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TMI Blog2018 (4) TMI 1077X X X X Extracts X X X X X X X X Extracts X X X X ..... d on which GST would not be payable. Under GST Notification No. 11/2017 - Central Tax (Rate) dated 28.06.2017 - S. No. 3 r/w Paragraph 2, the deemed value of land or undivided share of land has been fixed at one-third of the total amount charged. Hence, in GST, the machinery provisions to ascertain the value of land is available in the notification which has been issued under Sub-Section (5) of Section 15 of the CGST Act, 2017 regarding value of taxable supply - The said Notification has been issued under Section 15(5) of the CGST Act, 2017 by the Government on the recommendation of the GST Council and hence, no separate Rule was required to be issued. Paragraph 2 of the Notification No. 11/2017- Central Tax (Rate) dated 28.06.2017 is fully authorised by Section 15(5) of the CGST Act, 2017 to provide machinery provisions to ascertain the value of land for exclusion and to measures the value of supply of goods and services for levy of GST. The said machinery provisions cannot be equated with exemption Notification issued under Section 93(1) of the Finance Act, 1994 which were held to be insufficient by the Hon’ble High Court [2016 (6) TMI 192 - DELHI HIGH COURT]. Ruling:- the value ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le on the sale of undivided and impartible share of land represented by Agreement to sell the land? b) Whether GST shall be applicable on sale of superstructure (which is under construction)? c) If yes:- i. What will be the value on which tax is payable? ii. What would be the applicable rate for charging GST? Views of The Applicant: 7. Sale of land is out of the scope of the definition of Supply under GST, as the same has been prescribed under Entry 5 of Schedule III of the CGST Act, 2017. Consequently, transfer of undivided and impartible share in land would not be leviable to GST. 8. For the purpose of analysing the above transaction, it is of importance to have a perusal of the relevant portion of the provisions providing for the scope of 'supply', which reads as under: "7. (1) For the purposes of this Act, the expression "supply" includes- ... ... (2) Notwithstanding anything contained in sub-section (1), - (a) activities or transactions specified in Schedule III: or (b) ... shall be treated neither as a supply of goods nor a supply of services." 9. A perusal of the above extracted provision shows that all transactions provided under Schedule III of the CGST Ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ue 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. Explanation .- For the purposes of paragraph 2, "total amount" means the sum total of,- (a) consideration charged for aforesaid service; and (b) amount charged for transfer of land or undivided share of land, as the case may be. Discussion: 14. The issue for decision in this case is regarding value and rate of tax for payment of GST on the service of construction of a complex, building, civil structure or a part thereof, including a complex or building intended for sale to a buyer, wholly or partly, except where the entire consideration has been received after issuance of completion certificate, where required, by the competent authority or after its first occupation, whichever is earlier. 15. It is observed that as per Section 7(2)(a) of the CGST Act, 2017, activities or transactions specified in Schedule III of the said Act shall be treated neither as a supply of goods nor a supply of services. Further, Paragraph 5 of the said Schedule III specifically covers sale of land. Hence, sale of land is not covered under the scope of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed, (ii) goods which are used in construction activities and (iii) services undertaken by the applicant directly or through other contractors. 21. While admitting that GST cannot be levied on the value of land or value of undivided share of land, the question which needs to be answered is how the value of the said land needs to be ascertained. 22. In this case, the measure of tax should be the value of goods and services supplied by excluding the value of land. However, since land cannot be separately sold, a deemed value of land need to be ascertained on which GST would not be payable. 23. The applicant wants the value of land to be ascertained by him on the basis of Rule 30 of CGST Rules, 2017, as the said Rules, do not provide any other specific provision to ascertain the value of land for exclusion. 24. It is also observed that a similar issue under Service Tax was decided by Hon'ble High Court of Delhi under W.P. (Civil) No. 2235/2011 in the case of Shri Suresh Kumar Bansal V/s Union of India. The Hon'ble High Court held in its judgement dated 03.06.2016 that in the case of sale of complex, which is a composite contract, the levy of service tax would be restricted to the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d to be issued. Hence, Paragraph 2 of the Notification No. 11/2017- Central Tax (Rate) dated 28.06.2017 is fully authorised by Section 15(5) of the CGST Act, 2017 to provide machinery provisions to ascertain the value of land for exclusion and to measures the value of supply of goods and services for levy of GST. The said machinery provisions cannot be equated with exemption Notification issued under Section 93(1) of the Finance Act, 1994 which were held to be insufficient by the Hon'ble High Court, as mentioned above. Ruling 27. In the case of supply of services by way of construction of a complex, building, civil structure or a part thereof, including a complex or building intended for sale to a buyer, wholly or partly, except where the entire consideration has been received after issuance of completion certificate, where required, by the competent authority or after its first occupation, whichever is earlier, the GST would be payable on two-third of the total amount consisting of amount charged for transfer of land or undivided share of land, as the case may be, and whole of the consideration charged for the supply of goods and service. Hence, the value of land, or the undivid ..... X X X X Extracts X X X X X X X X Extracts X X X X
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