2020 (6) TMI 448 - AAR - GST

Levy of GST - sale of plot of land for which, as per the requirement of approved by the respective authority (i.e. Jilla Panchayat), Primary amenities such as, Drainage line, Water line, Electricity line, Land levelling etc. - HELD THAT - The applicant is the owner of the land, who develops the land with an infrastructure such as Drainage line, Water line, Electricity line, Land levelling etc. as per the requirement of the approved Plan Passing Authority (i.e. Jilla Panchayat). After this development of the land, he sales developed land as plots. His sales price includes the cost of the land as well as the cost of common amenities, Drainage line, Water line, Electricity line, Land levelling charges, etc. on a proportionate basis - Schedule II of the CGST Act, 2017 pertains to activities or transactions to be treated as Supply of goods or supply of services . As per clause 5(b) of the Schedule-II of the CGST Act, 2017, construction of a complex, building, civil structure or a part thereof, including a complex or building intended for sale to a buyer is a Supply of service and, hence, is liable to the Goods and Services Tax (GST). The activity of the sale of developed plots would be covered under the clause construction of a complex intended for sale to a buyer . Thus, the said activity is covered under construction services and GST is payable on the sale of developed plots in terms of CGST Act / Rules and relevant Notification issued time to time.

Summary

Issues:
Applicability of GST on the sale of a plot of land with provided primary amenities as per the requirements of the Plan Passing Authority.

Analysis:

Issue 1: Applicability of GST on the sale of land with provided amenities
The applicant sought an advance ruling on whether GST is applicable on the sale of a plot of land where primary amenities like drainage line, water line, electricity line, land leveling, etc., are to be provided by the seller as per the requirements of the Plan Passing Authority. The key consideration was whether such transactions fall within the ambit of GST.

Discussion & Findings:
The Authority analyzed the provisions of the CGST Act and Schedule III, which excludes the sale of land from the purview of GST. However, it emphasized that if the transaction involves more than just the sale of land, such as providing common amenities and infrastructure, it may be considered a service attracting GST liability.

The Authority noted that in the present case, the applicant not only sells the land but also provides various amenities and infrastructure like levelling the land, constructing roads, laying pipelines, and developing other necessary facilities. The sale price includes the cost of land and these amenities on a proportionate basis, indicating a service element beyond a simple land sale transaction.

Referring to Schedule II of the CGST Act, the Authority highlighted that the construction of a complex or building intended for sale is considered a supply of service liable to GST. Since the sale of developed plots involves providing infrastructure and amenities akin to a construction service, it falls under the ambit of GST as a construction service.

The Authority also cited a Supreme Court case to support the view that the sale of developed plots with common amenities constitutes a service rather than a mere sale of land. Therefore, it ruled that GST is applicable on the sale of a plot of land with provided amenities as per the requirements of the Plan Passing Authority.

In conclusion, the Authority affirmed that GST is applicable on the sale of a plot of land where the seller provides primary amenities mandated by the approving authority, as it involves a service element beyond a simple land sale transaction.