Patna High Court
Shashi Ranjan Constructions Private ... vs Union Of India on 5 May, 2025
Author: Rajeev Ranjan Prasad
Bench: Rajeev Ranjan Prasad, Ashok Kumar Pandey
IN THE HIGH COURT OF JUDICATURE AT PATNA
Civil Writ Jurisdiction Case No.6700 of 2024
======================================================
Shashi Ranjan Constructions Private Limited company registered under Com-
panies Act, 1956 having its office at Puja Bazar, Motijheel, Muzaffarpur, Bi-
har-842001 through its Director Praveer Kumar Sahu (Male, aged about 53
years), son of Shri Ashok Kumar Sahu resident of Kedar Nath Road, Sahu
Pokhar, Vill-Muzaffarpur, Musahri Farm, Muzaffarpur, Bihar-842002.
... ... Petitioner/s
Versus
1. Union of India through the Secretary, Finance, North Block, New Delhi-
110001.
2. Central Board of Indirect Taxes and Customs through its Secretary having its
office at 47 B, CBIC, Department of Revenue, North Block, New Delhi
110001.
3. State of Bihar through Commissioner of State Tax, Bihar, Patna having its
office at Kar Bhawan, Birchand Patel Marg, Patna-800001.
4. Asst. Commissioner of State Tax, Muzaffarpur West, Tirhut, Bihar.
... ... Respondent/s
======================================================
Appearance :
For the Petitioner/s : Mr.D.V.Pathy, Sr. Advocate
For the UOI : Dr. Krishna Nandan Singh, ASGI
Mr. Anshuman Singh, Sr.SC, CGST and CX
Mr. Shivaditya Dhari Sinha, Advocate
Mr. Alok Kumar, Advocate
For the State : Mr. Vikash Kumar, SC-11
======================================================
CORAM: HONOURABLE MR. JUSTICE RAJEEV RANJAN PRASAD
and
HONOURABLE MR. JUSTICE ASHOK KUMAR PANDEY
CAV JUDGMENT
(Per: HONOURABLE MR. JUSTICE RAJEEV RANJAN PRASAD)
Date : 05-05-2025
Heard Mr. D.V. Pathy, learned senior counsel for the pe-
titioner, learned ASG for the CGST & CX and Mr. Vikash Ku-
mar, learned SC-11 for the State-respondent.
2. Petitioner in the present writ application is a Private
Limited Company engaged in the business of construction of
Patna High Court CWJC No.6700 of 2024 dt.05-05-2025
2/28
buildings/apartments in the State of Bihar.
3. 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 (Annexure-P2 series) passed by the
Assistant Commissioner of Assistant Commissioner of State
Tax, Muzaffarpur (respondent no.4) under Section 73(9) of the
Bihar Goods and Services Tax Act (hereinafter referred to as the
'GST Act').
4. 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 pe-
titioner 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/-.
Challenge to the Notifications
5. The petitioner has also challenged the Notification
No.09/2023 dated 31.03.2023 as contained in Annexure-P8 and
the Notification No.56 of 2023 dated 28.12.2003 present at An-
nexure-P9 to the writ application. By these two Notifications,
the respondent no.2 has extended the time limit specified under
sub-section (10) of Section 73 of the CGST Act for issuance of
order under sub-section (9) of Section 73 of the GST Act for re-
Patna High Court CWJC No.6700 of 2024 dt.05-05-2025
3/28
covery of tax not paid or short paid or input tax credit wrongly
availed or utilized upto 31st March, 2024 for the Financial Year
2018-19.
6
. Mr. D.V. Pathy, learned senior counsel for the peti-
tioner submits that so far as challenge to the validity of the Noti-
fications contained in Annexure-P8 and P9 are concerned, the
same is pending consideration before the Hon'ble Supreme
Court in Special Leave to Appeal © No(s). 5864-5869/2025
(M/S. Turbo Megha Airways Private Ltd. vs. Deputy Commis-
sioner of State Tax-III & Ors.
7. The aforesaid contention of Mr. D.V.Pathy, learned
senior counsel for the petitioner has been contested by Mr.
Vikash Kumar, learned SC-11 for the State saying that so far as
the two Notifications are concerned, those would not have any
bearing upon the present case. It is submitted that the petitioner
has claimed that the Notifications are beyond the powers con-
ferred by Section 168A of the CGST Act inasmuch as there was
no force majeure in existence at the time of bringing out the no-
tifications. It is submitted that the impugned assessment order
dated 30.11.2023 has been passed within three years from the
due date for filing of Annual return for 2018-19, as stipulated
under Section 73(10) of the CGST/BGST Act. Since the ex-
Patna High Court CWJC No.6700 of 2024 dt.05-05-2025
tended date for filing annual return for 2018-19 was 31.12.2020,
the assessment order under Section 73(9) has to be completed
up to 31.12.2023. In this case, it has been completed on
30.11.2023 within the deadline, therefore, the issue raised by the
petitioner in this regard is irrelevant, redundant, superfluous and
only an attempt to mislead this Court.
8. Mr. Vikash Kumar, learned SC-11 has pointed out to
this Court from the order dated 03.03.2025 passed by the
Hon'ble Supreme Court in Special Leave to Appeal © No(s).
5864-5869/2025, copy of which is enclosed with the rejoinder
of the petitioner, that in the said case the issue relates to the Fi-
nancial Year 2019-2020. It is submitted that in the present case
the issue relates to Financial Year 2018-2019.
9. We find much substance in the submission of Mr.
Vikash Kumar, learned SC-11 for the State. The specific answer
to the submission of learned senior counsel for the petitioner in
this regard may be found in paragraph '26' of the counter affi-
davit which has not been controverted by the petitioner in its re-
joinder.
10. Thus, the challenge to the Notification No.09 of
2023 and Notification No.56 of 2023 in the present writ applica-
tion is misconceived and the same is found irrelevant and super-
Patna High Court CWJC No.6700 of 2024 dt.05-05-2025
fluous.
11. The contention of learned senior counsel for the pe-
titioner that the order, as contained in Annexure-P2 series, has
been passed beyond the time limit set out in Section 73(10) of
the GST Act is liable to be rejected. This Court finds substance
in the submission of learned SC-11 for the State that the im-
pugned order has been passed within a period of three years
from the last due date of filing of the return for the Financial
Year 2018-19.
Taxability of the Transaction of Execution of
Development Agreement
12. Learned senior counsel for the petitioner has further
argued that in case of a development agreement registered prior
to coming into force of the GST laws with effect from
01.07.2017, the land stood transferred in favour of the builder.
According to him, once the land stood transferred prior to
01.07.2017, the transaction under the development agreement
would not fall within the purview of the CGST/BGST Act and
the notifications issued thereunder. According to him, the devel-
opment agreement was executed on 27.11.2014 and though the
project was completed on 20.12.2018, the liability to pay tax in
respect of such development agreement was notified under Noti-
fication No.04/2019 dated 29.03.2019.
Patna High Court CWJC No.6700 of 2024 dt.05-05-2025
13. Learned senior counsel submits that the Notification
No.04 of 2019 is prospective in nature and the petitioner could
have been made liable to pay tax in respect of transfer of devel-
opment rights only on or after 01.04.2019. This Notification,
however cannot form basis of an order of assessment for the As-
sessment Year 2018-19.
14. It is submitted that project in question was com-
pleted on 20.12.2018 and the petitioner had handed over the
portion of the immovable property to the land owner on the ba-
sis of the development agreement after issuance of the comple-
tion certificate. According to him, at the point of handing over
of the immovable property/flat, the same would be classified as
land and building falling under Schedule II of the CGST/BGST
Act which in terms of Section 7(2) is to be treated neither a sup-
ply of goods nor supply of services.
15. Learned senior counsel has argued that in the case of
Commissioner of Income Tax vs. Balbir Singh Maini reported
in (2018) 12 SCC 354, it has held that with the registration of
the development agreement, the land stood transferred to the
builder. It is, thus, a submission that in this case the transfer of
land had already taken place during pre-GST period, therefore,
no tax may be levied by way of Reverse Charge Mechanism (in
Patna High Court CWJC No.6700 of 2024 dt.05-05-2025
short 'RCM') upon the builder-petitioner who is giving this sup-
ply of construction services to the land owner. It is submitted
that since this is a pure question of law, therefore, despite being
a remedy of statutory appeal to the petitioner, the petitioner has
approached this Court in its extraordinary writ jurisdiction.
Learned senior counsel has relied upon a judgment of the
Hon'ble Supreme Court in the case of Govind Saran Ganga
Saran vs. Commissioner of Sales Tax & Others reported in
1985 Supp SCC 205.
16. A counter affidavit has been filed on behalf of the
respondent no.2. It is stated that the petitioner has taken registra-
tion under the GST Act in Muzaffarpur West 1 Circle of Tirhut
Division. A proceeding was initiated by issuing a show cause
notice under Section 73 of the Bihar GST Act, 2017 on
09.10.2023 by the Assistant Commissioner of State Tax, Muzaf-
farpur West, Tirhut on the grounds inter-alia that the petitioner
had received non-monetary consideration towards allotment of
36 flats under development agreement. The notice mentions that
there is an element of supply of service and receipt of considera-
tion under development agreement which is liable to tax under
the Act. A summary of show cause notice was also issued in
Form GST DRC-01 quantifying the amount of tax, equivalent
Patna High Court CWJC No.6700 of 2024 dt.05-05-2025
penalty and interest.
17. It is stated that the order dated 30.11.2023 and the
summary of order in Form GST DRC-07 passed by the Assistant
Commissioner of State Tax, Muzafarpur West under Section
73(9) of the GST Act charging tax, interest and imposing
penalty three fold the amount of tax payable. It is submitted that
pursuant to the SCN, Order-in-Original has been passed by the
concerned State GST authority.
18. On behalf of the State GST authority, a counter affi-
davit has been filed through the Deputy Commissioner, State
Tax. On this point, it is stated that the petitioner is misleading
this Court by claiming that liability to pay tax on supply of de-
velopment rights was introduced through Notification
No.04/2019 dated 29.03.2019. The submission is that in fact, in
the instant matter, it is the supply of construction services (SAC
code 9954) by the petitioner that has been taxed and not the sup-
ply by way of transfer of development rights (SAC code 9972).
The supply of construction services was very much exigible to
tax in accordance with Notification No.11/2017 dated
28.06.2017 which has been admitted by the petitioner in para-
graph '10' of the writ application. It is submitted that the peti-
tioner has only tried at best to confuse the Court by using the
Patna High Court CWJC No.6700 of 2024 dt.05-05-2025
term 'transfer of development rights' in place of the correct term
'supply of construction services'.
19. It is submitted that the petitioner cannot claim ex-
emption from tax on the ground that he had handed over the
constructed property to the land owner after receiving the com-
pletion certificate. No exemption is available in case of transfer
of built-up property by a developer against consideration re-
ceived from the land owner in the form of development rights.
The tax is imposed on the construction service supplied by the
petitioner to the land owner and not on the immovable property
as such. The suppl of service by way of construction of real es-
tate which is intended to be conveyed to the land owner in lieu
of transfer of development rights by the land owner attracts
GST.
20. Learned SC-11 has relied upon a judgment of the
Hon'ble Telangana High Court in the case of Prahitha Con-
struction Private Limited Vs. Union of India and Others
(WP 5493/2020) reported in 2024 SCC OnLine TS 3994. It is
submitted that the Hon'ble Division Bench of Telangana High
Court has categorically held that a development agreement be-
tween the land owner and the builder consists of two sets of
transactions to be met in its entirety. It has been held that one
Patna High Court CWJC No.6700 of 2024 dt.05-05-2025
component of the development agreement is between the land
owner and the builder and another is the supply of construction
services by the builder to the land owner and only thereafter sale
of constructed area may be made to a third party buyer. It has
been held that both these transactions qualify as supplies made
and would attract GST subject to clause (b) of paragraph 5 of
Schedule II and both these supplies would fall under Section 7
of the GST Act i.e. construction services further read with Entry
5(b) of Schedule II. Learned SC-11 has submitted that the as-
sessment order is in accordance with law. There is no good
ground to call in question the impugned order (Annexure-P2 se-
ries).
21. Learned counsel has also relied upon the order of
this Court in CWJC No.18149 of 2023 (M/S Adarsh Con-
struction Vs. State of Bihar) wherein this Court finding no rea-
son to invoke the extraordinary jurisdiction under Article 226 of
the Constitution of India took a view that there are alternative
remedies available and the assessee has not been diligent in
availing such alternate remedies within the stipulated time.
Learned counsel has also relied upon the order of this Court in
CWJC No.18168 of 2023 (M/S Radhika Packing and Printers
vs. The State of Bihar and Others).
Patna High Court CWJC No.6700 of 2024 dt.05-05-2025
Consideration
22. Having heard learned senior counsel for the peti-
tioner, learned ASG for the CGST and CX assisted by Sr. Stand-
ing Counsel for CGST and CX and learned SC-11 for the State
Tax Authorities, this Court finds that while assailing Annexure-
P2 series to the writ application, the main contention of learned
senior counsel for the petitioner is that the impugned order has
been passed without consideration of the provisions of the Act,
the rules made thereunder and also notification fixing the liabil-
ity only in respect of the development agreement on or after
01.04.2019. The petitioner had also filed a review before the re-
spondent no.5 which stood rejected on the ground that there was
no mistake of fact apparent on the record.
23. On facts, there is no dispute that the petitioner en-
tered into a development agreement on 27.11.2014 for construc-
tion of a multi-storied building in which the petitioner agreed to
built, deliver and give possession to the owner 43% of the total
built-up area in the shape of shops/offices/flats and reserved car
parking spaces and/or any other built-up area(s) in the said
building to be constructed on the said land by the developer.
Paragraphs 4.1, 4.2 and 5 of the development agreement are as
under:-
"4.1. As consideration for 57% (Fifty Seven percent)
Patna High Court CWJC No.6700 of 2024 dt.05-05-2025
of the undivided share in the said land to be
conveyed/transferred by the owner of the first part to
the developer or its nominee(s) in terms of clause 5
below the developer agrees to build, deliver and give
possession to the owner of the First part 43% (Forty
percent) of the total built-up area in the shape of
Shops/offices/Flats and reserved car parking spaces
and/or any other built-up area(s) in the said building to
be constructed on the said land by the developer here-
inafter referred to as the "OWNER'S AREA". The
construction specification and services and amenities
to be provided for the owner's area.
4.2. 57% (Fifty Seven percent) of the total built-up
area of the said building (after excluding the said
Owner's area as stipulated in Clause 4.1 above) shall
exclusively belong to the Developer and shall here-
inafter be called the "DEVELOPER'S AREA" to
which the Developer alone shall be entitled to, for
having constructed the entire building at its own cost
and expense.
5. The Owner and their heirs/successors and/or nomi-
nee/s shall solely and exclusively be entitled to the
Owner's area and they shall have absolute right, title
and interest over the Owner's area and shall be fully
entitled to use and enjoy the same either themselves
individually or collectively or shall be fully entitled to
transfer, convey, grant, otherwise alienate their inter-
ests, in any manner as deemed fit by them to any per-
son or persons, association of persons, Firm, Body,
Corporate, Co-operative Societies, Government's
agencies etc. on such terms and conditions as may be
decided by the Owner individually or collectively.
Patna High Court CWJC No.6700 of 2024 dt.05-05-2025
6. The Developer and/or its nominee(s) shall and ex-
clusively be entitled to the Developer's area, and they
shall have absolute right, title and interest over the De-
veloper's area and they shall be fully entitled to trans-
fer, convey, grant, otherwise alienate their interest, in
any manner as deemed fit by them to any person or
persons, Association of persons, Firms, Body, Corpo-
rate, Cooperative Societies, Government's agencies,
etc. on such terms and conditions as may be decided
by the Developer or its nominee(s) individually or col-
lectively."
24. It is evident upon a bare reading of the registered de-
velopment agreement that the land owner has granted exclusive
license to the developer to enter upon the said land and to take
up and proceed with the development, planning and construc-
tion of the said building in terms of this agreement. In this re-
gard, paragraph '9' of the development agreement may be re-
ferred to.
25. In this case the completion certification (Annexure-
P/4) enclosed with the writ petition has been issued on
20.12.2018. The date of transfer of the owners' share in the
project has not been disclosed in the writ petition.
26. We find it important to take note of the observations
of the Hon'ble Supreme Court in the case of Super Poly Fab-
riks Limited vs Commissioner of Central Excise, Punjab re-
ported in (2008) 11 SCC 398, wherein Their Lordships have
Patna High Court CWJC No.6700 of 2024 dt.05-05-2025
held as under:-
"There cannot be any doubt whatsoever that a
document has to read as a whole. The purport
and object with which the parties thereto entered
into a contract ought to be ascertained only from
the terms and conditions thereof. Neither the
nomenclature of the document nor any particular
activity undertaken by the parties to the contract
would be decisive."
27. In view of the aforementioned covenants present in
the development agreement, the submission of learned senior
counsel for the petitioner that by virtue of the execution and reg-
istration of the development agreement, the owner had already
transferred the ownership in the land to the developer is only a
misconceived submission.
28. In Balbir Singh Maini (supra) the questions which
had fallen for consideration were, inter-alia as under:-
"(i) Whether the transactions in hand envisage a
"transfer" exigible to tax by reference to Section
2(47)(v) of the Income Tax Act, 1961 read with Sec-
tion 53-A of the Transfer of Property Act, 1882?
(ii) Whether the Income Tax Appellate Tribunal, has
ignored rights emanating from the JDA, legal effect
of non-registration of JDA, its alleged repudiation,
etc.?
(iii) Whether "possession" as envisaged by Section
2(47)(v) and Section 53-A of the Transfer of Property
Patna High Court CWJC No.6700 of 2024 dt.05-05-2025
Act, 1882 was delivered, and if so, its nature and le-
gal effect?
(iv) Whether there was any default on the part of the
developers, and if so, its effect on the transactions
and on exigibility to tax?
(v) Whether amount yet to be received can be taxed
on a hypothetical assumption arising from the amount
to be received?"
29. There was a tripartite unregistered Joint Develop-
ment Agreement ('JDA') for transfer/development of the prop-
erty. There was some dispute, matters were pending in the High
Court. Necessary permissions for development were not
granted, as a result of which 'JDA' did not take off the ground.
The Assessee had a 1000 Sq. feet plot, the full value of consid-
eration was Rs. 3.675 crores. The Capital Assessee had offered
gains of Rs.27,58,436/- received from Developer in the Assess-
ment Year 2007-08 and Rs.36 lakhs received during 2008-09 for
tax under head "capital gains". The Assessing Officer, however,
took a view that since physical and vacant possession were
handed over under the 'JDA', the same would tantamount to
"transfer" within the meaning of Sections 2(47)(ii), (v) and (vi)
of the Income Tax Act.
30. While dealing with the issues involved in the case,
the Hon'ble Supreme Court has discussed the relevant provi-
Patna High Court CWJC No.6700 of 2024 dt.05-05-2025
sions of the transfer of property Act (Section 53A-Part perfor-
mance), the definition of the word "transfer" in clause (47) of
Section 2 and the "Capital gain" under Section 45 of the Income
Tax Act. Paragraph '25' and '26' of the judgment reads as un-
der:-
"25. The object of Section 2(47)(vi) appears to be to
bring within the tax net a de facto transfer of any im-
movable property. The expression "enabling the en-
joyment of" takes colour from the earlier expression
"transferring", so that it is clear that any transaction
which enables the enjoyment of immovable property
must be enjoyment as a purported owner thereof. 4
The idea is to bring within the tax net, transactions,
where, though title may not be transferred in law,
there is, in substance, a transfer of title in fact.
26. A reading of the JDA in the present case would
show that the owner continues to be the owner
throughout the agreement, and has at no stage pur-
ported to transfer rights akin to ownership to the de-
veloper. At the highest, possession alone is given un-
der the agreement, and that too for a specific purpose
--the purpose being to develop the property, as en-
visaged by all the parties. We are, therefore, of the
view that this clause will also not rope in the present
transaction."
4. The maxim "noscitur a sociis" has been repeatedly applied by this Court. A recent application
of the maxim is contained in Coastal Paper Ltd. v. CCE, (2015) 10 SCC 664 at p. 677, para 25.
This maxim is best explained as birds of a feather flocking together. The maxim only means that
a word is to be judged by the company it keeps.
Patna High Court CWJC No.6700 of 2024 dt.05-05-2025
31. In the context of the case, the Hon'ble Supreme Court
held in paragraph '30' as under:-
"30. In the facts of the present case, it is clear that
the income from capital gain on a transaction which
never materialised is, at best, a hypothetical in-
come. It is admitted that for want of permissions,
the entire transaction of development envisaged in
the JDA fell through. In point of fact, income did
not result at all for the aforesaid reason. This being
the case, it is clear that there is no profit or gain
which arises from the transfer of a capital asset,
which could be brought to tax under Section 45
read with Section 48 of the Income Tax Act."
32. This Court is of the consideration opinion that the judg-
ment in the case of Balbir Singh Maini (supra) would not help the
petitioner.
33. Having gone through the development agreement
(Annexure-3 to the writ application), 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 pe-
titioner gets a right to sell the area of the property which is
called "Developers Area". We do not find any substantial mate-
rial to establish that with execution of the development agree-
ment, the petitioner got ownership in the land. It is held that the
transfer of development rights as it stands is amenable to GST
Patna High Court CWJC No.6700 of 2024 dt.05-05-2025
and cannot be brought within the purview of sale of land sub-
ject to clause (b) of Paragraph 5 of Schedule II, sale of building
(as per Entry 5 of Schedule-III of the GST Act).
34. At this stage, this Court would reproduce Paragraph
no.5(b) of Schedule II of the CGST/BGST Act as under:-
"5. Supply of services.-
(a) ...............
(b) construction of a complex, building, civil struc-
ture or a part thereof, including a complex or build-
ing intended for sale to a buyer, wholly or partly, ex-
cept where the entire consideration has been re-
ceived after issuance of completion certificate,
where required, by the competent authority or after
its first occupation, whichever is earlier."
Explanation.--For the purposes of this clause--
(1) the expression "competent authority" means the
Government or any authority authorised to issue
completion certificate under any law for the time be-
ing in force and in case of non-requirement of such
certificate from such authority, from any of the fol-
lowing, namely:--
(i) an architect registered with the Council of Archi-
tecture constituted under the Architects Act, 1972
(20 of 1972); or
(ii) a chartered engineer registered with the Institu-
tion of Engineers (India); or
(iii) a licensed surveyor of the respective local body
of the city or town or village or development or
planning authority;
(2) the expression "construction" includes additions,
alterations, replacements or remodelling of any ex-
isting civil structure;
(c) ............
(d) ............
(e) .............
(f) .............
35. The petitioner has not controverted the submission
Patna High Court CWJC No.6700 of 2024 dt.05-05-2025
of the State that vide notification no.11/2017 dated 28.06.2017,
construction of a complex, civil structure etc. intended for sale
to a buyer was made exigible to GST except where the entire
consideration has been received after issuance of completion
certificate or after its first occupancy, whichever is earlier. In
this case, it has been specifically pleaded by the State-respon-
dent that the consideration had been received by the petitioner in
the form of transfer of development rights, which happened long
before the issuance of completion certificate or first occupancy.
This Court agrees that in this case, the petitioner cannot claim
that it had received the consideration after the issuance of com-
pletion certificate or first occupancy.
36. At this stage, we would take note of the Notification
No.4 of 2018 dated 25.01.2018 as amended by Notification
No.23/2019-Central Tax (Rate) dated 30.09.2019. It is evident
on reading of the Notification No.4 of 2018 that it determines
the time of supply by way of the transfer of development rights
as well as supply of construction services. It has been brought
with an aim to streamline the process for both land owners and
developers, ensuring that taxation on transfer of development
rights as well as supply of construction services occurs when the
constructed area is handed over to the land owner upon project
Patna High Court CWJC No.6700 of 2024 dt.05-05-2025
completion.
37. We do not agree with the submission of learned se-
nior counsel for the petitioner that the liability to pay tax on sup-
ply of development rights was introduced through Notification
No.04/2019 dated 29.03.2019. The supply of construction ser-
vices is falling under SAC Code 9954 and the petitioner has
been taxed under this code. The petitioner has not been taxed for
supply by way of transfer of development rights (SAC code
9972). It is evident that the supply of construction services was
covered under Notification No.11/2017 dated 28.06.2017. In
this regard, the statement of the petitioner in paragraph '10' of
the writ application is quoted hereunder for a ready reference:-
"That a notification was issued by the Government
of India on 28.06.2017 subjecting construction of
complex, building, civil structure or a part thereof in-
cluding a complex or building intended for sale to a
buyer, wholly or partly except where the entire con-
sideration has been received after issuance of com-
pletion certificate or after its first occupation which-
ever is earlier at the rate of 18%."
38. We find that Notification No.4 of 2018 dated 25 th
January 2018 clearly provides that the liability to pay Central
tax on the said services (a) and (b) shall arise when the devel-
oper/builder transfers possession and right in the constructed
complex. The supply of services of transfer of development
rights remained taxable since introduction of the GST but by
Patna High Court CWJC No.6700 of 2024 dt.05-05-2025
virtue of notification no.04/2018, the liability to pay Central tax
shall arise only on the consideration received in form of con-
struction services.
39. At this stage, we reproduce the Notification No.11
of 2017-Central Tax (Rate) dated 28.06.2017, Notification No.4
of 2018-Central Tax (Rate) dated 25.01.2018 and Notification
No.4 of 2019-Central Tax (Rate) dated 29.03.2019 hereunder for
a ready reference:-
[TO BE PUBLISHED IN THE GAZZETE OF INDIA, EXTRAORDINARY,
PART II SECTION 3, SUB-SECTION (1)]
Government of India
Ministry of Finance
(Department of Revenue)
Notification No. 11/2017-Central Tax (Rate)
New Delhi, the 28th June, 2017
G.S.R......(E). In exercise of the powers conferred by sub-
section (1) of section 9, sub-section (1) of section 11, sub-
section (5) of section 15 and sub-section (1) of section 16 of
the Central Goods and Services Tax Act, 2017 (12 of 2017),
the Central Government, on the recommendations of the
Council, and on being satisfied that it is necessary in the pub-
lic interest so to do, hereby notifies that the central tax, on the
intra-State supply of services of description as specified in
column (3) of the Table below, falling under Chapter, Section
or Heading of scheme of classification of services as speci-
fied in column (2), shall be levied at the rate as specified in
the corresponding entry in column (4), subject to the condi-
tions as specified in the corresponding entry in column (5) of
the said Table:-
SI Chapter, Description of Service Rate Condi-
NO. Section (Per tion
or Head- cent.)
ing
(1) (2) (3) (4) (5)
1 Chapter All Services
2 Section 5 Construction Services
3 Heading (i) Construction of a complex, build- 9 -
9954 ing, civil structure or a part thereof,
Patna High Court CWJC No.6700 of 2024 dt.05-05-2025
(Con- including a complex or building in-
struction tended for sale to a buyer, wholly or
Services) partly, except where the entire con-
sideration has been received after is-
suance of completion certificate,
where required, by the competent au-
thority or after its first occupation,
whichever is earlier.
(Provisions of paragraph 2 of this no-
tification shall apply for valuation of
this service)
(ii) composite supply of works con-
tract as defined in clause 119 of sec-
tion 2 of Central Goods and Services
Tax Act, 2017. 9 -
(iii) construction services other than
9 -
(i) and (ii) above.
(TO BE PUBLISHED IN THE GAZZETE OF INDIA, EXTRAORDINARY, PART II
SECTION 3, SUB-SECTION (1)]
Government of India
Ministry of Finance
(Department of Revenue)
Notification No. 4/2018-Central Tax (Rate)
New Delhi, the 25th January, 2018
G.S.R...(E). In exercise of the powers conferred by section 148 of
the Central Goods and Services Tax Act, 2017 (12 of 2017), the
Central Government, on the recommendations of the Council,
hereby notifies the following classes of registered persons,
namely:-
(a) registered persons who supply development rights to a
developer, builder, construction company or any other reg-
istered person against consideration, wholly or partly, in the
form of construction service of complex, building or civil
structure; and
(b) registered persons who supply construction service of
complex, building or civil structure to supplier of develop-
ment rights against consideration, wholly or partly, in the
form of transfer of development rights,
as the registered persons in whose case the liability to pay central
tax on supply of the said services, on the consideration received
in the form of construction service referred to in clause (a) above
and in the form of development rights referred to in clause (b)
above, shall arise at the time when the said developer, builder,
construction company or any other registered person, as the case
may be, transfers possession or the right in the constructed com-
plex, building or civil structure, to the person supplying the devel-
Patna High Court CWJC No.6700 of 2024 dt.05-05-2025
opment rights by entering into a conveyance deed or similar in-
strument (for example allotment letter).
[F. No.354/13/2018-TRU]
(Ruchi Bisht)
Under Secretary to the Government of India
(underline is mine)
(TO BE PUBLISHED IN THE GAZZETE OF INDIA, EXTRAORDINARY,
PART II, SECTION3, SUB-SECTION (i)]
Government of India
Ministry of Finance
(Department of Revenue)
Notification No. 04/2019- Central Tax (Rate)
New Delhi, the 29 March, 2019
G.S.R......(E). In exercise of the powers conferred by sub-sec-
tion (1) of section 11 of the Central Goods and Services Tax Act, 2017
(12 of 2017), the Central Government, on being satisfied that it is nec-
essary in the public interest so to do, on the recommendations of the
Council, hereby makes the following further amendments in the notifi-
cation of the Government of India, in the Ministry of Finance (Depart-
ment of Revenue), No. 12/2017- Central Tax (Rate), dated the 28th
June, 2017, published in the Gazette of India, Extraordinary, Part II,
Section 3, Sub-section (i), vide number G.S.R. 691(E), dated the 28th
June, 2017, namely:-
In the said notification, -
(i) in the opening paragraph, for the word, brackets and figures "sub-
section (1) of section 11" the word, brackets and figures", sub-section
(3) and sub-section (4) of section 9, sub-section (1) of section 11,sub-
section (5) of section 15 and section 148," shall be substituted;
(ii) in the Table, -
(a) after serial number 41 and the entries relating thereto, the fol-
lowing serial numbers and entries shall be inserted, namely: -
(1) (2) (3) (4) (5)
"41 Head- Service by way of transfer of Nil Provided that the pro-
A ing9972 development rights (herein re- moter shall be liable to
fer TDR) or Floor Space Index pay tax at the applicable
(FSI) (including additional rate, on reverse charge
FSI) on or after 1 April, 2019 basis, on such proportion
for construction of residential of value of development
apartments by a promoter in a rights, or FSI (including
project, intended for sale to a additional FSI), or both,
buyer, wholly or partly, except as is attributable to the
where the entire consideration residential apartments,
has been received after is- which remain un-booked
suance of completion certifi- on the date of issuance
cate, required, where the by of completion certificate,
the competent authority or af- or first occupation of the
ter its first occupation, which- project, as the case may
ever is earlier. be, in the following
manner-
The amount of GST exemp-
tion available for construction [GST payable on TDR
of residential apartments in the or FSI (including addi-
project under this notification tional FSI) or both for
shall be calculated as under: construction of the resi-
[GST payable on TDR or FSI dential apartments in the
Patna High Court CWJC No.6700 of 2024 dt.05-05-2025
(including additional FSI) or project but for the ex-
both for construction of the emption contained
project) x (carpet area of the herein) x (carpet area of
residential apartments in the the residential apart-
project ÷ Total carpet area of ments in the project
the residential and commercial which remain un-
apartments in the project) booked on the date of is-
suance of completion
certificate or first occu-
pation
÷Total carpet area of
the residential apart-
ments in the project)
Provided further that tax
payable in terms of the
first proviso hereinabove
shall not exceed 0.5 per
cent of the value in case
of affordable residential
apartments and 2.5 per
cent. of the value in case
of residential apartments
other than affordable res-
idential apartments re-
maining un-booked on
the date of issuance of
completion certificate or
first occupation
The liability to pay cen-
tral tax on the said por-
tion of the development
rights or FSI, or both,
calculated as above,
shall arise on the date of
completion or first occu-
pation of the project, as
the case may be, which-
ever is earlier.
41B Head- Upfront amount (called as pre- Nil Provided that the pro-
ing9972 mium, salami, cost, price, de- moter shall be liable to
velopment charges or by any pay tax at the applicable
other name) payable in respect rate, on reverse charge
of service by way of granting basis, on such proportion
of long term lease of thirty of upfront amount
years, or more, on or after (called as premium,
01.04.2019, construction for of salami, cost, price, de-
residential apartments by a velopment charges or by
promoter in a project, intended any other name) paid for
for sale to a buyer, wholly or long term lease of land,
partly, except where the entire as is attributable to the
consideration has been re- residential apartments,
ceived after issuance of com- which remain un booked
pletion certificate, required, on the date of issuance
where the by competent au- of completion certificate,
thority or after its first occupa- or first occupation of the
tion, whichever is carlier. project, as the case may
be, in the following
The amount of GST exemp- manner-
Patna High Court CWJC No.6700 of 2024 dt.05-05-2025
tion available for construction [GST payable on up-
of residential apartments in the front amount (called
project under this notification as premium, salami,
shall be calculated as under: cost, price, develop-
ment charges or by
[GST payable on upfront any other name)
amount (called as premium, payable for long term
salami, cost, price, develop- lease of land for con-
ment charges or by any other struction of the resi-
name) payable for long term dential apartments in
lease of land for construction the project but for the
of the project) x (carpet area of exemption contained
the residential apartments in herein) x (carpet area
the project ÷Total carpet area of the residential
of the residential and commer- apartments in the
cial apartments in the project). project which remain
un- booked on the
date of issuance of
completion certificate
or first occupation ÷
Total carpet area of
the residential apart-
ments in the project),
Provided further that the
tax payable in terms of
the first proviso shall not
exceed 0.5 per cent of
the value in case of af-
fordable residential
apartments and 2.5 per
cent of the value in case
of residential apartments
other than affordable res-
idential apartments re-
maining un-booked on
the date of issuance of
completion certificate or
first occupation.
The liability to pay cen-
tral tax on the said pro-
portion of upfront
amount (called as pre-
mium, salami, cost,
price, development
charges or by any other
name) paid for long term
lease of land, calculated
as above, shall arise on
the date of issue of com-
pletion certificate or first
occupation of the
project, as the case may
be.
(ⅲ) after paragraph 1, the following paragraphs shall be inserted, namely, -
"1.A. Value of supply of service by way of transfer of development rights
or FSI by a person to the promoter against consideration in the form of res -
idential or commercial apartments shall be deemed to be equal to the value
Patna High Court CWJC No.6700 of 2024 dt.05-05-2025
of similar apartments charged by the promoter from the independent buyers
nearest to the date on which such development rights or FSI is transferred
to the promoter.
1B. Value of portion of residential or commercial apartments remaining un-
booked on the date of issuance of completion certificate or first occupation,
as the case may be, shall be deemed to be equal to the value of similar
apartments charged by the promoter nearest to the date of issuance of com-
pletion certificate or first occupation, as the case may be."
(iv) in paragraph 3 relating to Explanation, after clause (iv), the following
clause shall be inserted, namely: -
"(v) The term "apartment" shall have the same meaning as assigned to it in
clause (e) under section 2 of the Real Estate (Regulation and Development)
Act, 2016 (16 of 2017).
vi) The term "affordable residential apartment" shall have the same mean-
ing as assigned to it in de notification No. 11/2017-Central Tax (Rate), pub-
lished in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section
(1) dated 28th June, 2017 vide GSR number 690(E) dated 28 June, 2017, as
amended.
(vii) The term "promoter" shall have the same meaning as assigned to it in
clause (zk) under section 2 of the Real Estate (Regulation and Develop-
ment) Act, 2016 (16 of 2017).
(viii) The term "project" shall mean a Real Estate Project or a Residential
Real Estate Project.
(ix) the term "Real Estate Project (REP)" shall have the same meaning as
assigned to it in clause (zn) under section 2 of the Real Estate (Regulation
and Development) Act, 2016 (16 of 2017).
(x) The term "Residential Real Estate Project (RREP)" shall mean a REP in
which the carpet area of the commercial apartments is not more than 15 per
cent. of the total carpet area of all the apartments in the REP;
(xi) The term "carpet area" shall have the same meaning as assigned to it
clause (k) under section 2 of the Real Estate (Regulation and Development)
Act, 2016 (16 of 2017).
(xii) "an apartment booked on or before the date of issuance of completion
certificate or first occupation of the project" shall mean an apartment which
meets all the following three conditions, namely-
(a) part of supply of construction of the apartment service has time
of supply on or before the said date; and
(b) consideration equal to at least one instalment has been credited to
the bank account of the registered person on or before the said date;
and
(c) an allotment letter or sale agreement or any other similar docu-
ment evidencing booking of the apartment has been issued on or be-
fore the said date.
(xiii) "floor space index (FSI)" shall mean the ratio of a building's total
floor area (gross floor area) to the size of the piece of land upon which it
is built.".
2. This notification shall come into force with effect from the 1" day of
April, 2019.
[F. No.354/32/2019-TRU]
(Pramod Kumar)
Deputy Secretary to the Government of India
Note: -The principal notification No. 12/2017 - Central Tax (Rate), dated
the 28th June, 2017 was published in the Gazette of India, Extraordi-
nary, vide number G.S.R. 691 (E), dated the 28th June, 2017 and was
Patna High Court CWJC No.6700 of 2024 dt.05-05-2025
last amended by notification No. 28/2018-Central Tax (Rate), dated the
31 December, 2018 vide number G.S.R. 1272 (E), dated the 31 Decem-
ber, 2018."
40. It is evident from a bare reading of the aforesaid no-
tifications that the State-respondents are correct in contending
that the construction of a complex, civil structure etc. intended
for sale to a buyer was made exigible to GST except where the
entire consideration has been received after issuance of comple-
tion certificate or after its first occupancy, whichever is earlier.
There would be no ambiguity in the above-mentioned notifica-
tions. Reliance placed by learned senior counsel for the peti-
tioner on the judgment of Hon'ble Supreme Court in the case of
M/S Govind Saran Ganga Saran (supra) seems to be misplaced.
We reproduce paragraph '6' of the said judgment hereunder:-
"6. The components which enter into the concept
of a tax are well known. The first is the character
of the imposition known by its nature which pre-
scribes the taxable event attracting the levy, the
second is a clear indication of the person on whom
the levy is imposed and who is obliged to pay the
tax, the third is the rate at which the tax is im-
posed, and the fourth is the measure or value to
which the rate will be applied for computing the
tax liability. If those components are not clearly
and definitely ascertainable, it is difficult to say
that the levy exists in point of law. Any uncertainty
or vagueness in the legislative scheme defining
any of those components of the levy will be fatal
to its validity."
41. In our opinion, all the essential components of tax
which have been noticed by Hon'ble Supreme Court are present
Patna High Court CWJC No.6700 of 2024 dt.05-05-2025
in this case.
42. In the light of the discussions made hereinabove, we
are of the opinion that there is no ambiguity with regard to lia-
bility of the petitioner on account of 'GST' on 'RCM' basis on
the constructions services rendered by him in lieu of the devel-
opments rights under the Development Agreement dated
27.11.2014.
43. We find no reason to entertain the present writ appli-
cation. No other and further ground has been pleaded before this
Court.
44. This writ application is dismissed. However, there
will be no order as to cost.
(Rajeev Ranjan Prasad, J)
(Ashok Kumar Pandey, J)
arvind/-
AFR/NAFR AFR
CAV DATE 29.04.2025
Uploading Date 05.05.2025
Transmission Date
