TMI Blog2022 (1) TMI 659X X X X Extracts X X X X X X X X Extracts X X X X ..... lding, civil structure or part thereof are being undertaken. Thus,, it can be concluded that the object for sale is land. Scope of Supply - HELD THAT:- As per entry 5 (b) of Schedule II of SGST Act, construction of a complex, building, civil structure or part thereof, including a complex or building intended for sale to a buyer, wholly or partly, except where the entire consideration has been received after issuance of completion certificate, where required, by the competent authority or after its first occupation whichever is earlier. Thus, if some conditions are satisfied, construction of a complex, building, civil structure or part thereof, including a complex or building intended for sale to a buyer takes on the character of supply - In the instant case, the entry 5(b) of Schedule II, cannot be applied as these roads, poles or drainages are not for sale to probable buyers of plot. Neither their ownership nor their exclusive possession shall be passed on the probably buyers of plots, rather these are intended to be eventually vested with local authorities. The principal transaction is the sale of land and these amenities are a natural part of the sale of the plot of land an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (b) If yes, whether it is a supply of goods or services and under which category it falls. (c) The valuation of the supply, if applicable. (d) Rate of tax as applicable. (e) Abatement if any. B. Project Detail The applicant has by way of sale deeds acquired the parcels of land intended for development. As such the applicant is the owner of the land. The applicant is proposing to sub divide the larger parcel of land into smaller plots for sale to buyers. (i) Project 1: Waddo by Shantilal This project comprises a parcel of land which will be sub-divided into plots as per sub-division plan approved by the Mormugao Planning and Development Authority (Annexure Permissions-collectively attached). There is already an existing road and as such no road development work will be undertaken. Further, drainage and electricity lines are already pre-existing which would be used as it is or may be marginally improved. There would be no development of amenities or open areas. No construction of building or structures will be done. (ii) Project 2: Valley and Hills by Shantilal This project comprises of land wherein the land will be sub-divided into plots ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ity authorized to issue completion certificate under any law for the time being in force and in case of non-requirement of such certificate from such authority, from any of the following, namely: - (i) an architect registered with the Council of Architecture constituted under the Architects Act, 1972; or (ii) a chartered engineer registered with the Institution of Engineers (India); or (iii) a licensed surveyor of the respective local body of the city or town or village or development or planning authority; (2) the expression construction includes additions, alterations, replacements or remodelling of any existing civil structure; The development of the plots does not include the construction of a complex, building, civil structures or any part thereof. Thus, the sale being merely of a plot of land, sold based on it s actual measurement and not on the basis of any built up area/super built up area or carpet area and without any construction of any buildings or structure would fail within the purview of land as per pars 5 of Schedule III. (ii) POINT II Without prejudice to the above points. The GST law also provides for the concept of c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and appurtenances belonging thereto. RESIDENTIAL REAL ESTATE PROJECT (RREP) The term Residential Real Estate Project (RREP) shall mean a REP in which the carpet area of the commercial apartments is not more than 15% of the total carpet area of all the apartments in the REP - clause (xix) of paragraph 4 of Notification No. 11/2017-C.T. (Rate) and 8/2017-I.T. (rate) both dated 28/06/2017 inserted w.e.f.1-4-2019. In the project of the applicant there is no construction of any buildings or structures. Therefore, the question arises whether it can be said to fall under any of the categories REP or RREP. If it were to be decided that it falls within the purview of para 5(b) of Schedule II the type of project, the tax rate and the abatement thereon would need determination. (iv) POINT IV Without prejudice to the above since the other provisions are not entirely appropriately application to plot developments whether the residual manner of valuation prescribed under GST law can be adopted and the cost of development plus reasonable margin can be adopted as the value of supply and the remaining portion of the total consideration for sale of the plot received be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the sale in consideration is in respect of the subdivided plot of land. Land will be converted into plots through some value addition works. Before OC, it is land and after OC, it will be a plot. Such value addition works will be carried out to make it marketable as per the norms of the local authority. However, question to be answered is whether it is qualified to be covered by definition of Supply under GST Act. It is also to be determined as mere value addition done to land will change the nature of land from immovable property and to goods taxable under the cover of supply. Here it will be important to note, firstly, that the roads, poles or drainages constructed by seller of land are at no time transferred to the purchaser of sub divided developed plot. These amenities will be available for use to every plot holder without any title to it. Further, these amenities in turn will be gifted to the local authority as mentioned by applicant and thereafter, the local authority will be the owner of such road and/ or electricity poles. Moreover, this can be better understood from position that no plot owner or collectively all plot owners will be in a position to sell these po ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... land and, subject to clause(b) of paragraph 5 of Schedule II, Sale of building, is the activity or transaction which shall be treated neither as a supply of goods nor a supply of services. Here it will be important to note that, the sale of building has conditions for the qualification to be covered in clause (b)of paragraph 5 of Schedule II. However, for sale of land, there is no such condition. Thus, land is excluded in entirety and in all circumstances whereas building is includable within the scope of supply only upon meeting certain specific criteria. In view of the foregoing discussion, we rule as follows: RULING ADVANCE RULING UNDER SECTION 98 OF THE CGST/ GGST ACT, 2017. The ruling so sought by the applicant is accordingly answered as under: - a) Whether sale of plots is a supply? Ans : Sale of plots is not a supply. b) If yes, whether it is a supply of goods or services and under which category it falls? Ans ) Since answer to (a) above is negative, there is no question of classification. c) The valuation of the supply, if applicable? Ans ) Not applicable since (a) above is negative. d) Rate of tax as applicable? Ans ) Not app ..... X X X X Extracts X X X X X X X X Extracts X X X X
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