties continued, but the conversion was not approved. On 25 April 2025, DDA issued new demands imposing GST retrospectively on previously paid conversion charges, amounting to ₹30,26,264. This demand was based on an SOP dated 28 March 2025, which stated that conversion charges collected for converting non-residential leasehold property were treated similarly to ground rent, on the premise that DDA was foregoing its right to collect future rent. The SOP also discussed when sale consideration for freehold land or buildings would fall within the GST framework.
