TMI Blog2023 (5) TMI 709X X X X Extracts X X X X X X X X Extracts X X X X ..... services. Consideration separately shown to have been collected towards basic infrastructure charges - HELD THAT:- It is seen that the same are done to provide the basic infrastructure facilities like electricity access up to the plot, water and sewerage access up to the plot and roads, etc. These are mandatory requirement for release of plots and the plots become the saleable plots only after the provision of these basic infrastructure and facilities. Hence they are a part and parcel of the consideration for the plot though collected and shown separately. These facilities created are to be handed over to the local authorities and no longer remain the part of the applicant's property. Hence the consideration collected towards basic infrastructure development is part of the consideration towards the plot and is not a consideration for a separate supply - These constructions are done on the land not transferred to the plot owners but remains in the ownership of the applicant till it is relinquished to the local authorities. Hence the amount collected on account of this only increases the value of the land (plot) and hence do not form a separate supply. Consideration sep ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7 of CGST Act, 2017 read with Rule 104 of CGST Rules, 2017 and Section 97 of KGST Act, 2017 read with Rule 104 of KGST Rules, 2017, in FORM GST ARA-01 discharging the fee of Rs. 5,000/- each under the CGST Act and the KGST Act. 2. The applicant is a Public Limited Company registered under the provisions of Centra Goods and Services Tax Act, 2017 as well as Karnataka Goods and Services Tax Act, 2017 (hereinafter referred to as the CGST Act and KGST/SGST Act respectively). The applicant is engaged in the development of plots. 3. The applicant has sought advance ruling in respect of the following questions: i. Whether the applicant is liable to charge GST, if the booking of plot, receipt of consideration and agreement for sale is entered as well as sale deed is executed after the release certificate, on the following components (Under Section 97(2)(e) of CGST / KGST Act): a. Sale of Plot; b. Basic Infrastructure Development charges; and c. Other common amenities and facilities charges. ii. Whether the applicant is liable to charge GST, if the booking of plot and / or receipt of consideration and/or agreement for sale is entered prior to the releas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t under RERA Launch of the project and receiving application along with application money from prospective buyers. Booking of plots and entering into an agreement for sale and collecting advance from customers. Carry out the development activities and relinquishment of title of roads, drains, park etc (along with land) to local authority. Development of basic infrastructure and other common amenities and facilities. Verification of development of infrastructure by authorities. Release of plots for registration by authorities and registration of plots and collecting balance money. Completion of pending other common amenities and facilities and handing over the same to common association / apex body, as the case may be. 5.6 The applicant states that the sale consideration of the plots includes consideration towards plot of land, development of basic infrastructure prescribed by authorities in the approved plan as well as cost for providing all other common facilities, amenities and specifications to be provided within the project. 5.7 The applicant states that the cost of electrical connectivity to the common amenities, water li ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y has relied on clarification issued in Circular No. 177/09/2022 TRU dated 03-08-2022. Therefore, the applicant is of the understanding that in case of advance received towards sale of plot as well as basic infrastructure development and other common amenities and facilities charges before the release certificate is also not liable to GST. 6.6 The applicant is of the understanding that even where single price is charged for sale of plot, basic infrastructure development charges and other common amenities and facilities charges in the agreement for sale, it is not liable for GST considering the decision of authority for advance ruling in No. KAR ADRG 31/2022 dated 08-09-2022 and based on Circular No. 177/09/2022 TRU dated: 03-08-2022. PERSONAL HEARING / PROCEEDINGS HELD ON 12.12.2022 7. Smt Annapurna Kabra, Chartered Accountant and Duly Authorised Representative appeared for personal hearing proceedings held on 12.12.2022 and reiterated the facts narrated in their application. FINDINGS DISCUSSION 8. At the outset we would like to make it clear that the provisions of CGST Act, 2017 and the KGST Act, 2017 are in pari-materia and have the same provision ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt is verified and it is found as under: a. In para I, it is seen ... The promoter may at its sole discretion develop portion or whole of additional lands along with the Larger Property in different phases upon obtaining suitable approvals and consents from the concerned authority and finally integrate entire phases of development with common amenities and facilities including club house so that the plot owners of integrated development has access and use the amenities and facilities including club house in common. The Promoter is desirous of integrating the Additional land with the larger property and/or excluding certain portion of the Larger Property to form a single integrated plotted development residential project to be developed in phase-wise manner and such phase-wise development shall be considered as future phases of Godrej Woodland residential layout upon completion and become part and parcel of Godrej Woodland, hereinafter referred to as Future Development . The Promoter is entitled to develop the said Additional Lands earmarked for future development by modifying the existing Layout Plan sanction and RERA approval for Godrej Woodland, Godrej Woodland Phase-II, Go ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... idential use, and the breakup of the total cost is as morefully described in Annexure B herein below. f. Para 1.4 Along with the aforesaid Sale consideration, the Purchaser/s agrees and undertakes to pay to the Promoter, amounts as specified in Clause 6.1 of this Agreement in the manner detailed/specified in Payment Plan (Annexure B ) annexed hereto. g. Para 1.5 states as under: The Purchaser/s has paid an Application money/ initial amount of Rs........... /- to the Promoter as part payment towards the Sale Consideration of the Plot. The Purchaser/s hereby agrees to pay the balance Sale Consideration and other charges towards the Plot as per the Payment Plan (Annexure 'B') annexed hereto, as demanded by the Promoter within the time and in the manner specified therein. h. Para 1.6 states as under: The Sale Consideration of the said Plot includes recovery of price of land, development of the Basic Infrastructure and Other common amenities and facilities and cost for providing all other facilities, amenities and specifications to be provided within the Plot and the Project. The Promoter shall provide the electric wiring till the Plot, electrical connectivity ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he same. m. Para 17.1 states as under: The Promoter has proposed to construct a Club House at the location reserved for civic amenities in Future Development, which the Promoter has taken on lease/ allotment basis from the concerned authority or on one of the plots in Additional Land. Upon payment of subscription fees as prescribed by the Promoter or its nominees, the Purchaser/s shall be entitled to use the facilities and services of the Club House. The Club House shall be in complete control of the Promoter/ remain in exclusive ownership of the Promoter and the Promoter has the sole right and discretion to sell, lease, mortgage, encumber, construct buildings, complexes, etc., the Club House and the Purchaser/s are specifically made aware of this fact before the execution of this Agreement. The Promoter, at its own discretion, may also hand over the Club House to the Association of Owners/ Apex Body for maintenance and management of the Club House. n. The Annexure B which is part of the above agreement and related to the Sale Consideration and Payment Plan, shows as under ANNEXURE B SALE CONSIDERATION AND PAYMENT PLAN The Sale consideration shall be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... astructure development is part of the consideration towards the plot and is not a consideration for a separate supply. Further, clause (119) of Section 2 of the CGST Act, 2017 defines the works contract as to mean a contract for construction of any immovable property wherein transfer of property in goods is involved in the execution of such contract. In the pertinent situation, the construction of immovable property is present but there is no transfer of property in goods from the applicant to the plot owners. These constructions are done on the land not transferred to the plot owners but remains in the ownership of the applicant till it is relinquished to the local authorities. Hence the amount collected on account of this only increases the value of the land (plot) and hence do not form a separate supply. 15. As for as the consideration separately shown to have been collected towards common amenities and facilities, the clauses in the agreement is verified and found the following: (a) The clause 17.1 of the agreement clearly states that the Promoter is going to construct a Club House at the location reserved for civic amenities in Future Development, which the Promoter has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot known at the time of collection and it is for unforeseen expenses, it would be in the nature of a deposit and is not a part of consideration for a supply at the point of collection but when the same is applied to an expense, the supply would be constituted and would be taxable. The definition of consideration in clause (31) of Section 2 of the CGST Act is to be seen for this, which reads as under: (31) consideration in relation to the supply of goods or services or both includes - (a) any payment made or to be made, whether in money or otherwise, in respect of, in response to, or for the inducement of, the supply of goods or services or both, whether by the recipient or by any other person but shall not include any subsidy given by the Central Government or a State Government; (b) the monetary value of any act or forbearance, in respect of, in response to, or for the inducement of, the supply of goods or services or both, whether by the recipient or by any other person but shall not include any subsidy given by the Central Government or a State Government: Provided that a deposit given in respect of the supply of goods or services or both shall not be con ..... X X X X Extracts X X X X X X X X Extracts X X X X
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