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‘Construction of a Complex intended for Sale to a Buyer’ is covered under ‘Construction Services’, GST applicable: AAR [Read Order]

Gujarat AAR - construction - Taxscan

The Gujarat Authority of Advance Ruling (AAR) ruled that the activity of the sale of developed plots would be covered under the clause ‘construction of a complex intended for sale to a buyer’, so this activity is covered under ‘construction services’ and GST is payable on the sale of developed plots in terms of CGST Act or Rules and relevant Notification issued time to time.

The applicant, Dipesh Anilkumar Naik has submitted that he is having vacant land outside the municipal area of the town on which he has some proposed business activity. The applicant is having all the necessary approvals for the proposed project from the Plan Passing Authority (JillaPanchayat).

The applicant has further submitted that as per the Plan Passing Authority, the seller of land is required to develop the primary amenities like Sewerage and drainage line, Waterline, Electricity line, Land leveling for road, Pipeline facilities for drinking water, Street lights, Telephone line, etc.

The applicant further submitted that they will sell the individual plots to different buyers without any construction on the same but by providing the primary amenities as mentioned above, which are mandatory requirements of the JillaPanchayat.

The applicant has sought an advance ruling in respect of the issue whether GST is applicable on sale of a plot of land for which, as per the requirement of approved by the respective authority (JillaPanchayat), Primary amenities such as, Drainage line, Waterline, Electricity line, Land leveling, etc. are to be provided by the applicant.

The Authority consisting of members Sanjay Saxena and Mohit Agarwal while affirmatively answering on the issue ruled that the activity of the sale of developed plots would be covered under the clause ‘construction of a complex intended for sale to a buyer’, so this activity is covered under ‘construction services’ and GST is payable on the sale of developed plots in terms of CGST Act or Rules and relevant Notification issued time to time.

“Schedule II of the CGST Act, 2017 pertains to activities or transactions to be treated as “Supply of goods or supply of services”. As per clause 5(b) of the Schedule-II of the CGST Act, 2017, construction of a complex, building, civil structure or a part thereof, including a complex or building intended for sale to a buyer is a “Supply of service” and, hence, is liable to the Goods and Services Tax (GST),” AAR added.

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