The Supreme Court has issued a notice to the Union government regarding a petition challenging a verdict by the Telangana High Court, which imposed the goods and services tax (GST) on rights under the joint development agreement (JDA) in the real estate sector.
The Telangana High Court had determined that a JDA is distinct from a land sale agreement, thus justifying the taxation of rights under it.
Meanwhile, GST will continue to be applicable on these rights until further notice.
Abhishek A. Rastogi, the founder of Rastogi Chamber and the petitioner’s representative, argues that the key issue revolves around whether ancillary rights to land sale should be subject to GST, given that land supply falls outside the GST’s scope.
Moreover, he points out that land and building taxes are under state jurisdiction. He argues that taxing these rights in addition to existing taxes would render projects financially unfeasible and result in tax cascading.
The Supreme Court has scheduled the next hearing for September 9.
The issue of GST on development rights remains contentious, with some arguing that the Constitution does not grant the Centre authority to tax land sales.
