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2023 (10) TMI 787 - AAR - GSTLevy of GST - sale of developed plots by applicant to various customers after development - development of plots’ service provided to the land owners - transfer of development rights by the land owner in consideration of land development services - applicability of Reverse Charge Mechanism - transfer of development rights and development of plot service - time of payment - applicable Notification. Whether sale of developed plots by applicant to various customers after development is taxable under the GST Acts or not? - HELD THAT:- The activity of sale of land is covered as item (5) of the Schedule III to the CGST Act. The Circular No. 177/09/2022 dt: 03.08.2022 issued by Government of India, Ministry of Finance, Department of Revenue (Tax Research Unit) at para-14.3 states that “Land may be sold either as it is or after some development such as leveling, laying down of drainage lines, water lines, electricity lines, etc. It is clarified that sale of such developed land is also sale of land and is covered by Sr. No. 5 of Schedule III of the Central Goods and Services Tax Act, 2017 and accordingly does not attract GST” - the value of Land is not taxable either sold as undeveloped land or selling it after the land is developed. Whether development of plots’ service provided to the land owners is taxable under GST and if so under which Notification and under which entry? - HELD THAT:- The supply of works contract service to customers as well as land owners, who have transferred the development rights to the applicant, is taxable at the rate of 9% CGST & 9% SGST as sub entry – xii of entry at serial no. 3 with SAC 9954 of the notification 11/2017. Whether transfer of development rights by the land owner in consideration of land development services received is taxable or not under the provisions of the GST Acts? If taxable, whether the applicant is liable to pay GST under RCM basis on the development rights received from the land owners or whether the land owner is only liable to pay GST on such transfer of development rights. What is the applicable Notification and entry in the Notification? - HELD THAT:- As the category of the works contracts under taken by the applicant, who develops plots by leveling or altering land are not included in the above notification 04/2019, this exemption is not applicable to the transactions made by them - Further the Notification 13/2017 was amended vide Notification 5/2019 dt: 29.03.2019 to include services supplied by way of “transfer of development rights” by any person to a promoter for construction of a project; and thus this supply attracts liability on reverse charge. The term project is defined in the notification as a Real estate project or a residential real estate project as defined under Sec 2 (zn) of the Real-estate (regulation and development) Act 2016 -The Promoter is liable to pay CGST & SGST at the rate of 9% each on Reverse charge basis on transfer of development rights under entry 5B of the notification 13/2017 as amended by notification 5/2019 on 29.03.2019. The applicable rate is 9% CGST & SGST respectively.
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