TMI Blog2018 (10) TMI 1140X X X X Extracts X X X X X X X X Extracts X X X X ..... d Services Tax act, 2017 and Telangana Goods and Services Tax Act, 2017? - Held that:- On a careful reading of Section 7 it can be inferred that the said activity of amalgamation of the land do not fall under any of the sub-clauses (1) to (3) of Section 7 of the CGST Act,2017. Further, in terms of clause 1(c) of Schedule II of the GST Act, 2017 any transfer of title in goods under an agreement which stipulates that property in goods shall pass at a future date upon payment of full consideration as agreed, is a supply of goods. But as per Section 2(52) of the CGST Act,2017, ‘goods’ includes only moveable property but land is not covered under the definition of ‘goods’. Hence pooling of land by way of as described in the “Statement of relevant facts” of the subject Application would not constitute a supply under the Central Goods and Services Tax act, 2017 and Telangana Goods and Services Tax Act, 2017. Whether in the facts and circumstances construction activity undertaken by the Company with respect to the share belonging to the Partners would be treated a Supply of service under the Central and State GST act? - Held that:- In terms of clause 5 (b) of Schedule II of the CGST, Ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the partners (as described in the “Statement of relevant facts” of the subject Application) is a supply of service under the CGST/TGST Act, 2017. The applicant is providing service to owners 2 to 8 who are related persons and therefore the value of the construction service supplied by M/s Gowra Ventures Pvt. Ltd shall be 110% of the cost of provision of the said service. The vesting of the constructed portion upon the partners cannot be treated as an independent supply as neither any service nor any consideration has been received by owner1 for vesting of constructed portion to the partners (owners 2 to 8). - TSAAR Order No. 11/2018-A.R.Com/6 /2018 - - - Dated:- 26-7-2018 - SRI J. LAXMINARAYANA, AND SRI V. SRINIVAS, IRS, MEMBER Under Section 100(1) of the CGST/TGST Act, 2017, any person aggrieved by this order can prefer an appeal before the Telangana State Appellate Authority for Advance Ruling, Hyderabad, within 30 days from the date of receipt of this Order. M/s. Gowra Ventures Private Ltd, 502, Gowra Grand, 1-8-384 385, Sardar Patel Road, Begumpet, Secunderabad-500003 registered under GSTIN 36AACCG5513B1Z5 has filed an application in Form GST ARA-01 under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the Company intend to develop the said land by constructing a multi-storeyed building and hence approached the Company for construction services. Both the Company and the Partners have agreed to amalgamate their land parcels and construct a multi-storeyed building (Project) on the amalgamated land parcels, i.e., land 1 land 2 taken together. This is found beneficial to all parties in terms of enhanced floor space index and area in addition to several other benefits like common areas and facilities. As agreed a revised plan has been filed for approval by the competent authorities and the extra built-up area that will accrue on account of the amalgamated land parcels shall belong to the Partners on the condition that the construction cost of such additional floor area shall be paid by them to the company. Following are the relevant terms and conditions of the MoU between the Company and the Partners in respect of the above arrangement: 1. Land 1 and Land 2 will be amalgamated for the purpose of construction of multi-storeyed building although the legal ownership of the said lands will continue to be vested with the existing owners, namely, the company and the Partner ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rson in the course or furtherance of business; (b) import of services for a consideration whether or not in the course or furtherance of business; (c) the activities specified in Schedule I, made or agreed to be made without a consideration; and (d) the activities to be treated as supply of goods or supply of services as referred to in Schedule II. (2) Notwithstanding anything contained in sub-section (1),- (a) activities or transactions specified in Schedule III; or (b) such activities or transactions undertaken by the Central Government, a State Government or any local authority in which they are engaged as public authorities, as may be notified by the Government on the recommendations of the Council, shall be treated neither as a supply of goods nor a supply of services. (3) Subject to the provisions of sub-sections (1) and (2), the Government may, on the recommendations of the Council, specify, by notification, the transactions that are to be treated as- (a) a supply of goods and not as a supply of services; or (b) a supply of services and not as a supply of goods. As per Section 2(31) of the Central and State GST Act consi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... levy of tax under Section 9 of the Central and State GST Act? [The value for the purpose of supply of construction service by the Company to the Partners shall be (a) be the open market value of such supply; (b) if the open market value is not available, be the value of supply of goods or services of like kind and quality; (c) if the value is not determinable under clause (a) or (b), be the value as determined by the application of rule 30 or rule 31, GST Rules in that order On application of Rule 28 of the Central and State GST Rules since the open market value or value of like kind and quality of the service is not available, Rule 30 of the Central and State GST Rules shall apply and one hundred and ten percent of the cost of construction would represent the value in this case where the parties are related in terms of Rule 30 of the Central and State GST Rules] As per Section 15 Central and State GST Act (1) The value of a supply of goods or services or both shall be the transaction value, which is the price actually paid or payable for the said supply of goods or services or both where the supplier and the recipient of the supply are not relat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he cost of production or manufacture or the cost of acquisition of such goods or the cost of provision of such services. Whether the vesting of the constructed portion to the Partners would be regarded as an independent supply? [No, this is not an independent supply because the land and the superstructure thereon have always remained during the construction activity as the property of the respective parties as represented by their shares in the Project]. During the time of personal hearing held on 17.05.2018 Mr Sampath Thirumalai Advocate authorized representative of the applicant appeared for the hearing and reiterated the submissions made in their application and requested for advance ruling. Further the applicant submitted a copy of the agreement entered between the partners vide their letter dated 16.7.2018. Discussion Findings: The applicant sought advance ruling on different issues and each issue is discussed below: 1) Whether in the facts and circumstances the pooling of land by way of amalgamation of the separate parcels viz Land 1 and Land2 as described in the Statement of relevant facts would constitute a supply under the Central Good ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t property in goods shall pass at a future date upon payment of full consideration as agreed, is a supply of goods. But as per Section 2(52) of the CGST Act,2017, goods includes only moveable property but land is not covered under the definition of goods . Hence pooling of land by way of as described in the Statement of relevant facts of the subject Application would not constitute a supply under the Central Goods and Services Tax act, 2017 and Telangana Goods and Services Tax Act, 2017. 2) Whether in the facts and circumstances construction activity undertaken by the Company with respect to the share belonging to the Partners (as described in the Statement of relevant facts ) would be treated a Supply of service under the Central and State GST act? As per the copy of the MOU for construction of Commercial Complex at Madhapur, furnished by M/s Gowra Ventures Pvt Ltd vide their letter dated 16-07-2018, condition mentioned at Sl.No.3 ( page 4 of said MOU) stipulates to authorize M/s Gowra Ventures Pvt Ltd to take lead for construction of the subject commercial complex . In terms of clause 5 (b) of Schedule II of the CGST, Act, 2017, construction of a complex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... harged by the supplier to the recipient of a supply and any amount charged for anything done by the supplier in respect of the supply of goods or services or both at the time of, or before delivery of goods or supply of services; (d) interest or late fee or penalty for delayed payment of any consideration for any supply; and (e) subsidies directly linked to the price excluding subsidies provided by the Central Government and State Governments. Explanation . For the purposes of this sub-section, the amount of subsidy shall be included in the value of supply of the supplier who receives the subsidy. (3) The value of the supply shall not include any discount which is given (a) before or at the time of the supply if such discount has been duly recorded in the invoice issued in respect of such supply; and (b) after the supply has been effected, if- (i) such discount is established in terms of an agreement entered into at or before the time of such supply and specifically linked to relevant invoices; and (ii) input tax credit as is attributable to the discount on the basis of document issued by the supplier has been reversed by the recipient ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f rule 30 or rule 31, in that order: Provided that where the goods are intended for further supply as such by the recipient, the value shall, at the option of the supplier, be an amount equivalent to ninety percent of the price charged for the supply of goods of like kind and quality by the recipient to his customer not being a related person: Provided further that where the recipient is eligible for full input tax credit, the value declared in the invoice shall be deemed to be the open market value of the goods or services. Having regard to the nature of service, value cannot be determined under clause (a) or (b) of Rule 28 of the said Rules and therefore in terms of clause (c) of Rule 28 of the said Rules, the value needs to be determined by applying the provisions of rule 30 of CGST Rules, 2017. Rule 30 of CGST Rules, 2017 is extracted hereunder for ready reference: 30. Value of supply of goods or services or both based on cost.- Where the value of a supply of goods or services or both is not determinable by any of the preceding rules of this Chapter, the value shall be one hundred and ten percent of the cost of production or manufacture or the c ..... X X X X Extracts X X X X X X X X Extracts X X X X
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