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TMI Blog2022 (1) TMI 1055X X X X Extracts X X X X X X X X Extracts X X X X ..... ellant had filed an application for Advance Ruling on the above matter with the Gujarat Advance Ruling Authority asking the following question seeking Advance Ruling: "Whether GST is applicable on sale of plot of land for which, as per the requirement of approval by the respective authority (the Jilla Panchayat), primary amenities such as, Drainage line, water line, electricity line, land leveling etc. are to be provided by the applicant? 2. The Gujarat Authority for Advance Ruling (hereinafter referred to as 'GAAR') has ruled that GST is applicable on sale of plot of land for which, as per approval of the respective authority (the Jilla Panchayat), primary amenities such as, Drainage line, water line, electricity line, land leveling etc. are to be provided by the applicant, on the following grounds: (i) Entry 5 of Schedule-III of the CGST Act covers sale of land which is excluded from GST and reads as under: "5. Sale of land and, subject to clause(b) of paragraph 5 of Schedule-II, sale of building." (ii) The applicant, who is the owner of the land, develops the land with infrastructure such as Drainage line, Water line, Electricity line, Land leveling etc. as per the requ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Tax(GST). (vii) The activity of sale of developed plots would be covered under the clause 'construction of a complex intended for sale to a buyer'. Thus, the said activity is covered under 'construction services' and GST is payable on the sale of developed plots in terms of CGST Act/Rules and relevant Notification issued from time to time. 3. Aggrieved with the aforesaid ruling, the appellant has filed the present appeal on 31.08.2020 and has submitted the statement of facts as under: (i) The appellant is a farmer engaged in agricultural activities and has proposed business activities on a vacant land that he is having. The land is situated outside the municipal area of town and the appellant is having all the necessary approvals for the proposed project from the plan passing authority i.e. the Jilla Panchayat. (ii) As per point no. 6 of the conditions stated in the Plan approval letter, the appellant is mandatorily required as a condition for passing the plan to construct/develop the basic common facilities like drainage, water line, electricity line, road, compound wall, etc. and the cost shall be borne by the appellant or as per the mutual decision of the stakeholders. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the agreement, the common facilities will not be sold to the plot holders and the appellant will not develop the same. On this, the Advance Ruling Authority had asked to submit a detailed written submission mentioning the facts but due to Covid 19, the representative asked for some time for the submission of the detailed written submission. (ii) Due to Covid-19 situation, Hon'ble Supreme Court has issued an order dated 23rd March, 2020 declaring that the period from 15th March, 2020 till further orders, shall not be taken into consideration for counting the period of limitation under any general or special laws. (iii) Notification No.35/2020-Central Tax dated 03.04.2020 has extended the due date of compliance which falls during the period from 20.03.2020 to 29.06.2020 to the 30th day of June, 2020 (which also includes filing of appeal). (iv) The appellant had requested the Advance Ruling Authority during hearing on 19.03.2020 to grant them time till everything gets normal considering the pandemic of covid-19. They have also attached copy of their letter dated 23.03.2020. (v) Since the anomaly lasted till 30.06.2020, the concerned authorities without accepting the facts and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... two or more supplies, one of which is a principal supply, shall be treated as a supply of such principal supply; and (b) a mixed supply comprising two or more supplies shall be treated as a supply of that particular supply which attracts the highest rate of tax. Schedule-III Paragraph 5 of CGST Act states: As per entry 5 of the Schedule III relating to 'Activities or transactions which shall be treated neither as a supply of goods nor a supply of services which reads as under: "Sale of land and, subject to clause(b) of paragraph 5 of Schedule II, sale of building." The appellant has stated that on combined reading of the above provisions it is understood that, sale of land is excluded from the scope of 'supply' under Entry No.5 of Schedule III. Further, the appellant submits that expressions 'composite supply' and 'principal supply' have been defined under subsection (30) & (90) of Section 2 as under: (a) Section 2(30) "composite supply" means a supply made by a taxable person to a recipient consisting of two or more taxable supplies of goods or services or both, or any combination thereof, which are naturally bundled and supplied in conjunction with each other in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ka, in the case of Maarq Spaces pvt.ltd. (Order No.KAR ADRG/199/2019) has said that where merely land development activities are undertaken under a JDA, the same are likely to be taxed under GST, however where development of land is naturally bundled with sale of land and sale is the principal supply in the bundled transaction, the transaction may be construed as composite supply not liable to GST. (xii) The proposed activity of the seller of land includes selling of exclusive plot to individual buyers with a condition to construct common facilities by the buyers by creating their own AOP of which all the Plot holders shall be members. Hence, there is no justification in charging GST where no construction or services took place on sale of land as it falls under paragraph 5 of Schedule III of the CGST Act as the seller is selling only land without any construction on the same. 5. The appellant has submitted additional submission on 12.11.2020 wherein he has stated that they filed appeal on 31.08.2020 against GAAR's order No.GUJ/GAAR/2020/11 and personal hearing in the matter was held on 10.11.2020 wherein the appellant, as per his request, was granted liberty to submit additional ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e highly unjustifiable and illegal. (vi) The appellant has concluded his submission by stating that the prime activity in the present case is of sale of Land which is squarely covered under Entry 5 of Schedule-III and therefore, order of the Authority of Advance Ruling needs to be set aside. 6. There has been change in one of the two Members of this authority consequent upon the transfer and posting of the Chief Commissioner, Gujarat Goods and Services Tax, after Personal Hearing has been held in this case. The appellant was therefore asked whether they require fresh hearing or not. The appellant vide their mail dated 02.12.21 informed that they would like to be heard again. Accordingly, personal hearing in the matter was held on 09.12.21 wherein the appellant requested time for making additional submission in the matter. The appellant submitted additional written submissions vide mail dated 17.12.2021 wherein he reiterated his earlier written submissions and also added as below: The intention of the legislature is clear regarding exclusion of land from the purview of GST and accordingly, it is beyond doubt that there is no GST on sale of land per se by excluding sale of land ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inage line, water line, electricity line, land leveling etc. are to be provided by the appellant. GAAR vide their Advance Ruling No. GUJ/GAAR/R/2020/11 dated 19.05.2020 had ruled that GST was applicable on the same. The appellant has challenged the said order by filing this appeal against the aforementioned order of GAAR. 9. Further, as per the submission of the appellant, they had filed the appeal against the order of the Authority for Advance Ruling(AAR) bearing No.GUJ/GAAR/R/2020/11 dated 19.05.2020, on 31.08.2020. The appellant has made a reference to Notification No. 35/2020-Central Tax dated 03.04.2020 which provides for extension of time limit for compliance (including filing of appeal) whose due date falls between 20.03.2020 to 29.06.2020 till 30.06.2020, they have not mentioned as to when they have received the aforementioned order of GAAR. As per the provisions of Notification No.35/2020-Central Tax dated 03.04.2020 as amended vide Notification No.55/2020 dated 27.06.2020, the time limit in respect of the appeals which were due for filing between 20.03.2020 and 30.08.2020 were extended upto 31.08.2020. The appellant has filed the appeal on 31.08.2020 and therefore the ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d Shri Denishbhai Dhanrajbhai Shah, both partners of Swami Developers(the sellers) and Shri Nevil Bharatbhai Doctor(the purchaser) which is not in any way related to the appellant. Therefore, the said documents/papers submitted by the appellant as well as those parts of the submissions of the appellant that are based on the clauses of the attached sale deed, cannot be relied upon in the present case. In view of the above, the discussion/decision in respect to the issue in hand will be solely based on the submissions of the appellant, the available records and merits of the case. 12. We find that the appellant in written submission dated 17.12.2021 has made contradictory submissions wherein it has been stated that the sale of plot is after carrying out the development activities or providing amenities such as like drainage, electricity line, compound wall etc. Further adding that it is immaterial whether any money is received by the applicant from the prospective buyers before development of plot is completed and a completion certificate is received by the applicant from the appropriate authority. The appellant has approached the Authority for Advance Ruling for advance ruling in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... development of such common facilities (through an agreement) to another entity (Association of Persons or some other artificial judicial person)which would carry out the work of development of such common facilities, which otherwise were required to be developed/provided by the appellant. Thus, it appears that this is not a simple agreement of sale of land but a conditional agreement of sale wherein the buyers are required to do several other things, apart from making payment for land to the appellant. (iv) The appellant in his application for Advance Ruling has asked 'Whether GST is applicable on sale of plot of land for which, as per the requirement of approval by the respective Authority (i.e. Jilla Panchayat), primary amenities such as Drainage line, water line, electricity line, land leveling etc. are to be provided by the applicant? In the appeal filed by them, the appellant has stated that the present case relates to 'Whether the above transaction of selling mere land by the seller will fall under paragraph 5 of Schedule III of the CGST Act. 13.1 Amid all the contradictions that are found in the submissions of the appellant, one thing that looks apparently clear from a pl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unt spent towards the construction of common facilities, irrespective of the fact as to whether the common facilities were developed by the appellant or the individual buyers through formation of an AOP. Further, irrespective of the fact as to whether the appellant develops the common facilities and then sells the plots of land OR makes an agreement with the buyers of the plots of land mandating them to develop the common facilities by forming an AOP or some other artificial judicial person, it will still be considered a sale of developed land only, since the plan approval authority clearly mandates development of common facilities in the land, prior to it's sale. Even otherwise, such charges are to be included in the value of supply as per the provisions of the CGST Act, 2017. In this regard, a reference is required to be made to the definition of 'consideration' as appearing at Section 2(31) of the CGST Act, 2017 and Section 15 of the CGST Act, 2017 which covers the valuation aspect of taxable supply. 13.2 As per Section 2(31) of the CGST Act, 2017, "consideration" in relation to the supply of goods or services or both includes: (a) any payment made or to be made, whether in mon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (a) before or at the time of the supply if such discount has been duly recorded in the invoice issued in respect of such supply; and (b) after the supply has been effected, if- (i) such discount is established in terms of an agreement entered into at or before the time of such supply and specifically linked to relevant invoices; and (ii) input tax credit as is attributable to the discount on the basis of document issued by the supplier has been reversed by the recipient of the supply. 13.4 As can be seen from the above, the only thing that gets excluded from the value of supply of services or supply of goods are the discounts as per 3(a) and 3(b) of Section 15 of the CGST Act, 2017. Thus, even if it is assumed that the common facilities in the plot of the appellant are to be developed by their individual buyers by forming an AOP on behalf of the appellant, the said expense will undoubtedly be included in the value of supply as per the provisions of Section 15(b) which reads as under: "(b) any amount that the supplier is liable to pay in relation to such supply but which has been incurred by the recipient of the supply and not included in the price actually paid or payable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... land' and hence the entire supply of land being a Composite Supply, is neither supply of goods nor supply of services and in such cases, the taxability and the rate of tax is decided on the basis of the predominant item in that supply, which, in this case, is the sale of land and therefore the development of basic common facilities are the ancillary supply. The appellant has concluded his submission by stating that the prime activity in the present case is of sale of Land which is squarely covered under Entry 5 of Schedule-III and therefore, order of the Authority of Advance Ruling needs to be set aside. 14.1 To look into the aspect of 'composite supply' as submitted by the appellant, we will be required to refer to the definition of 'Composite Supply' as appearing in Section 2(30) of the CGST Act, 2017. Section 2(30) of the CGST Act, 2017 reads as under: (30) "composite supply" means a supply made by a taxable person to a recipient consisting of two or more taxable supplies of goods or services or both, or any combination thereof, which are naturally bundled and supplied in conjunction with each other in the ordinary course of business, one of which is a principal supply; Ill ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rise. Hence this condition is also not satisfied. (iv) Since there is only one supply of service involved in the aforementioned transaction, there is no principal supply or ancillary supply. Hence, this condition is also not satisfied. In view of the above, since none of the above conditions have been satisfied, we conclude that the aforementioned supply, as submitted by the appellant, cannot and does not constitute a 'composite supply'. 15. We find that the plotted development is a scheme which involves forming land into layout after obtaining necessary plan approval from the Development Authority, getting all other permission required to take up, commence and complete what would be the layout, comprised of individual sites. In the activity of plot development, the activities such as leveling the land, construction of boundary wall, construction of roads, laying of underground cables and water pipelines, laying of underground sewerage lines with sewer treatment plant, development of landscaped gardens, drainage system, water harvesting system, demarcation of individual plots, construction of overhead tanks, other infrastructure works and further amenities like garden, communi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on the sale of developed plots in terms of CGST Act, 2017 and Rules thereunder. 16. We find that the appellant has relied upon Order No.KAR ADRG/199/2019 issued by the Authority for Advance Ruling(AAR), Karnataka in the case of Maarq Spaces pvt.ltd to support their contention. We also find that the appellant has also relied upon Order No. 16/2021 dated 22.11.2021 issued by the Authority for Advance Ruling (AAR), Madhya Pradesh in the case of M/s. Bhopal Smart City Development Corporation Ltd., in support of their contention. In this regard, we have to emphasize here that decisions of Advance Ruling Authorities cannot be relied upon by the appellant, since, as per the provisions of Section 103 of the CGST Act, 2017, the Advance Ruling pronounced by the Advance Ruling Authority or the Appellate Authority shall be binding only on the applicant who had sought it in respect of any matter referred to in sub-section(2) of Section 97 for Advance Ruling and the concerned officer or the jurisdictional officer in respect of the applicant. 17. We also find that the appellant in written submission dated 17.12.2021 has made contradictory submissions wherein it has been stated that the sale of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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