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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 ..... factory land to Mr. B for Rs. 1 crore. Mr. B showing acceptance to the sale agreement, gives advance money amounting to Rs. 20 lakhs which is 20% of the total sale amount. Now for some reasons Mr. B could not complete the transaction upon which Fastrack forfeits amount of Rs. 20 lakhs. 3. Accordingly, an applicant sought advance ruling on the following question : 1. Whether the amount forfeited by Fastrack will attract GST? 2. Who will be considered as Service Receiver and Service Provider? 3. When sale of land is not treated as supply as per Schedule III of GST Act, 2017, whether forfeiture of advance pertaining to sale of land will be treated as supply and accordingly attract GST? Applicant's Interpretation of Law/Taxation under G ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eement held between applicant and Mr. B (customer). Findings and Discussion 7. We have considered the submissions made by the Applicant in their application for advance ruling as well as the submissions made by authorized signatory, during the personal hearing proceedings on 09-07-2020 before this authority. We also considered the issue involved, on which advance ruling is sought by the applicant, relevant facts & the applicant's interpretation of law. At the outset, we would like to state that the provisions of both the CGST Act and the GGST Act are the same except for certain provisions. Therefore, unless a mention is specifically made to such dissimilar provisions, a reference to the CGST Act would also mean a reference to the same pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the contract, the amount paid to the applicant would be forfeited by him. Now, it is clearly seen that aforesaid transaction/ activity of forfeiture nowhere involves sale of land. Applicant has received money not on account of sale of land but on account of non fulfillment of conditions as stipulated in the agreement by the prospective customer. Hence the said income of Rs. 20 lacs of the applicant is not due to sale of factory land but it is due to breach of condition of contract by Mr. B. It can be termed as a consideration to the applicant for "refraining or tolerating or doing an act" of Mr. B to not complete the transaction, which Mr. B (customer) had agreed in terms of contractual obligations. 11. Section 7 of the CGST Act, 2017 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se 5(e) of Schedule-II. Therefore, this activity constitutes supply in terms of Section 7(1) of CGST Act, 2017 and accordingly is taxable. 14. 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 terms and condition of an agreement held between the applicant and Mr. B (customer). This means that while entering into the agreement, Mr. B was well aware abo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hold that the GST is leviable on the amount forfeited by the applicant in terms of clause 5(e) of Schedule II to CGST Act 2017. 16. In view of the aforesaid discussion, we rule as under: Ruling Question 1. Whether the amount forfeited by Fastrack will attract GST? Answer: Affirmative in view of the above discussion. Question 2. Who will be considered as Service Receiver and Service Provider? Answer: The applicant is the service provider and Mr. B (customer) is the service receiver. Question 3. When sale of land is not treated as supply as per Schedule III of GST Act, 2017, whether forfeiture of advance pertaining to sale of land will be treated as supply and accordingly attract GST? Answer: The amount forfeited/ received by applican ..... X X X X Extracts X X X X X X X X Extracts X X X X
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