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2022 (3) TMI 906 - AAR - GSTValuation of supply under GST - Immovable Constructed Commercial Property without any occupancy or Completion Certificate - area of the land exceeds 500 square meters or the number of Apartments proposed to be developed exceeds 8 inclusive of all phases - whether the sale consideration mentioned in the sale deed between the builder and the proposed purchaser should be considered as taxable value or Transaction value of the said immovable property or the guidance value fixed by the state government authorities for the purpose of the registration of such property? - HELD THAT - Section 15(1) of CGST Act, 2017 he GST Act contemplates to treat the transaction value as the value of supply unless the same is rejected and the value determined as per Section 15 of the GST Act. It does not contemplate to consider a guidance value prescribed under another legislation to be deemed to be the value of the supply, unless the transaction value itself is disputed and found not acceptable under Section 15 of the GST Act. In the latter case, the determination of the value of such supply shall be made as per the provisions of Section 15 of the GST Act. However, in case of apartments, the land value is fixed at one third of the value of the apartment involving the transfer of land along with the building, in Notification No. 11/2017-Central Tax (Rate) dated 28.06.2017. In such cases, the value of land is calculated as per the above specification and no other value is acceptable for the said land value.
Issues Involved:
1. Determination of taxable value under GST for immovable constructed commercial property without occupancy or completion certificate. Issue-wise Detailed Analysis: 1. Determination of Taxable Value under GST for Immovable Constructed Commercial Property without Occupancy or Completion Certificate: The applicant, intending to start a business in construction and sale of commercial immovable properties, sought clarification on whether the sale consideration mentioned in the sale deed or the guidance value fixed by state authorities should be considered as the taxable value for GST purposes. Admissibility of Application: The application was found admissible under Section 97(2)(c) of the CGST/KGST Act, 2017, as it pertains to the determination of the time and value of the supply of goods or services. Relevant Legal Provisions: - Section 15(1) of CGST Act, 2017: The value of supply of goods or services shall be the transaction value, which is the price actually paid or payable for the supply, provided the supplier and recipient are not related and the price is the sole consideration. - Schedule II Para 5(b) of Section 7 of CGST Act, 2017: Construction and sale of a complex, building, or civil structure intended for sale to a buyer before completion certification is considered a "Supply of Service" and is taxable. - Notification No. 11/2017-Central Tax (Rate) dated 28.06.2017: Specifies that in cases involving the transfer of land, the value of such supply shall be the total amount charged for the supply less the value of the transfer of land, which is deemed to be one-third of the total amount charged. Guidance Value vs. Transaction Value: - Guidance Value: The minimum value at which property transactions can be registered, as prescribed by the Karnataka State Stamps and Registrations Department. It has legal force and is applicable to both plots and constructed properties. - Transaction Value: The actual price paid or payable for the supply, which is considered for GST purposes unless found unacceptable under Section 15 of the GST Act. Findings: - The GST Act treats the transaction value as the value of supply unless it is rejected and determined otherwise under Section 15. - The guidance value prescribed under another legislation is not deemed to be the value of supply unless the transaction value is disputed. - For apartments involving the transfer of land, the land value is fixed at one-third of the apartment's value as per Notification No. 11/2017-Central Tax (Rate). Ruling: The taxable value under the GST Act for the construction of immovable plots without an occupancy certificate should be determined based on the transaction value. If the transaction value is found unacceptable, it must be determined according to the principles laid down under Section 15 of the GST Act, 2017.
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