Delhi Resident Challenges DDA’s Retroactive GST on Property Conversions in High Court

A Delhi resident has approached the Delhi High Court to challenge the Delhi Development Authority’s (DDA) standard operating procedure (SOP) that imposes Goods and Services Tax (GST) retroactively on the conversion of leasehold properties into freehold. The retrospective levy affects property owners who completed the conversion after the implementation of the Central Goods and Services Tax (CGST) Act in 2017. The case is scheduled for hearing on Friday.

The petitioner, Mala Sahni Seth, has also included the Ministry of Finance, Central Board of Indirect Taxes and Customs, GST Council Secretariat, and the Delhi government as parties in the case. Through counsel Saurab Seth, the petitioner has requested the court to declare the March 28 SOP issued by the DDA’s internal GST Cell as unconstitutional and ultra vires the CGST Act.

According to the petition, the SOP, without any statutory authority, creates a new taxable event by treating the statutory conversion of leasehold property into freehold as a taxable “service.” This, the petitioner argues, is a colourable exercise of fiscal power and an impermissible delegation of legislative authority.

Seth and other joint owners of a property at DLF South Court Mall, Saket, converted their property to freehold in 2023 after paying the required conversion charges. However, in April 2025, the DDA issued invoices retroactively charging GST of ₹30.26 lakh based on the March SOP. The petitioners maintain that this levy was without jurisdiction and contrary to provisions in the CGST Act, which explicitly exclude the sale or transfer of land from the definition of “supply.”

The challenge highlights growing concerns among property owners about the legality of retrospective taxation and the potential financial burden it imposes. Experts note that the case could set an important precedent regarding the extent of authority of government bodies in interpreting tax provisions and imposing retroactive charges.

If the High Court rules in favor of the petitioner, it could prevent similar retrospective levies on other property owners in Delhi, providing clarity on the scope of GST applicability on land conversion. The DDA has yet to respond  on the matter.