Central Goods and Service tax Act , 2017 .
S. 73 : Demands and recovery – Determination of tax – Joint Development Agreement – Real estate developer – Time of supply of service – Time of supply under Joint development agreement is governed by Notification 04/2018, i.e., on conveyance/allotment, not agreement date,-Any deposit obtained without authority of law is refundable with interest, regardless of whether made under protest or otherwise. [S. 13(2(b), 74 , Art . 226]
The petitioner, a real estate developer, entered into a Joint Development Agreement (JDA) on 13.10.2017 with Trinitas Realtors India LLP. The DGGI initiated investigation and issued summons in December 2021 alleging that GST liability arose on the date of execution of the JDA. Under threat of attachment and coercion, the petitioner deposited ₹7 crores through DRC-03 on 21.12.2021 and immediately challenged the departmental action by filing a writ petition. The Revenue initially maintained that tax was payable on the JDA date relying on Section 13(2)(b) CGST Act (time of supply when service completion not linked to invoice/payment). However, in subsequent affidavits, the Department itself admitted that Notification No. 04/2018-CT (Rate) dated 25.01.2018, read with Notification No. 11/2017-CT (Rate) dated 28.06.2017, clarified that in case of construction services under JDAs, the time of supply arises only upon issuance of an allotment letter or conveyance deed, not at the JDA execution stage. The Court further noted that a later sale deed extinguished the rights under the JDA, which confirmed that no supply arose on the JDA date. The High Court held that the deposit of ₹7 crores was wholly without authority of law, as there was no tax liability on the JDA execution. Court held that once the Department itself conceded in affidavits that the liability would not arise until possession/transfer, the collection became unsustainable. Accordingly, the Court ordered refund of ₹7 crores with interest at 6% per annum from the date of deposit (21.12.2021) till realization, directing that the refund be processed within six weeks. The judgment reinforces two critical GST principles: (i) time of supply under JDAs is governed by Notification 04/2018, i.e., on conveyance/allotment, not agreement date, and (ii) any deposit obtained without authority of law is refundable with interest, regardless of whether made under protest or otherwise. ( WP No .5 of 2022 dt. 21-8 -2025 )
Provident Housing Ltd. v. UOI (Goa Bench) (Bom)(HC) www.itatonline.org
[Coram : Hon’ble Smt. Justice Bharati Dangre and Hon’ble Justice Nivedita Prakash Mehta]