2020 (4) TMI 633 - AAR - GST

Levy of GST - Classification of Supply - rate of GST - activity of purchase of land and selling the said land by converting in to integrated residential sub plots of varying sizes under name of Bliss Homes with basic facilities - HELD THAT - The activity of purchase of land and selling the said land by converting in to integrated residential sub plots of varying sizes under the name of Bliss Homes with the basic facility is liable to GST. The activities of applicant will fall under the clause (b) of paragraph 5 of Schedule II of Gujarat Goods and Services Tax Act and Central Goods and Services Tax Act. Hence the activities of the applicant attract 9% CGST and 9% SGST as per serial no 3 of Notification No. 11/2017 Central Tax (Rate) dated 2806-2017.

Summary

Issues Involved:
1. Whether the activity of purchase of land and selling the said land by converting into integrated residential sub-plots with basic facilities is liable to GST or not?
2. If liable for GST, under which category of supply it will fall and what will be the rate of GST on it?

Analysis:

Issue 1:
The Applicant, engaged in purchasing land and developing it into integrated residential sub-plots under the name "Bliss Homes," sought an advance ruling on the GST liability of such activities. The Applicant provides essential facilities like compound walls, internal roads, drainage systems, and more, necessary for residential purposes as per the common GDCR of the Government of Gujarat.

Issue 2:
The Applicant contended that their activities should be considered as the sale of land, falling under Schedule III of the CGST Act, which specifies activities not treated as supply of goods or services. The Schedule specifically mentions "Sale of land" as a non-taxable activity. The Applicant highlighted that they do not engage in building constructions but only sell developed land as plots, emphasizing that the sale of land is not taxable under GST law.

The Authority for Advance Ruling considered the submissions made by the Applicant and ruled on the appropriate GST rate applicable to the services provided. The issue revolved around determining the correct rate of GST for the activities undertaken by the Applicant.

The sale deed presented by the Applicant outlined the formation of a residential community scheme named "Bliss Homes," where sub-plots were created for residential purposes and allotted to members for a valuable consideration. The ruling stated that the purchase of land and selling it after development into integrated residential sub-plots with basic facilities is indeed liable to GST.

Consequently, the activities of the Applicant were categorized under clause (b) of paragraph 5 of Schedule II of the Gujarat Goods and Services Tax Act and the Central Goods and Services Tax Act. The ruling specified that the Applicant's activities attract 9% CGST and 9% SGST as per Notification No. 11/2017 Central Tax (Rate) dated 28-06-2017.