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TMI Blog2021 (1) TMI 368X X X X Extracts X X X X X X X X Extracts X X X X ..... igation specified in the contract. In case obligation/condition of the contract is not fulfilled by the recipient, then such act is squarely covered under clause 5(e) of Schedule-II. Therefore, this activity constitutes supply in terms of Section 7(1) of CGST Act, 2017 and accordingly is taxable. As per Section 7(1) of the CGST Act, 2017, activities referred to in Schedule II are covered under the scope of supply of goods and service. Clause 5(e) to Schedule II to CGST Act 2017, declares that 'agreeing to the obligation to refrain from an act, or to tolerate an act or a situation, or to do an act' shall be treated as supply of service. The amount, which was received from Mr. B and forfeited by the applicant, was a part of the ter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... omer), for payment of a sum, will be covered under Clause 5(e) to Schedule II to CGST Act 2017, as a declared service - the GST is leviable on the amount forfeited by the applicant in terms of clause 5(e) of Schedule II to CGST Act 2017. - GUJ/GAAR/R/58/2020 - - - Dated:- 30-7-2020 - SANJAY SAXENA AND MOHIT AGRAWAL, MEMBER Present for the applicant : Shri Dishant Khattar M/s. Fastrack Deal Comm Pvt. Ltd., No. 1314/1, Vill Rajpur, Ta Kadi, Mehsana, Gujarat, is a company having GSTIN: 24AAACF9937C1ZR, filed an application for Advance Ruling under Section 97 of CGST Act, 2017 and Section 97 of the GGST Act, 2017 in FORM GST ARA-01 discharging the fee of ₹ 5,000/- each under the CGST Act and the SGST Act. 2. The applicant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o 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. 5. The applicant submitted that as per Schedule II and Schedule III of CGST Act, 2017 sale of land will be a non- GST supply as it is clearly stated in the Schedule III of CGST Act, 2017. Since sale of land is not treated as supply the amount of advance forfeited for sale of land will also not be considered as supply, leading to no liability to pay GST. Personal Hearing 6. The authorized representative of the company appeared and reiterated the submission already made in the application filed with the Auth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d amount received by him is on account of sale of land. However, it is clear from his own submissions that he has not received the said amount on account of sale of land but received the same on account of non-fulfillment of conditions of agreement of purchase of factory land by the customer. The applicant has submitted the copy of agreement/contract, which is in Gujarati language and relevant para has been translated in English for sake of understanding. In the said para of contract, it is mentioned, if purchaser fails to give remaining amount on or before 31/12/2019 along with 18% interest per annum, then amount paid by the customer to the applicant would be treated as forfeited . In view of the said terms and condition of contract, it c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... referred to in Schedule II. 12. Sub Clause (e) of The Clause (5) of Schedule-II states, as under: (e) agreeing to the obligation to refrain from an act, or to tolerate an act or a situation, or to do an act; This clause can be divided into following 3 sub-clauses: (a) Agreeing to the obligation to refrain from an act, (b) Agreeing to the obligation to tolerate an act or a situation, (c) Agreeing to the obligation to do an act. 13. It is clear from above that the words agreeing to the obligation appearing in clause (e) applies to all the 3 activities. As per the contract, the provider of service here agrees to refrain or tolerate or to do an act. There is specific agreement by the provider to carry out obl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... terms and conditions of contract already agreed to and settled between them. Thus, the appellant has refrained from taking subsequent action/ tolerated an act of the Mr. B (customer), for which consideration has been received by hm. The purpose of payment of amount is an act of tolerance in the sense that when there is breach of the contract, the appellant is put to certain hardships, which he tolerates in return of the payment received as advance being forfeited. Therefore, the impugned transaction is also a supply under the provisions of the CGST Act and therefore taxable. In our view, therefore, this transaction of the applicant agreeing to the obligation of refrain or tolerate or to do an act (exiting from the contract) on the part of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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