Transactions Involving Part Payment Before Completion Certificate Would Amount to Works Contract and Attract GST | HC

Case Details: B.G. Parameshwara vs. Bengaluru Development Authority - [2025] 173 taxmann.com 290 (Karnataka)

Judiciary and Counsel Details

• M.G.S. Kamal, J.
• Monesh Kumar & Raghavendra G. Gayatri, Advs. for the Petitioner.
• Basavaraja H.T., Akash B. Shetty, Advs. & Smt. B. Sukanya Baliga, AGA for the Respondent.

Facts of the Case

The petitioner, a real estate developer, challenged the levy of Goods and Services Tax (GST) on property transactions, claiming the properties were fully constructed and not subject to GST. The department, however, contended that the agreements for the purchase of apartments and row houses were entered into during the construction period, with part payments made before the completion certificate was issued. They argued that, under Section 7 read with Schedule II of the CGST Act, such transactions qualified as works contracts, thereby attracting GST liability.

High Court Held

The Hon’ble High Court held that when a transaction is entered into before the completion of construction and consideration is paid partly or fully before the issuance of the completion certificate, it amounts to the supply of services attracting GST liability. The court observed that the payment schedules confirmed the petitioner had made partial payments during the construction period. It further noted that the relevant notification explicitly required GST to be paid separately by the allottees. The court found no element of discrimination, particularly since tax was not levied on properties that were completed before the implementation of GST. Accordingly, the writ petition was dismissed, and the GST liability on such transactions was upheld in favour of the department.

List of Cases Reviewed

• Larsen and Toubro Limited and Another v. State of Karnataka and Another [(2014) 1 SCC 708] – [Para 25] followed.

List of Cases Referred to

• Larsen and Toubro Limited and Another v. State of Karnataka and Another (2014) 1 SCC 708 (Para 5 and 13)
• M/s. Total Environment Buildings Systems Private Limited v. Deputy Commissioner of Commercial and Others Taxes (2022) 16 SCC 219 (Para 5)