The Supreme Court has issued a notice to the Union government on a petition challenging a Telangana High Court verdict on imposing the goods and services tax (GST) on rights under the joint development agreement (JDA) in the real estate sector.
The Telangana High Court had held that JDA is different from an agreement for the sale of land and therefore the rights under this should be taxed.
In the interim, GST will continue to be applicable on the rights.
Abhishek A. Rastogi, founder of Rastogi Chamber who is arguing the case for the petitioner, said the moot point is whether the incidental and ancillary right to the sale of land would be subject to GST as the supply of land is excluded from the purview of GST.
Besides, taxes on land and building are a state subject, he said.
He said part of this is already subject to full tax and hence the additional tax on the value of the sale of land will make the projects unviable and lead to tax cascading.
The matter will now be heard on September 9.
GST on development rights is a vexed issue as some believe that the Centre does not have the power to levy tax on the sale of land, according to the Constitution.
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Pooja Gupta
CA Pooja Gupta (CA, ISA, M.com) having 15 years of experience.
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