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TMI Blog2023 (10) TMI 787X X X X Extracts X X X X X X X X Extracts X X X X ..... . It is clarified that sale of such developed land is also sale of land and is covered by Sr. No. 5 of Schedule III of the Central Goods and Services Tax Act, 2017 and accordingly does not attract GST - the value of Land is not taxable either sold as undeveloped land or selling it after the land is developed. Whether development of plots service provided to the land owners is taxable under GST and if so under which Notification and under which entry? - HELD THAT:- The supply of works contract service to customers as well as land owners, who have transferred the development rights to the applicant, is taxable at the rate of 9% CGST 9% SGST as sub entry xii of entry at serial no. 3 with SAC 9954 of the notification 11/2017. Whether transfer of development rights by the land owner in consideration of land development services received is taxable or not under the provisions of the GST Acts? If taxable, whether the applicant is liable to pay GST under RCM basis on the development rights received from the land owners or whether the land owner is only liable to pay GST on such transfer of development rights. What is the applicable Notification and entry in the Notification? ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under any provisions of the CGST/TGST Act 2017. The application is, therefore, admitted after examining it and the records called for and after hearing the applicant as per section 98(2) of TGST Act 2017. 4. BRIEF FACTS OF THE CASE: 4.1 The applicant, Vaishnaoi Infratech and Developers Private Limited, is a company registered under The Companies Act, 1956 and is a registered taxpayer (hereinafter referred to as Applicant) engaged in the business of real estate development. 4.2 It is submitted that, the applicant is engaged in the business of development of plots by purchasing the land from land owners or/and taking the land from other land owners by entering into development agreement. Applicant has owned 10 acres of land at Mamidipally Village near Shamshabad Airport, Hyderabad and in addition to that, they have taken another 12 acres of land located besides their land from other land owners by entering the joint development agreement. 4.3 Based on the above facts, applicant requests Advance Ruling on following points, i. Whether sale of developed plots by applicant to various customers after development is taxable under the GST Acts or not. ii. Whether ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hearing held on 24.05.2023. The authorized representatives reiterated their averments in the application. Further, the Authorised Representative/Applicant M/s. Vaishnaoi Infratech And Developers Private Limited, reiterated that their case /Similar Case is not pending in any proceedings in the applicant s case under any of the provision of the Act and have not already decided in any proceedings in the applicant s case under any of the provisions of the Act. 7. DISCUSSION FINDINGS: a. The applicant in the annexure 1 to form GST ARA-01 has raised five questions at Para 3 of the statement of relevant facts the same are clarified as follows: Question 1 : Whether sale of developed plots by applicant to various customers after development is taxable under the GST Acts or not? Clarification : The applicant is engaged in the business of development and Sale of plots. These plots are developed on the land purchased by them or the land for which they have entered into a development agreement with the land owner. The activity of sale of land is covered as item (5) of the Schedule III to the CGST Act. The Circular No. 177/09/2022 dt: 03.08.2022 issued by Governm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 11/2017. d. Question 3: Whether transfer of development rights by the land owner in consideration of land development services received is taxable or not under the provisions of the GST Acts? If taxable, whether the applicant is liable to pay GST under RCM basis on the development rights received from the land owners or whether the land owner is only liable to pay GST on such transfer of development rights. What is the applicable Notification and entry in the Notification? Clarification : Notification 12/2017 is amended vide notification 4/2019 dt: 29.03.2019 to inserted Sl.No. 41A in the exemption for the purpose of exempting Transfer Of Development Rights for construction of residential apartments . This is an exemption given to a specific category of taxable persons i.e., developers of residential apartments only. It is a well settled law that different exemptions may be granted to different classes of persons. The Supreme Court in a catena of case law has held that legislature has wide powers of classification in case of taxation statutes. These judgments include Spencer s Hotels (P) Ltd V State of West Bengal (1991) 2 SCC 154, S Rice Mills V State of AP AI ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m input tax credit of the same while discharging the liability to pay tax on development services provided by him. e. Question 4: If transfer of development rights and development of plot service are liable for GST, how to arrive at the value of supply of such services for payment of GST. How much value of land has to deducted for levying tax? Clarification : Where the value of works contract is separately specified w.r.t development undertaken on land by way of altering the immovable property, such amount shall be the value of supply exigible to tax as determined under Sec 15 of the CGST Act. However if the value of the works contract is not separately specified then Rule 30 of the CGST Rules read with Sec 15 of the CGST Act shall be applied for arriving at value of supply of such services. f. Question 5: If Transfer of development rights are liable for GST, can developer claim ITC of the same while discharging the liability to pay tax on development services provided, if such rights are received from the registered land owners? Clarification : Yes. Please see response to the question 3 above. g. Question 6: If tax is payable on TDRs on R ..... X X X X Extracts X X X X X X X X Extracts X X X X
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