No GST applicable for consideration received on Sales of Land Plot: AAAR upheld the Decision of AAR [Read Order]

The Karnataka Appellate Authority for Advance Ruling (AAAR) has recently upheld that no Goods and Service Tax (GST) applicable for consideration received on sales of land plots.

Applicant, Rabiya Kanum who owns three acre land decided to make the land for residential usage by forming a small plot of land and selling the plot to individuals.

Whereas for determining the GST applicability for the consideration received the sale of the land plot applicant approached Authority for Advance Ruling Karnataka(AAR) as per section 97 of the Central Goods and Service Good Tax (CGST), 2017.

After considering the application of the applicant the AAR ruled that GST was not applicable considering the sale of the land plot.

Against this ruling the jurisdictional CGST officer filed an appeal before the AAAR.

N sundaram assistant commissioner/Appellant  appearing for the department submits that respondent developed the land with required infrastructure thereafter sell the developed land.So the sale price includes the cost of the land as well as the cost of common amenities. Therefore the activities of the respondent are covered under construction service and GST would be levied.

Respondent /applicant contended that the land will have to be developed in order to obtain plan sanction. Also without developing the land with basic amenities authorities would not give permission to sell the property. Hence the sale of the developed plot was not taxable in terms of entry 5 schedule III of the CGST Act.

Further the sale price did not include the amenities provided to the land.

While considering the submissions of the both the parties the AAAR comprising the member of Ranjana Jha and Shikha c rejected the appeal of the appellant and  observed that,

Appellant aggrieved only with the respect of advances received by the respondent. In such cases the respondent was liable to pay tax.

The department has no grievances with the ruling that the sale of plots after completion of the development work and after receipt of the completion certificate do not attract GST in terms of the entry 5 to Schedule III of the CGST Act, 2017.

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