2023-VIL-196-AAR
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SGST Advance Ruling Authority

GST – Telangana AAR - Sale of developed plots - Transfer of development rights – applicant is engaged in development of plots by purchasing the land from landowners or the land for which they have entered into a development agreement with the landowner – Whether sale of developed plots after development is taxable under GST – HELD - 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 also states that land may be sold either as it is or after some development and sale of such developed land is also sale of land covered by Sr. No. 5 of Schedule III of the CGST Act – accordingly, sale of land is not taxable either sold as undeveloped land or selling it after the land is developed - Section 2(119) of the CGST Act, 2017 - Whether development of plots’ service provided to the land owners is taxable under GST – HELD – applicant is engaged in supply of service of works contracts - 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 18% GST as sub entry (xii) of entry at serial no.3 with SAC 9954 of the notification 11/2017-CT(Rate) - Whether transfer of development rights by the land owner in consideration of land development services received is taxable under the provisions of the GST Act – HELD – Transfer of Development Rights by the landowner to the applicant is taxable under the GST Act at the hands of the recipient-promoter, i.e. the applicant under Reverse charge basis - The applicable rate of tax is 18% GST as residuary entry as mentioned in circular no.164/20/2021 dt: 06.10.2021 at Para no. 9.3.2. The applicant can claim input tax credit of the same while discharging the liability to pay tax on development services - Value of supply of Works Contract service pertaining to development of land – HELD - 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 - Time of supply of tax payable on TDRs on RCM basis and on development service – HELD - Time of supply Transfer of Development Rights which are recognized as service under notification no. 13/2017 as amended by notification no. 5/2018, is determined under Sec 13 (3) (b) of the CGST Act read with Sec 31 (3) (f) or (g). Thus time of supply is the date immediately following 60 days from the date of issue of invoice or voucher or any other document in lieu thereof by the supplier - Development Services are given in continuity over a period of time, therefore they are “Continuous Supply of Services” hence the time of supply of development services is determined by Sec 13 read with Sec 31 (5). Therefore, the time of supply will be due date of payment by the recipient or when due date is not ascertainable then the actual date on which payment is received and when such payment is linked to the completion of an event then the time of supply will be date of completion of that event.
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