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2023 (2) TMI 929 - AAAR - GSTLevy of GST - consideration received on sale of sites - advance received towards sale of site - sale of plots after completion of works related to basic necessities - rate of GST - on what value GST to be charged? - If GST is chargeable on any of these transactions, can the applicant collect the GST from the prospective buyers? - eligibility for claiming Input Tax Credit that are paid on the expenses they incur on development. HELD THAT:- The transfer of title in the land to the buyer is only limited to the dimensions of the plot being sold. The developed roads, drains, water supply lines and tanks, electricity lines and sewerage facilities are not sold to the purchasers of plots in the layout. The ownership of these facilities and infrastructure which are mandated by law lies with the local authority and the Planning authority. As such it cannot be said that the owner who has carried out the development of the land has rendered a service to the purchasers. The consideration that the buyer pays is with the intention of purchasing the plot. The consideration is not for receiving a service of development of land. The activity of developing the land is only incidental to the sale of land. The dominant intention here is the sale of land and not the provision of service of development. In the case of plotted development where a large parcel of land is subdivided into small plots for sale to buyers, the development of land is a mandatory prerequisite to the sale of plots as per the Town & Country Planning Act. Where the parcel of land is being sold as is, such development work is not mandated by any law. In this case the Respondent is undertaking the development works as per the statutory requirement and any amounts received from interested buyers is only an advance for the purchase of land and not for the development works - The buyer approaches the developer and pays advances with the intention of getting an apartment built for him. Therefore, until the completion certification is received from the competent authority, the developer is rendering a service of construction to the buyer. However, any buyer who approaches a developer for purchase of an apartment after receipt of the completion certificate, is not getting any service from the developer and is paying the consideration for the purchase of building which is the ready to move in apartment. This transaction is not subject to GST in terms of entry 5 of Schedule III of the CGST Act. There can be no transfer in the title of a plot of land to the purchaser unless and until the same is released by the Planning Authority. This release of sites for transfer of title by registration happens only when the development work is complete and a completion certificate is obtained from the concerned Authority/Agency/Department. Therefore, any sale of a plot which is carved out of a large parcel of land can take place only after the development of the land. The Appellant Department has also contended that the Respondent charges the buyer based on the super built-up area and not on the exact measure of the plot. They contend that this evidences that the developer is collecting charges for land and services like land levelling, formation of roads, providing electricity facility, drainage line and water line, etc on a proportionate basis and all these are intrinsic part of the plot allotted to the buyer and such transactions are not relevant to the sale of land but are to the sale of developed plot, which amounts to rendering taxable supplies - it is made clear that any services procured by the owner from third parties for undertaking the development activity will be subject to GST at the applicable rates. The transfer of title in the land/plot cannot take place before the land is developed with the required infrastructure and amenities, as the Planning Authority, in terms of Section 17 of the KTCPA (reproduced in Para 15 ante), will not issue the layout plan unless the development is complete. Further, without the layout plan issued by the Planning Authority, the local authority will not issue the Khata for the plot and in the absence of the Khata, the registration process for transfer of title from the seller to the buyer will not take place. On a co-joint reading of all the provisions, it is held that sale of land developed by the Respondent is covered within the scope of the term 'sale of land' as mentioned in entry 5 of Schedule III.
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