9911796707
TMI Blog2019 (2) TMI 1905X X X X Extracts X X X X X X X X Extracts X X X X ..... discharged by RBIPL. Further, the RBIPL has agreed to deposit the original titled documents of the developable land as guarantee for the performance of secured obligations, meaning thereby that RBIPL is the owner of the developable land - these terms of MOU make it crystal clear that the title of ownership of land vests with the RBIPL. Since RBIPL is the owner of the developable land, mere transfer of certain rights i.e. the development rights does not confer any title or ownership in the developable land upon the applicant. Hence, the argument that the transfer of Development rights amounts to sale of land under Entry No. 5 of Schedule III appended to CGST Act (Activities or transaction which shall be treated neither as a supply of goods nor a supply of services) is outrightly rejected. Value and time of supply - HELD THAT:- Notification 4/2018-CGST(Rate), dated 25.01.2018 notified that the liability to pay tax in case of transfer of development rights in exchange of constructed space shall be the date of allotment of constructed complex, i.e., the letter of allotment issued by the developer after the construction is complete. The notification clearly suggests the liabili ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mercial and/ or residential project; 1.5.1(b) apply to the relevant Governmental Authority for obtaining sanction and / or modification of the layout plans and architectural plans in connection with the execution of the project; 1.5.1(c) make necessary applications and/ or revise, modify, renew or amend applications on behalf of RBIPL, under any Applicable Law, as may be required; 1.5.1(d) get the plans of the proposed buildings to be constructed on the Developable Land prepared and sanctioned in accordance with the rules and regulations of the Governmental Authority for their approval and sanction and make applications and/ or revise or modify applications for the change of user of the Developable Land; 1.5.1(e) appoint architects, surveyors, engineers, contractors, consultants and other Person(s) with respect to the development; 1.5.1(f) make applications to the concerned Governmental Authority for obtaining water and electricity connection and permits for cement, steel, sewerage, internet, phone line, gas pipe and other controlled building materials, if any; 1.5.1(g) file applications, declarations, certificated and submit information, as may be required under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hority in connection with any portion of the Developable Land, to commerce or file suits, legal actions or other proceedings in any court, before any judicial magistrate, tribunal or any Governmental Authority for partition of the Developable Land, the recovery of possession over the Developable Land, for enforcement of title to the Developable Land and/ or to sign, execute, deliver or file all necessary vakalatnamas, warrants, claims, plaints, orders, applications, affidavits and/ or other documents, papers and writings. 1.6 Further, as per Clause 2.6 of MOU, Pursuant to the Agreement, the Development Rights will be automatically, irrevocably and unconditionally granted, without the requirement of execution of any further deed, upon issuance of license to develop the Developable Land by the appropriate Government Authority . 1.7 Hence, by virtue of intended Development agreement (hereinafter referred to as DA ) which is yet to be executed, Applicant will be granted irrevocable and unconditional development rights to the Developable Land. The main purpose of the entire process is to acquire the required amount of land in a hassle free manner. 1.8 Subsequent to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... do not permit development but mere possession, while TDR permits development. (e) Lease involves recurring compensation, while TDR involves fixed and generally single compensation. Interpretation No. 6 Permanent Irrevocable Transfer of Development Rights is not a transaction of License . (a) License cannot create interest in property while TDR creates interest. (b) Licensee cannot transfer the product while under TDR the developers can enter in flat buyer s agreement with the customers. (c) Licensor discretion stands in case of license while in TDR the developer has the discretion to develop and sell the project. Interpretation No. 7 Transfer of Development Rights does not constitute to lease or License . Hence, Serial No. 2(a) of Schedule II of CGST which describes activities which constitute as supply in relation to land. (i.e. any lease, tenancy, easement, license to occupy land is a supply of services) does not apply to the activity of transfer of Development rights and thus no GST Tax is levied on the basis of this serial no. Interpretation No. 8 (a) Transfer of Irrevocable and Unconditional Devel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t Rights for the entire Developable Land, for any reason whatsoever, EDPL may, in its sole discretion, decide not to acquire Development Rights altogether or to acquire such portion of Development Rights as may have been available. If EDPL, in its sole discretion as aforesaid, decides to acquire such portion of Development Rights as may have been available, in such case, the Consideration after proportionate reduction as envisaged above, such excess of Advance shall be refunded to EDPL by RBIPL/ Associates immediately upon notice of demand being made by EDPL. (f) RBIPL agrees that the original title documents of the Developable Land shall be deposited with EDPL as guarantee for the due performance of the Secured Obligations, immediately upon acquisition of the Developable Land. Further, RBIPL agrees that the original title documents of any further land which may be acquired by RBIPL shall be deposited with EDPL as guarantee for the due performance of the Secured Obligations, immediately upon acquisition of such land. (g) Transfer, sale or otherwise dispose of any interest in the Developable Land to any other Person or enter into an agreement or arrangement or solicit arra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ommissioning of any immovable property wherein transfer of property in goods (whether as goods or in some other form) is involved in the execution of such contract; *It is worth mentioning here that the provisions of CGST Act and SGST Act are almost identical. So, unless a specific reference is made, a reference to CGST Act shall also mean a reference to HGST Act. 4.1 As per Section 9 of the CGST Act, 2017- Tax is levied on all intra-State supplies of goods or services or both, except on alcoholic liquor for human consumption. 4.2 Now, in order to determine the liability to tax, the definition of supply should also be closely examined. The definition of supply as per Section 7(1) of the CGST Act, 2017 includes- (a) all forms of supply of goods or services or both such as sale, transfer, barter, exchange, license, rental, lease or disposal made or agreed to be made for a consideration by a person in the course or furtherance of business; (b) import of services for a consideration whether or not in the course or furtherance of business; (c) the activities specified in Schedule I, made or agreed to be made without a consideration; and (d) the activit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... b) above, shall arise at the time when the said developer, builder, construction company or any other registered person, as the case may be, transfers possession or the right in the constructed complex, building or civil structure, to the person supplying the development rights by entering into a conveyance deed or similar instrument (for example allotment letter). 5.2 Notification 4/2018-CGST(Rate), dated 25.01.2018 notified that the liability to pay tax in case of transfer of development rights in exchange of constructed space shall be the date of allotment of constructed complex, i.e., the letter of allotment issued by the developer after the construction is complete. The notification clearly suggests the liability to pay tax on transfer of Development Rights. 5.3 As regards the second point for determination, the value of supply has to be determined in accordance with Notification No. 11/2017 Central Tax (Rate), dated 28 June, 2017 read with notification No. 4/2018 Central Tax (Rate), dated 25 January 2018. The relevant entry for valuation is Sr. No. 3, Heading 9954 read with Para No. 2 of Notification No. 11/2017 Central Tax (Rate), dated 28 June, 2017. 6. Finding ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
