India, April 17 -- The Nagpur bench of the Bombay high court has held that Goods and Services Tax (GST) is not applicable to the transfer of development rights (TDR) or floor space index (FSI) as part of a development agreement.

The petitioner, Shrinivasa Realcon Private Ltd, challenged a notice from the GST department saying it is liable to pay GST on TDR based on a 2017 notification issued by the Central Board of Indirect Taxes and Customs. The notice pointed to clause (5-B) in the notification, which reads: "Services supplied by any person by way of transfer of development rights or Floor Space Index (FSI)... for construction of a project by a promotor."

TDR is a tool that allows property owners to transfer their unused development r...