The Bombay High Court in the case of M/S SHRINIVASA REALCON PRIVATE LTD. VERSUS DEPUTY COMMISSIONER ANTI-EVASION BRANCH, CGST & CENTRAL EXCISE NAGPUR & OTHERS. vide Case No.- WRIT PETITION NO. 7135 OF 2024 dated 08.04.2025, has provided an significant ruling for homeowners and landowners involved in redevelopment projects. The court clarified that GST is not applicable in specific Joint Development Agreement (JDA) scenarios where development rights are not sold. The court held that in situations where the landowner does not sell development rights but merely appoints a developer to construct on their land, GST is not applicable under Entry 5B. This is because there is no supply of service in the form of TDR or FSI transfer

Facts of the Case: In this case, the petitioner was appointed as a developer under an agreement dated 07.04.2022 to construct a multi-storied complex for a consideration of ₹7 crores and two flats. The department sought to levy GST under Entry 5B of Notification No. 11/2017-CT (Rate) dated 28.06.2017, as amended by Notification dated 29.03.2019, claiming it was a case of transfer of development rights (TDR). 

Held: The Court observed that the scope of Entry no. 5B which states as “Services supplied by any person by way of transfer of development rights or Floor Space Index (FSI) (including additional FSI) for construction of a project by a promoter”.

The Court herein held that Entry 5B specifically relates to transfer of TDR/FSI, as understood under the Unified Development Control and Promotion Regulations (UDCPR). Further, the Court noted the distinction Between TDR and Developer Rights. Accordingly, opined that the developer’s right to construct and appropriate part of the built-up area for consideration under a development agreement is not a TDR or FSI transfer. Entry 5B of Notification No. 11/2017-CT (Rate), as amended, pertains to services involving the transfer of development rights or Floor Space Index (FSI) for construction by a promoter. However, in the case under consideration, the agreement between the homeowner and the builder did not involve the sale of TDR or FSI. Instead, the homeowner appointed the builder to develop the land without transferring any development rights .

No independent sale or grant of TDR/FSI from a third party was involved. Hence, the transaction falls outside the scope of Entry 5B. The Court held that this has no bearing on the issue of TDR/FSI transfer and does not attract GST under Entry 5B.