GST Refund Due: Tax Liability for JDA Does Not Fall on Developer at Time of Agreement

Issue:

Whether a real estate developer is liable to pay GST on construction services provided to a landowner under a joint development agreement (JDA) at the time the JDA is entered into, or if the tax liability only arises later, and if so, whether an amount deposited under protest should be refunded with interest.

Facts:

A real estate developer (the assessee) entered into a joint development agreement (JDA) with a landowner to construct a residential project. The Directorate General of GST Intelligence (DGGI) began an investigation and insisted that GST was due and payable on the construction service provided by the assessee to the landowner at the time the JDA was signed. The assessee, under protest, remitted an amount of ₹7 crores.

Decision:

The court held that no GST liability actually fell upon the assessee at the time the JDA was entered into. This was based on the fact that the assessee became the owner of the property under the JDA/sale deed. The court also considered a subsequent notification issued in 2018, which clarified that the tax liability would fall on the property that is conveyed. In light of the sale deed, which was placed on record and showed the developer becoming the owner of the property, the court concluded that the tax liability did not fall upon the assessee. The amount deposited under protest was ordered to be refunded with interest at a rate of 6% per annum from the date of deposit.

The Notification stipulates that the liability to pay Central Tax in either case arises only upon transfer of possession — or any right therein — in the completed structure to the landowner by conveyance deed, allotment letter or similar instrument. ”

Key Takeaways:

Time of Supply in Real Estate JDAs: The case clarifies that the time of supply of construction services in a JDA is a critical factor. The GST liability on the transfer of development rights by the landowner to the developer, and the construction services by the developer to the landowner, depends on specific triggers.
Tax Liability on Conveyed Property: The court’s decision relies on the principle that the tax liability falls on the property that is conveyed. In this JDA, the developer received the property, and the tax liability was not on them at the time of the JDA itself, as per the 2018 notification and the sale deed.
Refund with Interest: Since the tax was collected without a legal basis (or was prematurely collected), the court ordered a refund of the amount, including interest. The rate of interest at 6% per annum is a standard legal rate for such refunds.

HIGH COURT OF ANDHRA PRADESH

RCC Engineering (P.) Ltd.

Deputy Assistant Commissioner^*

R. Raghunandan Rao and T.C.D. Sekhar, JJ.

WRIT PETITION NO. 21892 of 2025

SEPTEMBER 3, 2025

Karthik Ramana Puttamreddy for the Petitioner.

ORDER

R. Raghunandan Rao, J.-The petitioner was served with an assessment orders, dated 19.08.2024 and 24.08.2024, passed by the 1^st respondent, under the Goods and Service Tax Act, 2017 (for short ‘the GST Act’) for the financial years 2019-20, 2021-22 and 2022-23. These orders have been challenged by the petitioner in the present writ petition.

2. These assessment orders, in Form GST DRC-07, are challenged by the petitioner, on various grounds, including the ground that the said proceedings do not contain the signature of the assessing officer.

3. Learned Government Pleader for Commercial Tax, on instructions, submits that there is no signature of the assessing officer, on the impugned assessment orders.

4. The effect of the absence of the signature, on an assessment order was earlier considered by this Court, in the case of A V Bhanoji Row v. Assistant Commissioner (ST) 94 GSTL 430 (Andhra Pradesh)/W.P.No.2830 of 2023, decided on 14.02.2023. A Division Bench of this Court, had held that the signature, on the assessment order, cannot be dispensed with and that the provisions of Sections-160 & 169 of the Central Goods and Service Tax Act, 2017, would not rectify such a defect. Following this Judgment, another Division Bench of this Court, in the case of SRK Enterprises v. Assistant Commissioner (ST) /[2024] 102 GST 450/82 GSTL 142 (Andhra Pradesh)/W.P.No.29397 of 2023, decided on 10.11.2023, had set aside the impugned assessment order.

5. Another Division Bench of this Court by its Judgment, dated 19.03.2024, in the case of SRS Traders v. Assistant Commissioner (ST) [ (Andhra Pradesh)/W.P.No.5238 of 2024, following the aforesaid two Judgments, had held that the absence of the signature of the assessing officer, on the assessment order, would render the assessment order invalid and set aside the said order.

6. Following the aforesaid Judgments, the impugned assessment orders would have to be set aside on account of the absence of the signature of the assessing officer, on these impugned assessment orders.

7. This Court is also cogent of the fact that the impugned order has been passed some time back and the present writ petition has been filed with delay. However, Rule 26(3) of the CGST Rules, 2017 stipulates that service of notice or orders, without signature, would not amount to service at all. The Hon’ble High Court of Madras in (Tvl. Deepa Traders v. Deputy Commissioner (ST), Chennai 106 GST 584/90 GSTL 411 (Madras)/W.P.No.19277 of 2024, dated 13.08.2024) had held the same view. Consequently, there is no service of the impugned order even as of today, on account of the absence of signature on the impugned proceeding. In those circumstances, the delay in approaching this Court, would not a relevant factor.

8. Accordingly, this Writ Petition is disposed of setting aside the impugned assessment orders, in Form GST GST-07, dated 19.08.2024 & 24.08.2024 issued by the 1^st respondent, with liberty to the 1^st respondent to conduct fresh assessment, after giving notice and by assigning a signature to the said orders. The period from the date of the impugned assessment orders, till the date of receipt of this Order shall be excluded for the purposes of limitation. There shall be no order as to costs.

As a sequel, pending miscellaneous applications, if any, shall stand closed.