Case Note & Summary
The petitioners, Builders Association of Navi Mumbai and Neelsidhi Realties, filed a writ petition under Article 226 of the Constitution of India challenging the levy of Goods and Services Tax (GST) on the transfer of Transferable Development Rights (TDR) and Floor Space Index (FSI). The petitioners argued that TDR and FSI are not 'goods' as defined under the GST Acts and that the levy is unconstitutional, violative of Articles 14, 19(1)(g), and 265 of the Constitution, and amounts to double taxation. The respondents, including the Union of India and the Commissioner of GST, defended the levy, contending that TDR and FSI are goods as they are movable property and are transferred for consideration. The court analyzed the definition of 'goods' under Article 366(12) of the Constitution and Section 2(52) of the Central Goods and Services Tax Act, 2017, and held that TDR and FSI are goods as they are not immovable property and are capable of being transferred. The court further held that the transfer of TDR/FSI constitutes a 'supply' under Section 7 of the CGST Act as it is made for consideration in the course of business. The court rejected the arguments of discrimination, unreasonable restriction on trade, and double taxation, holding that the classification is reasonable, the tax is a reasonable restriction in public interest, and there is no double taxation as GST is a single tax on the supply. The court also held that the levy is with the authority of law and does not violate Article 265. The petition was dismissed, and the GST levy on TDR/FSI transfers was upheld as constitutional and valid.
Headnote
A) Constitutional Law - Goods - Definition of Goods - Transferable Development Rights (TDR) and Floor Space Index (FSI) are 'goods' as defined under Article 366(12) of the Constitution of India and Section 2(52) of the Central Goods and Services Tax Act, 2017 - The court held that TDR and FSI are movable property and are not in the nature of immovable property, thus they fall within the definition of goods and are subject to GST (Paras 10-15). B) Goods and Services Tax - Supply - Transfer of TDR/FSI - The transfer of TDR/FSI by a developer to a landowner or by a developer to another developer constitutes a 'supply' under Section 7 of the Central Goods and Services Tax Act, 2017 - The court held that such transfers are for consideration and in the course of business, hence taxable (Paras 16-20). C) Constitutional Law - Article 14 - Reasonable Classification - The classification of TDR/FSI transfers as taxable under GST is not discriminatory - The court held that the classification has a rational nexus with the object of taxing all supplies of goods and services, and there is no violation of Article 14 of the Constitution (Paras 21-25). D) Constitutional Law - Article 19(1)(g) - Freedom of Trade - The levy of GST on TDR/FSI transfers does not violate the freedom to carry on trade or business under Article 19(1)(g) - The court held that the tax is a reasonable restriction in the public interest and does not impose an unreasonable burden (Paras 26-30). E) Goods and Services Tax - Double Taxation - No Double Taxation - The levy of GST on TDR/FSI transfers does not amount to double taxation as the transaction is a distinct supply and not already taxed under any other head - The court held that GST is a single tax on the supply of goods and services, and there is no overlapping (Paras 31-35). F) Constitutional Law - Article 265 - Tax Without Authority of Law - The levy of GST on TDR/FSI transfers is with the authority of law under the Central Goods and Services Tax Act, 2017 and the Maharashtra Goods and Services Tax Act, 2017 - The court held that the impugned notifications are valid and do not violate Article 265 (Paras 36-40).
Issue of Consideration
Whether the levy of Goods and Services Tax (GST) on transfer of Transferable Development Rights (TDR) and Floor Space Index (FSI) is constitutional and valid under the Central Goods and Services Tax Act, 2017 and the Maharashtra Goods and Services Tax Act, 2017.
Final Decision
The Bombay High Court dismissed the writ petition and upheld the constitutional validity of the GST levy on transfer of TDR and FSI. The court held that TDR and FSI are goods under Article 366(12) and Section 2(52) of the CGST Act, and their transfer constitutes a supply under Section 7. The court rejected all constitutional challenges and found no violation of Articles 14, 19(1)(g), or 265, and no double taxation.
Law Points
- Transferable Development Rights (TDR) and Floor Space Index (FSI) are goods
- GST levy on TDR/FSI transfers is constitutional
- TDR/FSI transfers are supply under GST
- no violation of Article 14 or 19(1)(g)
- no double taxation
- no retrospective effect
- no violation of Article 265.
