Bombay High Court Orders Refund Of ₹7 Crore To Provident Housing In GST Dispute
Judges Rule Tax Liability Under JDA Was Extinguished After Land Sale
The Bombay High Court at Goa has directed the Union government to refund ₹7 crore with interest to M/s Provident Housing Ltd., ruling that no GST liability arose from its joint development agreement after the landowner sold the property outright.
The division bench of Justice Bharati Dangre and Justice Nivedita P. Mehta, in a judgment dated 21 August 2025, held that the developer had been forced to pay GST “under protest” despite no taxable event arising under the law.
Background Of The Case
The petitioner, a real estate developer, had entered into a Joint Development Agreement (JDA) with M/s Trinitas Realtors India LLP on 13 October 2017. During investigation, GST authorities insisted that tax was payable on construction services provided to the landowner. Under pressure, the developer deposited ₹7 crore on 21 December 2021.
Later, the landowner sold the entire land parcel to the petitioner through a sale deed, expressly extinguishing all rights and liabilities under the JDA.
Revenue’s Stand
Initially, the GST Department claimed tax was due on the date of the JDA itself, relying on Section 13(2)(b) of the CGST Act, 2017 and Notification No.11/2017-Central Tax (Rate).
However, in a later affidavit, officials shifted their stance, invoking Notification No.4/2018 (25 January 2018), which clarified that GST liability in such JDAs arises only upon transfer of possession of the completed structure to the landowner through a conveyance deed or similar instrument.
Court’s Findings
The High Court held that:
- No tax liability arose on the signing of the JDA in 2017.
- Under the 2018 Notification, liability would arise only upon transfer of possession, which never occurred.
- The subsequent sale of land to the petitioner extinguished the JDA entirely, eliminating any possibility of GST liability.
Justice Dangre observed that the ₹7 crore deposit was not legally due and must be refunded.
Final Order
The writ petition was allowed, with the Court directing the Revenue to refund ₹7 crore along with 6% annual interest from the date of deposit (21 December 2021). The refund must be processed within six weeks from the judgment date (21 August 2025).
Wider Implications
This judgment is expected to bring relief to real estate developers engaged in JDAs, reaffirming that GST liability arises only upon possession transfer, not at the time of agreement signing. It also sends a strong message to tax authorities against collecting amounts without a clear statutory basis.
