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2022 (9) TMI 785 - AAR - GSTLevy of GST - consideration received on sale of sites - advance received towards sale of site - sale of plots after completion of works related to basic necessities - rate of GST - valuation of GST - If GST is chargeable on any of these transactions, can the applicant collect the GST from the prospective buyers? - ITC on the expenses they incur on development - HELD THAT - The Applicant is an individual who owns land and planning to convert that land into residential sites and sell them to individuals. CBIC has issued circular No.177 dated 03.08.2022 and has issued clarification on whether sale of land after levelling, laying down of drainage lines etc., is taxable under GST - Thus CBIC has clarified that land may be sold either as it is or after some development such as levelling, laying down of drainage lines, water lines, electricity lines and sale of such developed land is also sale of land and is covered by Sr. No. 5 of Schedule III of the Central Goods and Services Tax Act, 2017 and accordingly does not attract GST. Thus in view of entry No. 5 of schedule III of CGST Act 2017 and clarification issued by CBIC mentioned, it is held that sale of land does not attract GST.
Issues:
1. Applicability of GST on the consideration received on the sale of sites. 2. Applicability of GST on the advance received towards the sale of sites. 3. Applicability of GST on the sale of plots after completion of works related to basic necessities. 4. Collection of GST from prospective buyers. 5. Eligibility for Input Tax Credit on expenses incurred on development. Analysis: Issue 1: Applicability of GST on the consideration received on the sale of sites The applicant sought an advance ruling on whether GST is applicable to the consideration received on the sale of sites. The Authority referred to Schedule III of the CGST Act, which states that the sale of land is neither a supply of goods nor services. Additionally, a circular issued by CBIC clarified that the sale of developed land, including after levelling and laying down drainage lines, falls under the same category and does not attract GST. Therefore, the Authority ruled that GST is not applicable to the consideration received on the sale of sites. Issue 2: Applicability of GST on the advance received towards the sale of sites Similarly, the Authority held that GST is not applicable to the advance received towards the sale of sites, in line with the ruling on the first issue. Issue 3: Applicability of GST on the sale of plots after completion of works related to basic necessities The applicant inquired whether GST is applicable on the sale of plots after completing works related to basic necessities. Following the same reasoning as the previous issues, the Authority ruled that GST is not applicable on the sale of plots/sites, even after the completion of essential works. Issue 4: Collection of GST from prospective buyers Given the rulings on the first issue, the question of whether the applicant can collect GST from prospective buyers became redundant. Issue 5: Eligibility for Input Tax Credit on expenses incurred on development Since the applicant was not liable to pay GST on the sale of sites, the question of claiming Input Tax Credit on expenses incurred on development also became redundant. In conclusion, the Authority ruled that GST is not applicable to the consideration received on the sale of sites, the advance received towards the sale, or the sale of plots after completing basic necessities. The rulings rendered the questions regarding collecting GST from buyers and claiming Input Tax Credit irrelevant.
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