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TMI Blog2019 (2) TMI 1905X X X X Extracts X X X X X X X X Extracts X X X X ..... BIPL"). RBIPL is engaged in the business of acquiring and developing land for the purpose of real estate projects by either itself or through contractors and developers. 1.3 RBIPL acquired land pursuant to MOU and consequently became owner of the land in District Panipat, Haryana ("hereinafter referred to as Developable Land"). 1.4 Further RBIPL (acting for itself and the Associated) has offered to grant Development Rights to EDPL for the Developable Land. 1.5 As per Clause 1.1 of MOU, Development Rights have been defined as under:- 1.5.1 "Development Rights" shall mean all the rights for development granted under any license to develop or change of land use or any consent/ permission of a similar nature granted by the concerned Governmental Authority and inter-alia include the following development, construction and marketing rights, with respect to the Developable Land; 1.5.1(a) enter upon and take possession of the Developable Land for the purpose of developing a commercial and/ or residential project; 1.5.1(b) apply to the relevant Governmental Authority for obtaining sanction and / or modification of the layout plans and architectural plans in connection with the executi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... against land acquisition and/ or any land acquisition proceedings by the Government and institute any writ/ petition for compensation etc. in the court of law and receive compensation thereof or settle the same in any manner; 1.5.1(p) enter into collaboration agreement/ joint venture for development of the Developable Land with any Third Party; 1.5.1(q) Receive sale consideration, i.e. to say receive all the monies payable by the prospective purchaser(s) on allotments of developed plots and/ or built up areas and on execution of the pre-sale agreements and other documentation, of the built up areas; 1.5.1(r) right to enter into agreements, as may be required, in connection with any of the aforesaid rights and obtain registration of such agreement and; 1.5.1(s) accept the service of any writ of summons or other legal process or notice, to appear and represent RBIPL before any court, judicial magistrate, tribunal or any Governmental Authority in connection with any portion of the Developable Land, to commerce or file suits, legal actions or other proceedings in any court, before any judicial magistrate, tribunal or any Governmental Authority for partition of the Developable Land ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se of clause 5(b) of Schedule II". * Interpretation No. 3 "The word 'sale' denotes transfer of title which is irrevocable and permanent". Hence 'sale of land' denotes' transfer of title in land. Hence sale of land (GST Regime) is status quo transfer of title (Negative List). * Interpretation No. 4 "A 'Right' transferred by way of sale is a 'Title' transferred by way of sale". * Interpretation No. 5 "Permanent & Irrevocable Transfer of Development Rights is not a transaction of Lease". (a) Lease gives revocable right to enjoy property to lessee, while in case of transfer of development rights (TDR) the right is transferred permanently and irrevocably. (b) Lease gives right to enjoy while TDR give right to develop. (c) Lease regains possession after lease term, while in TDR it is not the case. (d) Lease rights do not permit development but mere possession, while TDR permits development. (e) Lease involves recurring compensation, while TDR involves fixed and generally single compensation. * Interpretation No. 6 "Permanent & Irrevocable Transfer of Development Rights is not a transaction of License". (a) License cannot create interest in property while TDR c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uant to RBIPL and Associates granting the Development Rights of the Developable Land to EDPL, the entire cost of development of the Developable Land shall be exclusively borne by EDPL. Further, post obtaining the Development Rights as aforesaid, EDPL shall on behalf of RBIPL and Associates, obtain at its own cost, all necessary Governmental Approvals that shall be required for the development of the Developable Land. (d) All municipal taxes, rates, cesses and other public dues with respect to the Developable Land due and outstanding and accrued on or after the date of grant of Development Rights shall be paid and discharged by RBIPL/ Associates. (e) RBIPL and the Shareholders agree that if RBIPL/ Associates is not successful in granting the Development Rights for the entire Developable Land, for any reason whatsoever, EDPL may, in its sole discretion, decide not to acquire Development Rights altogether or to acquire such portion of Development Rights as may have been available. If EDPL, in its sole discretion as aforesaid, decides to acquire such portion of Development Rights as may have been available, in such case, the Consideration after proportionate reduction as envisaged ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed to or forming part of the land which are agreed to be severed before supply or under a contract of supply; * "Section 2 (102):- "Services" means anything other than goods, money and securities but includes activities relating to the use of money or its conversion by cash or by any other mode, from one form, currency or denomination, to another form, currency or denomination for which a separate consideration is charged; * The expression "works contact" is defined under Section 2 (119) of the GST Act 2017. The definition is "works contract" means a contract for building, construction, fabrication, completion, erection, installation, fitting out, improvement, modification, repair, maintenance, renovation, alteration or commissioning of any immovable property wherein transfer of property in goods (whether as goods or in some other form) is involved in the execution of such contract; * *It is worth mentioning here that the provisions of CGST Act and SGST Act are almost identical. So, unless a specific reference is made, a reference to CGST Act shall also mean a reference to HGST Act. 4.1 As per Section 9 of the CGST Act, 2017- Tax is levied on all intra-State supplies of good ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ghts to a developer, builder, construction company or any other registered person against consideration, wholly or partly, in 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 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)." 5.2 Notification 4/2018-CGST(Rate), dated 25.01.2018 notified that the liability to pay tax in case of transfer of development rights in exchange of ..... 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