2023 (1) TMI 86 - AAR - GST

Maintainability of Advance Ruling application - Levy of GST - Classification of services - rate of GST - sale of Land / Industrial Plot - legal basis of non applicability - Input tax credit - HELD THAT - The transaction shall be out of GST net only if the activity is exclusively dealing with transfer of title or transfer of ownership of land, which is immovable property or earth. Here the substance of agreement between the parties is important. Where the nature of activity is that of ONLY sale of immoveable property of plot, it is excluded from GST levy. It has been observed from the submission that the applicant is in dilemma whether they will sale the whole land as purchased as such or will sale the individual plots of different sizes. The applicant is not sure about the proposed nature of activities to be undertaken by them. We find that to sale land as such i.e. barren land and to sale of individual plot with developed facilities are two distinct activities and attract different provisions of GST Act and Rules. The nature of taxability purely depends upon the type of activity proposed to be undertaken by the applicant - the applicant have not submitted any such documents by which it can be ascertain what types of activities have been permitted by the competent Authority to be carried out on the plot. The applicant has also failed to submit details of amenities to be provided in the plotted scheme and documents in support of it. The applicant also not disclosed/ submitted whether they proposed to construct any residential/ commercial construction on the plot or otherwise. In absence of specific activities proposed to be carried out by the applicant and lack of sufficient documents, the application does not have any locus standii - the application filed for Advance Ruling is not maintainable.

Issues Involved:
1. Whether the applicant is liable to pay GST on the sale of land/industrial plot.
2. The legal basis for non-applicability of GST if the activity is not liable to GST.
3. Classification of the activity under GST if taxable, including the Service Accounting Code.
4. The value on which GST will be payable and whether any abatement is available.
5. The rate of tax on which GST will be payable.
6. Availability of Input Tax Credit.

Issue-wise Detailed Analysis:

1. Liability to Pay GST on Sale of Land/Industrial Plot:
The applicant contends that the sale of land is exempt from GST as per Entry No. 5 of Schedule III of the CGST Act, 2017, which states that the sale of land is neither a supply of goods nor a supply of services. The applicant references the 47th GST Council press release and CBIC Circular No. 177/09/2022-TRU, which clarify that the sale of developed land (after leveling, laying drainage lines, etc.) is also considered a sale of land and does not attract GST. The applicant further argues that the sale of land, even with basic facilities like roads and boundaries, should be treated as a composite supply where the principal supply is the sale of land, which is not liable to GST.

2. Legal Basis for Non-Applicability of GST:
The applicant relies on Schedule III of the CGST Act, 2017, which excludes the sale of land from the definition of supply. They also cite the Supreme Court's decision in Union of India v. Mohit Minerals Private Limited, which held that a composite supply cannot be bifurcated into the supply of goods and services for GST purposes. Additionally, the applicant references an Advance Ruling by the Authority for Advance Ruling, Goa, in the case of M/s Shantilal Real Estate Services, which held that the sale of plots with value addition does not amount to a supply liable to GST.

3. Classification Under GST if Taxable:
The Assistant Commissioner, CGST & C. Ex. Commissionerate, Surat, submitted that while the sale of land is not considered a supply of goods or services, the sale of an industrial plot with additional services (e.g., electricity, water, drainage lines) would be taxable under GST. Such activities would fall under the definition of construction services (Service Code 9954), except where the entire consideration is received after obtaining a completion certificate.

4. Value on Which GST Will be Payable and Abatement:
As per Section 15(1) of the CGST Act, 2017, the value of a supply is the transaction value, which is the price actually paid or payable. No abatement is available for the value of the supply.

5. Rate of Tax on Which GST Will be Payable:
The applicable rate of GST for construction services is 18%.

6. Availability of Input Tax Credit:
Input Tax Credit (ITC) will not be available as per Section 17(5) of the CGST Act, 2017. This section states that ITC is not available for goods or services received for constructing an immovable property (other than plant and machinery) on one's own account, even if used in the course of business.

Findings:
The Authority for Advance Ruling noted that the applicant did not provide sufficient documentation to support their claim of selling land as such or as individual plots with basic facilities. The applicant failed to submit sale deeds, agreements, or details of amenities to be provided. The nature of taxability depends on the specific activities proposed, which the applicant did not clarify. Without these details, the application lacks the necessary basis for a ruling.

Ruling:
The application for Advance Ruling is not maintainable due to the absence of specific details and sufficient documentation.

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