TMI Blog2020 (2) TMI 554X X X X Extracts X X X X X X X X Extracts X X X X ..... 98 of the Central Goods and Services Tax Act, 2017 and the Maharashtra Goods and Services Tax Act, 2017) The present application has been filed under Section 97 of the Central Goods and Services Tax Act, 2017 and the Maharashtra Goods and Services Tax Act, 2017 hereinafter referred to as the CGST Act and MGST Act ] by Vilas Chandanmal Gandhi, the applicant, seeking an advance ruling in respect of the following questions. a) Whether GST is leviable on sale of Transferable Development Rights ( TDR )/ Floor Space Index ( FSI ) received as consideration for surrendering the joint rights in land in terms of Development Control Regulations and granted in light of the article of agreement dated 18 December 2017 entered between the Applicant and Pune Municipal Corporation ( PMC ) read with Development Control Regulations? b) If yes, what will be classification under GST and what will be applicable rate of GST? At the outset, we would like to make it clear that the provisions of both the CGST Act and the MGST Act are the same except for certain provisions. Therefore, unless a mention is specifically made to any dissimilar provisions, a reference to the CGST Act would ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rights in the said land in favour of the PMC against which PMC awarded TDR s/ Additional FSI as compensation vide issue of Development Right Certificates ( DRC s ). 2.7 Both the parties later decided to sell a part of the TDRs/ Additional FSI to Vamona Developers Pvt. Ltd. (VDPL) and share the sale proceeds in agreed ratio. Consequently, Applicant entered into agreement/ deed of assignment with VDPL. 2.8 Initially at the time of the said agreement, applicant did not charge GST and later on Applicant raised GST invoice on VDPL and requested them to pay the GST on the said transaction along with interest. However, VDPL informed applicant that that GST is not leviable on the transaction of sale of TDR/ Additional FSI. 2.9 In view of above, Applicant has applied for advance ruling and submitted before us that Sale of TDR/ Additional FSI does not amount to taxable supply under GST being in nature of transaction of sale of land/ immovable property and covered under Clause 5 of Schedule III of CGST Act. 2.9.1 Applicant has reproduced the definition of the term goods as defined in the CGST Act, 2017 and has submitted that the said definition includes the word moveable proper ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntraI Tax (Rate) dated 29 March 2019, has made an amendment in Notification No. 12/2017-CentraI Tax (Rate) whereby, Service by way of transfer of development rights/ Additional FSI were made exempt subject to condition that promoter shall be liable to pay tax at the applicable rate, on reverse charge basis, on such proportion of value of development rights, as is attributable to the residential apartments, which remain un-booked on the date of issuance of completion certificate. 3.5 Further, reference is made to Notification no 5/2019-C.T.(Rate) dated 29.03.2019 wherein by way of amendment in Notification No. 13/2017-C.T.(Rate), Service by way of transfer of development rights/ Additional FSI by any person to promoter were made taxable under reverse charge. Also, reference has been made to Notification no 6/2019-C.T. (Rate) dated 29.03.2019 prescribes that in case of a promoter who receives development rights against consideration in the form of construction service or against monetary consideration, GST liability shall arise on date of issuance of completion certificate. 3.6 In view of the above, applicant feels that the transactions of transfer of development rights are tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... une-2, also appeared and submitted written submissions. The application was admitted and called for final hearing on 12.12.2019. Sh. Nitin Shah, Advocate, appeared, made oral and written submissions. Jurisdictional Officer Sh. Sachin Gaikwad, State Tax Officer (C-311) Pune-2 along with the Sh. B.C. Khandale, Asstt. Commissioner of S.T. Pune -2, appeared and made oral submissions. 05. OBSERVATIONS 5.1 We have gone through the facts of the case, documents on record and submissions made by both, the applicant as well as the jurisdictional officer. The basic issue before us is, whether GST is leviable on sale of TDR/ FSI received as consideration for surrendering the joint rights in land in terms of Development Control Regulations. 5.2 We find that vide F. No. 354/32/2019-TRU dated the 14th May, 2019, the Government of India, Ministry of Finance, Department of Revenue (Tax Research Unit), New Delhi has issued FAQs (Part II) on real estate. Sr.No. 7 of the same is reproduced below:- Sr.No. Question Answer 7. In the formula prescribed under first proviso to Entry 4 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the form of construction service of complex, building or civil structure; and (b) registered persons who supply construction service of complex, building or civil structure to supplier of development rights against consideration, wholly or partly, in the form of transfer of development rights, as the registered persons in whose case the liability to pay central tax on supply of the said services, on the consideration received in the form of construction service referred to in clause (a) above and in the form of development rights referred to in clause (b) above, shall arise at the time when the said developer, builder, construction company or any other registered person, as the case may be, transfers possession or the right in the constructed complex, building or civil structure, to the person supplying the development rights by entering into a conveyance deed or similar instrument (for example allotment letter). 5.4 Further, in Notification No. 13/2017-C.T. (Rate) as amended by Notification no 5/2019-C.T. (Rate) dated 29.03.2019, Service by way of transfer of development rights/ Additional FSI by any person to promoter were made taxable under reverse charge mechanism. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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