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TMI Blog2020 (3) TMI 442X X X X Extracts X X X X X X X X Extracts X X X X ..... t any personal amount in this manner and as and when a plot is sold the amount is shared and the applicant receives a part of their consideration. In this manner the applicant gets paid his consideration progressively. Therefore in terms of the provisions of Section 15 the applicant receives the value of taxable supply made by them. Consideration for a service is the total value that the service provider gets in the deal and not what the service provider expends for the provisioning of the service. The total gain to the applicant or the total amount accruing to the applicant for the services is 40% of the amount at which the plots are sold. It has already been emphasized and held that the applicant has no right in the title of the land and therefore the applicant cannot be considered as the sellers of the plots. Their role is limited to aiding and assisting the landowners in the sale of the plots. They are only service providers in the whole process, be it development of the raw land into residential plots or their sale after the development. Therefore the entire amount received by them is liable to be taxed. Thus, the activities performed/to be performed by the applicant can ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d provide completion certificate to the developer and developer will hand over the colony to the municipal corporation for further maintenance. 4. QUESTIONS RAISED BEFORE THE AUTHORITHY: - In view of the above, the applicant has sought in respect of the following question. 4.1. Whether it is covered in para 5 of Schedule III (Sale of Land) or classified under works contract. 4.2. If it is covered under works contract, how the valuation would be done. 4.3. Residual Rules i.e. Rule 30/31 provided under GST Valuation Rules can be considered or not. 5. CONCERNED OFFICER'S VIEW POINT: The concerned officer is his view submitted that the work undertaken by the applicant doesn't fall under Para 5 of schedule Ill. And rule 31 applies for the valuation. 06. RECORD OF PERSONAL HEARING: Shree Vishal Jasgia CA authorized representative of the applicant appeared and reiterated the submission given in the application. He also gave a copy of the agreement executed between the applicant and the land owner M/s. Star construction. 7. DISCUSSIONS AND FINDINGS: 7.1 We have carefully gone through the submission made by the applicant in their application, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ves the right to the applicant to develop the land. 7.11 Para (13) and (14) entrust upon the land owner to pay any tax/rent and to settle any legal dispute regarding land. 7.12 Para (15) : says that the land owner authorizes the applicant would get the approval of design, layout and other permission from the concerned authorities. 7.13 The above are salient features of the agreement. The main argument of the applicant is that they are primarily engaged in the sale of land and the said activity is not liable to be taxed in terms of the provisions contained in serial number 5 of Schedule III of the GST Act, 2017. Therefore nearly by developing common facilities like drainage, electricity, road facilities, garden development etc should not attract GST. 7.14 The applicant further contempt that mentioned development activities should not be covered under the ambit of GST. Since the dominancy in the transaction / activities is in respect of land/plots, whole transaction / activities would be covered in sale of plots/ land though the ancillary services (Common facilities) has been provided. 7.15 Now we examine the contention of applicant in light of the salient features ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment of land and not the sale of land. The land owner still remains the land owner till the property is transferred in the name of purchaser. 7.18 The agreement also states that the land owner authorizes the applicant to prepare the necessary plans drawing designs and get it approved by the concern authority. The authorization clause clearly shows that the activities are to be done by the applicant is on behalf of the land owner. The applicant doesn't become the land owner himself. 7.19 There are many other provisions in the agreement that applicant has no right over the land and consequently the applicant cannot claim to be engaged in the activity of sale of land as envisaged in the provisions of entry at Serial number 5 of said Schedule III. The provisions of this entry will apply only to those persons who are the owners of the land and not to persons who are incidental to the sale of land. 7.20 According to the agreement the primary role of the applicant is development of the land into residential plots. The other activities to be done by the applicant are ancillary to the above prime activity. The applicant doesn't get the right himself to deal with many govern ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he landowners in the given ratio. This shows that the charges that the applicant receives for the services provided by them to the landowners for the development of the land are equal to their revenue share when the plots are sold. Now we look at the definition of 'Consideration' as enumerated in Section 2(31) of the Act. It is stated therein that consideration in relation to supply of goods or services or both includes any payment made or to be made, whether in money or otherwise, in respect of, in response to, or for the inducement of, supply of goods or services or both, whether by the recipient or by any other person. 7.27 In this context we see that the applicant receives consideration equal to 40% of the value at which each of the plots is sold. This amount constitutes the consideration for the services provided by the applicant. Section 15 of the CGST Act, 2017 provides that the value of a supply of goods or services or both shall be the transaction value, which is the price actually paid or payable for the said supply where the supplier and the recipient are not related and the price is the sole consideration. It is seen here that the applicant does not get any ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t is that the applicant shall get the amount only as and when the plots are sold. As already discussed earlier this arrangement, where the applicant gets paid for their services only upon the sale of the plots, enables the landowners to not to spend their financial resources to pay the applicant for their services. The applicant gets 40% of the amount collected from the plot purchasers. This amount constitutes their consideration for their services rendered to the landowners. Consideration for a service is the total value that the service provider gets in the deal and not what the service provider expends for the provisioning of the service. The total gain to the applicant or the total amount accruing to the applicant for the services is 40% of the amount at which the plots are sold. It has already been emphasized and held that the applicant has no right in the title of the land and therefore the applicant cannot be considered as the sellers of the plots. Their role is limited to aiding and assisting the landowners in the sale of the plots. They are only service providers in the whole process, be it development of the raw land into residential plots or their sale after the developm ..... X X X X Extracts X X X X X X X X Extracts X X X X
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