The Goa Authority of Advance Ruling (AAR) held that the GST is not payable on Sale of Plots.
The applicant, M/s. Shantilal Real Estate Services is a real estate developer carrying on the business of construction of residential apartments, shops and development of plots. The applicant has acquired by sale deeds certain parcels of Land at Dabolim & Chicalim in Mormugao, Goa and is currently the Owner of the Land and the applicant is currently undertaking certain plotting schemes on these parcels of lands.
The applicant has sought the advance ruling on the issue of whether sale of plots is a supply.
The coram of Pradnyasheel Jumle and Sarita S.Gadgil held that As per entry 5 of Schedule III of SGST Act, sale of land and, subject to clause(b) of paragraph 5 of Schedule II, Sale of building, is the activity or transaction which shall be treated neither as a supply of goods nor a supply of services. Here it will be important to note that the sale of the building has conditions for the qualification to be covered in clause (b)of paragraph 5 of Schedule II. However, for sale of land, there is no such condition. Thus, land is excluded in entirety and in all circumstances whereas building is includable within the scope of supply only upon meeting certain specific criteria.
“In the instant case, the entry 5(b) of Schedule II, cannot be applied as these roads, poles or drainages are not for sale to probable buyers of the plot. Neither their ownership nor their exclusive possession shall be passed on to the probable buyers of plots, rather these are intended to be eventually vested with local authorities. The principal transaction is the sale of land and these amenities are a natural part of the sale of the plot of land and these do not, in any way, change the nature of the land or of the transaction or activity being that of sale of land. Further, the sale is taking place from the owner of the plot of land to the prospective buyer of the subdivided plot and it is the ownership that is passing from the current owner of the plot of land to the buyer who will thereby become the owner of the subdivided plot only,” the AAR noted.
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