GST on Development rights (TDR)

 Whether GST is applicable on Development rights (TDR) transferred by the landowner to the developer under JDA entered prior to 01.07.2017 where OC/CC or conveyance deed is after 01.07.2017.

 
Completion of the project in GST period is the sole reason for proposing tax under GST on such TDR. Some arguments in support of the non-applicability of GST:

 
1. Circular 151/2/2012-ST clarifies that no service tax is payable on land provided by the landowner to the developer as part of the JDA by equating it with sale of land. We have blessing of the Tribunal in the case of DLF in this regard. Matter is pending before SC.
2. Transitional provisions under Section 142(11) also does not save the transaction to make it taxable under GST:
 a. 142(11)(a) - VAT not leviable for want of monetary consideration. Refer Kar HC judgment in the case of Bren Corporation
b. 142(11)(b) - Service tax is not leviable hence not applicable
c. 142(11)(c) - Not applicable since both VAT and ST not applicable
3. TDR is considered to have been transferred at the point in time when JDA/GPA is executed. Since this has taken place prior to 1.7.2017, GST cannot be levied on the same. TDR is not a continuous supply of service and it cannot be construed to have been provided throughout the life of the JDA.
4. To support the above, Notification 04/2018 CTR has been issued under Section 148 which permits to defer the payment of tax and not the levy. Hence, the point in time when the TDR is supplied i.e., levy is on the date of JDA and not on receipt of OC/CC.
5. Notification 04/2018 CTR can at best be applicable for JDAs entered post 1.7.2017
6. Q. No. 27 of FAQ on real estate dated May 7, 2019 specifically speaks about TDR supplied between 1.7.2017 to 31.3.2019. Since categorically the FAQ is addressing TDR supplied between 01.07.2017 to 31.3.2019 and those supplied on or after 1.4.2019 an inference can be drawn that JDA supplied prior to 1.7.2017 are not covered under the GST law.