2021 (9) TMI 1292 - AAAR - GST

Valuation of supply - transaction of sale of residential/ commercial property with undivided rights of land - construction of residential/commercial complex - builder charges an amount which is inclusive of land or undivided share of land - actual cost of Land can be deducted for the for the purpose of arriving at the taxable value of supply or not - HELD THAT - In para 2 of N/N. 11/2017-CT (Rate) dated 28.06.2017, as amended vide N/N. 1/2018-C.T. (Rate), dated 25-1-2018, there is deemed provisions that the value of transfer of land or undivided share of land, as the case may be, and the value of such transfer of land or undivided share of land, as the case may be, in such supply shall be deemed to be one third of the total amount charged for such supply. Accordingly, the appellant contention to allow the deduction of actual value of land from the sale value on the grounds that their land value is ascertainable and other grounds is not legal in terms of para 2 of Not. No. 11/2017-CT (Rate) dated 28.06.2017 as amended vide Not. No. 1/2018-C.T. (Rate), dated 25-1-2018. The reliance of Rule 18(A)(A) of the erstwhile Gujarat Value Added Tax Rules, 2006 is unjustified in the instant case since the Value Added Tax Act has been subsumed with GST Act. The Value Added Tax Act does not have any legal value in determination of GST liability since the value of supply is to be arrived in terms of the provisions of the GST Act. Appeal dismissed.

Summary

Issues:
1. Determination of the value of supply for the sale of residential/commercial property with undivided rights of land.
2. Whether the actual cost of land can be deducted for arriving at the taxable value in the construction of residential/commercial complexes.

Issue 1:
The appeal was filed under Section 100 of the CGST Act, 2017 and SGST Act, 2017 against an Advance Ruling. The appellant sought clarification on the value of supply for the sale of property with undivided rights of land. The Gujarat Authority for Advance Ruling ruled that the value should be determined as per the deeming provision of Notification no. 11/2017-CT (Rate) dated 28.06.2017, as amended by Notification No. 1/2018-C.T. (Rate), dated 25-1-2018.

Issue 2:
The appellant contended that the actual value of land in undivided shares is ascertainable and should be fully deducted from the total value of the property, rather than the prescribed 33% deduction as per the notifications. The appellant argued that the intention of the GST regime is not to tax land and that the deduction should reflect the actual value of land. However, the Appellate Authority upheld the ruling, stating that the prescribed deduction of one third of the total amount charged for the supply of land or undivided share of land is in accordance with the notifications. The Authority highlighted that the Value Added Tax Act does not hold relevance in determining GST liability, and the appellant's arguments lacked merit. Consequently, the appeal was rejected, affirming the original Advance Ruling.

This detailed analysis of the judgment addresses the issues raised by the appellant and the rulings provided by the authorities, emphasizing the legal provisions and interpretations involved in the case.