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TMI Blog2025 (4) TMI 549X X X X Extracts X X X X X X X X Extracts X X X X ..... filed by the Petitioner and sanction the same without any further delay along with interest; and c) Grant such other order or direction as deemed fit by this Hon'ble Court in the facts and circumstances of the case." 2. The brief facts giving rise to the present petition are as under: The petitioner is a private limited company engaged in the business and development of real estate projects having various commercial and residential projects in and around Mangalore. On 17.12.2022, the petitioner filed an application / refund claim before the respondents seeking refund of GST amount of Rs. 14,32,64,614/-, pursuant to which, the 3rd respondent issued a Show Cause Notice dated 24.01.2023 proposing to reject the refund claim of the petitioner, who filed a detailed reply countering all the allegations made in the Show Cause Notice. In pursuance of the same, the 3rd respondent passed the impugned order dated 15.02.2023 rejecting the refund claim of the petitioner. Aggrieved by impugned order at Annexure - A dated 15.02.2023 rejecting the refund claim of the petitioner and for consequential directions to the respondents to sanction and pay / grant refund along with interest in favour ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... been received after issuance of completion certificate, where required, by the competent authority or after its first occupation, whichever is earlier, is classified as a service. The activity or the transaction covered under Paragraph 5 (b) is the activity of construction of complex, building, civil structure or a part thereof, including a complex or building intended for sale to a buyer. It was submitted that for the said Paragraph 5 (b) and Section 7 of the Act to get attracted for a transaction, the basic requirement is that there should be a service provider and services receiver and the service provider should undertake construction activity for the service recipient. It was also submitted that there should be performance of a contract for construction of building by the service provider/supplier to the service receiver/recipient and when the same is absent in a case, then the said Paragraph 5 (b) has no applicability. (iii) It was submitted that that no construction can be said to have been undertaken if the agreement for construction is entered after the construction and no construction activity is undertaken by the builder/service provider/supplier after the execution of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n of India Vs. VKC Footsteps India Pvt. Ltd - 2021 (52) GSTL 513 (SC) in which, while analyzing the jurisprudential vision and the economic rationale for GST legislation, the Apex Court held that taxes on alcohol for human consumption and stamp duty paid transactions are outside the ambit of GST and falls completely under the domain of the States under the Constitutional framework. (vii) It was submitted that if the agreement with the buyer is entered after the construction and no element of construction is undertaken after the execution of the agreement, then there is no supply of goods or services between the parties, even if completion certificate is not received for the said building. It was submitted that even for "supply" under Section 7 of the GST Act, it includes supply of goods or services made or agreed to be made for a consideration and thus factum of supply would be initiated only once the agreement is entered into between the supplier and the recipient and such agreement should be for consideration. (viii) Learned Senior Counsel submitted that the transaction contemplated under Paragraph 5 (b) of Schedule II r/w Section 7 of the Act, would be applicable only to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s and support the impugned order and submit that there is no merit in the petition and that the same is liable to be dismissed. 7. I have given my anxious consideration to the rival contentions and perused the material on record. 8. A perusal of the material on record will indicate that M/s. Lotus Shopping Centres Private Limited was constructing a mall named Lotus Shopping Mall, Kukshekara, Mangaluru. During the pendency of the construction of the mall, there were insolvency proceedings initiated against the said company. On 18.06.2019, the NCLT appointed Respondent No. 4 as the Liquidator of the said company and issued directions to him to liquidate the assets of the company in terms of the provisions contained in the Insolvency and Bankruptcy Code, 2016, pursuant to which, Respondent No. 4 issued an invitation for expression of interest for acquisition of the asset i.e., Lotus Shopping Mall on a standalone basis. On the basis of this invitation, the petitioner submitted the expression of interest and participated in the e-auction on 16.05.2022. In the e-auction, the petitioner emerged to be a successful bidder. Subsequently, a letter of intent dated 24.05.2022 was issued by Re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ame deserves to be quashed and consequent directions are to be issued to the respondents to sanction/grant and pay refund in favour of the petitioner together with applicable interest for the following reasons: (i) Before adverting to the present case, it would be relevant to state that while examining the issue regarding levy of GST on solatium received by the land loser towards acquisition of lands, this Court in the case of Smt. Asha R Vs. Assistant Commissioner and another - W.P.No.2552/2024 and connected matters - Dated 10.09.2024 held as under: "Section 7 of the CGST Act, reads as under: Scope of supply. 7. (1) For the purposes of this Act, the expression "supply" includes-- (a) all forms of supply of goods or services or both such as sale, transfer, barter, exchange, licence, 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; [and] (c) the activities specified in Schedule I, made or agreed to be made without a consideration;[****] (d) [*****]. [(1A) where certain activities or transact ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or furtherance of business. (viii) Clause (d) of sub-section (1) of Section 7 states that the activities referred to in Schedule II shall be treated as "supply of goods" or "supply of services". This clause was omitted vide CGST Amendment Act, 2018 w.e.f. 01.07.2017. (ix) Simultaneously, Section 7 (1A) was inserted vide CGST Amendment Act, 2018 w.e.f. 1.07.2017. It postulates that only when activities or transactions constitute a supply in accordance with Section 7 (1), then they shall be treated as supply of goods or services as referred to in Schedule II. The effect of this would be that Schedule II will be merely a classification schedule and will not automatically lead to being considered a supply of goods or services or both. (x) Entry No. 5(e) of Schedule II treats agreeing to the obligation to refrain from an act or to tolerate an act or a situation or to do an act as supply of service. (xi) Section 7 (2)(a) postulates that notwithstanding anything contained in Section 7 (1), activities or transactions specified in Schedule III shall neither be treated as supply of goods nor supply of services. (xii) Entry 5 of the III Schedule treats sale of land and subject to cl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... holesale supplier, is further passed on to the retailer. * The goods procured from the wholesale supplier becomes "input goods" for the retail seller. The retail seller would make value additions thereon and make an "outward supply" of the same to the final consumer. In doing the same, GST is levied on the retail seller, but the incidence of GST, which was earlier on the retail seller, is further passed on to the final consumer. * The supply chain having been terminated, the final consumer will not be able to pass the incidence of tax any further and thus bears the final burden of tax. * GST is therefore a destination-based tax on consumption of goods and services. It is levied at all stages right from manufacture up to final consumption with "credit" of taxes paid at previous stages of supply chain available as set-off. In a nutshell, only value addition will be taxed, and burden of tax is to be borne by the final consumer. 12. In the case of All India Federation of Tax Practitioners v. Union of India [2007] 9 VST 126 (SC) ; (2007) 7 SCC 527, the apex court held as under (page 153 in 9 VST) : "6. At this stage, we may refer to the concept of 'Value Added Tax' (VA ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as may be prescribed, without payment of integrated tax and claim refund of unutilised input-tax credit ; or (b) he may supply goods or services or both, subject to such conditions, safeguards and procedure as may be prescribed, on payment of integrated tax and claim refund of such tax paid on goods or services or both supplied, in accordance with the provisions of section 54 of the Central Goods and Services tax Act or the rules made there under." Section 54 (3) of the CGST Act, 2017 reads as under : 54. Refund of tax.-(1) Any person claiming refund of any tax. .. (2). .. (3) Subject to the provisions of sub-section (10), a registered person may claim refund of any unutilised input- tax credit at the end of any tax period: Provided that no refund of unutilised input-tax credit shall be allowed in cases other than- (i) zero rated supplies made without payment of tax ; (ii) where the credit has accumulated on account of rate of tax on inputs being higher than the rate of tax on output supplies (other than nil rated or fully exempt supplies), except supplies of goods or services or both as may be notified by the Government on the recommendations of the Council : Pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n completed during the relevant period ;" (xiv) It would be relevant to note that the levy of GST is on goods or services or both and the same is defined in the CGST/KGST Act under Section 2 (52) and Section 2 (102) as under: 2. Definitions.- In this Act, unless the context otherwise requires, (52) "goods'' means every kind of movable property other than money and securities but includes actionable claim, growing crops, grass and things attached to or forming part of the land which are agreed to be severed before supply or under a contract of supply; It is quite clear from the above that since goods is defined as movable property, it obviously does not include immovable property. It is also seen that though the definition of services is wide enough to cover anything other than goods, money and securities, it will have to be read in its context and cannot be given such a wide meaning as to include immovable property. (102) "services" means anything other than goods, money and securities but includes activities relating to the use of money or its conversion by cash or by any other mode, from one form, currency or denomination, to another form, currency or denomination for whi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rliament to go further and to do more by, for instance, expanding the coverage of the legislation (to liquor, stamp duty and petroleum) or to bring in uniformity of rates. This would constitute an impermissible judicial encroachment on legislative power. Likewise, when the first proviso to Section 54 (3) has provided for a restriction on the entitlement to refund it would be impermissible for the Court to redraw the boundaries or to expand the provision for refund beyond what the legislature has provided. If the legislature has intended that the equivalence between goods and services should be progressively realized and that for the purpose of determining whether refund should be provided, a restriction of the kind which has been imposed in clause (ii) of the proviso should be enacted, it lies within the realm of policy." (xvi) As held by the Apex Court in the aforesaid judgment, though stamp duty transactions are on the instrument, given the fact that it is a major source of revenue, the GST Council deliberated on subsuming the same under GST so that real estate transactions of sale, acquisition, etc., could also be taxed under the GST regime; however, since the same could not b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... subjected to GST. 2.4 Thus, supply of immovable property (land and buildings) has been kept outside the purview of GST. It is felt, that this would distort the GST particularly when there is no constitutional or legal impediment to levy GST on supply of land and building to GST due to the following reasons: - (i) Stamp duty, which is levied under Article 268, is with reference to documents and is collected by the Centre on documents listed in Entry 91 of the Union List while by the States on documents listed in Entry 63 of the State List. Therefore, the argument that because legal conveyance of title of land and buildings attracts stamp duty, they cannot be subjected to GST is facile because stamp duty is levied on documents while GST would be levied on the supply of land and buildings, whether as goods or services ("aspect theory" upheld by the Supreme Court in a host of judgements). Renting/leasing are subjected to service tax presently. Documents pertaining to such renting/leasing are subjected to stamp duty. (ii) Entry 49 of the State List reads thus: - "Taxes on lands and buildings" It is felt that this entry is not an impediment to levy of GST on supply of lan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the discussion in the forgoing paras, it is imperative that supply of land and building is subjected to GST. However, certain categories of such supplies may be exempted in public interest. These are listed below: - (I) Supply of vacant land for the purposes of agriculture. (II) Supply of land for construction of, - (a) a civil structure or any other original works pertaining to a scheme under Jawaharlal Nehru National Urban Renewal Mission or Rajiv Awas Yojana; (b) a civil structure or any other original works pertaining to the 'In -situ rehabilitation of existing slum dwellers using land as a resource through private participation' under the Housing for All (Urban) Mission/Pradhan Mantri Awas Yojana, only for existing slum dwellers; (c) a civil structure or any other original works pertaining to the Beneficiary-led individual house construction/enhancement under the Housing for All (Urban) Mission/Pradhan Mantri Awas Yojana; (d) a structure meant for funeral, burial or cremation of deceased; (e) a single residential unit, on land admeasuring not more than 100 square metres; (f) low-cost houses up to carpet area of 60 square meters per house in a housing project a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... immovable property transactions was not agreed upon and at the GST council meeting held on 22nd and 23rd of December 2016, which is broadly set out hereunder: Agenda Item 2A - CST Treatment of Land and Building (Real Estate) 10. The Secretary to the Council introduced this agenda and explained that in Section2(49), the definition of 'goods' included only movable property. He pointed out that under the Constitution, States had power to charge stamp duty on transactions in land and building and that the rate of this duty ranged between 5% and 6%. He emphasized that under this agenda item, no change in the scheme of stamp duty was proposed as entry 63 of the State List of Schedule 7 of the Constitution empowering States to charge stamp duty remained intact. He pointed out that today, there existed a dichotomy in rates of Service Tax on property depending upon the fact whether it was bought as an under construction property (which attracted Service Tax) or as a ready-built property after obtaining completion certificate (which did not attract Service Tax). He explained that this created a cost arbitrage of about 6% in favour of buying ready-built property. He stated that, in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gs, tiles, etc. The Hon'ble Deputy Chief Minister of Gujarat stated that levying GST on Land and Building would put additional duty burden on the small house-owners. The Hon'ble Minister from Telangana observed that after demonetization, the real estate business had suffered and introduction of GST on it would further worsen the situation. The Hon'ble Minister from Bihar suggested to form a small committee to further examine this proposal. The Commissioner (GST) CBEC stated that if tax was imposed on re-sale of property, say, a hotel, this would help in claiming ITC and lowering the cost of business for the buyer of the hotel. He also stated that charging GST on re-sale of property would also capture the value addition over a period of time. The Hon'ble Deputy Chief Minister of Gujarat pointed out that there was stamp duty on re-sale. The Hon'ble Minister from West Bengal stated that he supported the views expressed by the Hon'ble Deputy Chief Minister of Gujarat and the Hon'ble Ministers from Uttar Pradesh and Telangana. He observed that all fittings and raw materials used in buildings would largely be tax- paid and this was presently an additional ta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o of the GST implementation. The Hon'ble Deputy Chief Minister of Delhi suggested that instead of closing the issue at this stage, it could be further examined by a group of officers or Ministers constituted for this purpose. However, taking into view the general sense of the House, the Council agreed that this issue could be revisited after a year or so of the implementation of GST. 11. In view of the discussion above for agenda item 2A, the Council decided not to introduce GST on land and building at this stage and agreed that this issue could be revisited after a year or so of the implementation of GST. (xix) Having regard to the judgment of the Apex Court in VKC Footsteps case supra and the discussion of the GST Council, it can be concluded that transactions such as, acquisition and transfer of immovable property were not sought to be subsumed under the GST regime. (xx) At this stage, it would be relevant to understand that immovable property in its traditional sense always meant the tangible property but as there were developments and changes in the practices of society, it came to be recognized as a bundle of rights in immovable property. As rightly contended by t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd to money to be paid out in the purchase of land. Land in its widest signification would therefore include not only the surface of the ground, cultivable, uncultivable or waste lands but also everything on or under it. In Jagannath Singh v. State of U.P., AIR (1960) SC 1563 p. 1568, this Court held that the word "land" is wide enough to include all lands whether agricultural or non-agricultural land. In State of U.P. v. Sarju Devi, [1978] 1 SCF 18, this court held that the definition of the land in Section 3 (14) shows that it is not necessary for the land to fall within its purview that it must be actually under cultivation or occupied for purposes connected with agriculture. The requirement is amply satisfied even if the land is either held or occupied for the purposes connected with agriculture. The word "held" only means possession of legal title and does not require actual connected occupation. In State of Gujarat v. Kamla Ben Jivan Bhai, [1979] Supp. 2 SCC 440, this Court held that actual cultivation is not necessary to constitute an estate and the right to collect grass is a right annexed to land which was held to be an estate and abolition of the right to pay annual amoun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... enactments which are replete with such provisions. The twentieth amendment of the Constitution is an instance where the de facto doctrine was applied by the constituent body to remove any suspicion or taint of illegality or invalidity that may be argued to have attached itself to judgments, decrees, sentences or orders passed or made by certain District Judges appointed before 1966, otherwise than in accordance with the provision of Article 233 and Article 235 of the Constitution. The twentieth amendment was the consequence of the decision of the Supreme Court in Chandra Mohan v. State of U.P. [AIR 1966 SC 1987 : (1967) 1 SCR 77 : (1967) 1 LLJ 412] that appointments of District Judges made otherwise than in accordance with the provisions of Articles 233 and 235 were invalid. As such appointments had been made in many States, in order to pre-empt mushroom litigation springing up all over the country, it was apparently thought desirable that the precise position should be stated by the constituent body by amending the Constitution. Shri Phadke, learned Counsel for the appellants, argued that the constituent body could not be imputed with the intention of making superfluous amendments ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... passed or made by these District Judges and a number of writ petitions and other cases have already been filed challenging their validity. The functioning of the District Courts in Uttar Pradesh has practically come to a standstill. It is, therefore, urgently necessary to validate the judgments, decrees, orders, and sentences passed or made heretofore by all such District Judges in those States " (xxiv) In the case of Chotanagpur Banking Association Ltd vs. Govt. of India - 1957 SCC Online Patna 81, the Patna High Court held as under: 46. The use of the word "absolutely" in Sections 16 and 17 of the Land Acquisition Act, and the absence of this word in R. 75A(3) will not make any difference, in that, the word "absolutely" only makes the intention of the Legislature more emphatic, and nothing more. It has been used only as abundans cautela as an abundant caution, in that Abundans Cautela Non Nocet, that is, excess of caution does no harm. The words "the property shall vest in Government free from any mortgage, pledge, lien, or other similar encumbrance" alone are clear manifestations of the intention of the Legislature that the vesting of the property is not for any limited purp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me Court has, on the basis of the decision in Gannon Dunkerley's case, held various other transactions which resemble, in substance, transactions by way of sales, to be not liable to sales tax. As a result of these decisions, a transaction, in order to be subject to the levy of sales tax under entry 92A of the Union List or Entry 54 of the State List, should have the following ingredients, namely, parties competent to contract, mutual assent and transfer of property in goods from one of the parties to the contract to the other party thereto for a price. Therefore, it was held that sale of immovable property, even if it had cement, steel and other goods incorporated therein, would not suffer tax. (iv) The 46th amendment to the Constitution was made w.e.f. 03.02.1983 with an intention to put to rest all these controversies by inserting a comprehensive definition of the expression "tax on sale or purchase of goods" vide clause (29A) of Article 366 of Constitution. The relevant portion of the said clause (29A) reads as follows: 'a tax on the transfer of property in goods (whether as goods or in some other form) involved in the execution of a works contract;' (v) After this in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Co. v State of Rajasthan (1993) 88 STC 204 (SC). In this judgment, the Apex Court held that if the legal fiction introduced by Article 366(29A)(b) were to be carried to its logical end, it would follow that even in a single and indivisible works contract there would be a deemed sale of the goods which are involved in the execution of a works contract. Such a deemed sale would have all the incidents of a sale of goods involved in the execution of a works contract where the contract is divisible into one for sale of goods and the other for supply of labour and services. It was held that it could be concluded that "the tax on transfer of property in goods (whether as goods or in some other form) involved in the execution of a works contract falling within the ambit of Article 366(29A)(b) is leviable on the goods involved in the execution of a works contract and the value of the goods which are involved in the execution of works contract would constitute the measure for imposition of the tax". (vii) The fallout of these decisions was that the States were competent to tax the goods component in the works contract or construction contracts but could not tax the labour component as was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on in the contract that the customer is obliged to undertake the work of civil construction and the bulk of the material used in construction belongs to the manufacturer, is not correct, as the subsequent discussion would show; and second, the Notification dated 17-5-2010 issued by the Government of Haryana, Excise and Taxation Department, whereby certain rules of the Haryana Value Added Tax Rules, 2003 have been amended and a table has been annexed providing for "Percentages for Works Contract and Job Works" under the heading "Labour, service and other like charges as percentage of total value of the contract" specifying 15% for fabrication and installation of elevators (lifts) and escalators, is self- contradictory, for once it is treated as a composite contract invoking labour and service, as a natural corollary, it would be works contract and not a contract for sale. To elaborate, the submission that the element of labour and service can be deducted from the total contract value without treating the composite contract as a works contract is absolutely fallacious. In fact, it is an innovative subterfuge. We are inclined to think so as it would be frustrating the constitutional p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (105) would refer only to service contracts simpliciter and not to composite works contracts. This is clear from the very language of Section 65(105) which defines "taxable service" as "any service provided". All the services referred to in the said sub-clauses are service contracts simpliciter without any other element in them, such as for example, a service contract which is a commissioning and installation, or erection, commissioning and installation contract. Further, under Section 67, as has been pointed out above, the value of a taxable service is the gross amount charged by the service provider for such service rendered by him. This would unmistakably show that what is referred to in the charging provision is the taxation of service contracts simpliciter and not composite works contracts, such as are contained on the facts of the present cases. It will also be noticed that no attempt to remove the non-service elements from the composite works contracts has been made by any of the aforesaid Sections by deducting from the gross value of the works contract the value of property in goods transferred in the execution of a works contract." (ix) The fallout of this decision was t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y law for the time being in force and in case of non-requirement of such certificate from such authority, from any of the following, namely:- (i) an architect registered with the Council of Architecture constituted under the Architects Act, 1972; (20 of 1972.) or (ii) a chartered engineer registered with the Institution of Engineers (India); or (iii) a licensed surveyor of the respective local body of the city or town or village or development or planning authority; (2) the expression "construction" includes additions, alterations, replacements or remodelling of any existing civil structure; 6. (a) works contract as defined in clause (119) of Section 2; Section 2(119) "works contract" means a contract for building, construction, fabrication, completion, erection, installation, fitting out, improvement, modification, repair, maintenance, renovation, alteration or commissioning 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 Entry 6(a) to Schedule II 6. Composite supply The following composite supplies shall be treated as supply of services namely: (a) Works co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... beit incomplete, but as a building per se. The former would be amenable to the GST regime while the latter would be amenable to the stamp duty regime, a distinction clearly borne out by the GST Council Minutes and the decision of the Apex Court in VKC Footsteps case supra. (xiv) The aforesaid discussion makes it clear that both entry 5 (b) and entry 6(a) of Schedule II would tax the services and goods components under the respective headings as the levy of GST is on supply of goods and services; therefore, there should be a contract for the purposes of construction in order to attract the levy of GST under either of the above entries; further, if the contract should fall under entry 5 (b), payments towards the consideration should have been made before completion; however, if the contract is one for sale of land or sale of building without there being any construction services involved or works contract services being involved, the question of attracting GST will not apply and consequently, Entry 5 of Schedule III will have to be read, construed and understood so as to ensure that the tax legislation does not fall foul of the Constitution as the stamp duties on sale of immovable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ract services, but the same will neither apply nor get attracted to the subject sale transaction when the partially completed building is sold, as such, without any service element or goods element being contemplated in the said agreement or sale deed. (xvi) As stated supra, the Apex Court in the case of Larsen & Toubro Ltd. v. State of Karnataka - (2014) 1 SCC 708 held that the activity of construction undertaken by the developer/builder would be works contract only from the stage the developer enters in to a contract with the flat purchaser and that it is only the value additions made to the goods transferred after the agreement is entered into with the purchaser can only be made chargeable to tax by the Government by holding as under: "115. It may, however, be clarified that activity of construction undertaken by the developer would be works contract only from the stage the developer enters into a contract with the flat purchaser. The value addition made to the goods transferred after the agreement is entered into with the flat purchaser can only be made chargeable to tax by the State Government. (xvii) It is clear from the above, that in the present facts, the liquidator ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ance of a contract for construction of building by the service provider/supplier to the service receiver/recipient. When the same is absent in a case, then the said Paragraph has no applicability. It is therefore clear that no construction services can be said to have been undertaken if the agreement for sale is entered into for the first time after the building emerges and no construction activity is undertaken by the builder/service provider/supplier after the execution of the agreement. (xx) As stated earlier, in Larsen & Toubro's case supra, the Apex Court held that the activity of construction undertaken by the developer/builder would be works contract only from the stage the developer enters in to a contract with the flat purchaser and that the value additions made to the goods transferred after the agreement is entered into with the purchaser can only be made chargeable to tax by the Government; it was clarified that activity of construction undertaken by the developer would be works contract only from the stage the developer enters into a contract with the flat purchaser. The value addition made to the goods transferred after the agreement is entered into with the flat pu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ade or agreed to be made for a consideration; the factum of supply would be initiated only once the agreement is entered into between the supplier and the recipient and such agreement should be for consideration; it is therefore evident that the transaction contemplated under Paragraph 5 (b) of Schedule II read with Section 7 of the Act, would be applicable only to the extent of supply of construction service provided to a service recipient; significantly, Entry 5 (b) of Schedule II is a service contract simpliciter and not a composite works contract. 12. The aforesaid discussion makes it clear that when the constructed immovable property whether fully constructed or partially constructed is sold, as such, without providing any construction service subsequently, the same would not attract Paragraph 5 (b) of Schedule II and Section 7 of the Act, since there is no supply of goods or services or both in the said transaction and consequently, the question of whether the building has received completion certification or not would be irrelevant in such cases. The fact that Paragraph 5 (b) of Schedule II and Section 7, contemplates only construction service provided by a builder/promoter ..... X X X X Extracts X X X X X X X X Extracts X X X X
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