Whether the activity of purchase of land and selling the said land by converting in to integrated residential sub plots of varying sizes under name of “Bliss Homes” with basic facilities prescribed is liable to GST or not ?

PJ/Case Law/2020-2021/3560

M/s. Satyaja Infratech (GUJ/GAAR/R/2019/21dated 20.09.2019)

Brief Facts: -TheApplicant is engaged in purchase of land and selling the said land by converting in to integrated residential sub plots of varying sizes under name of “Bliss Homes” with following basic facilities like CompoundWall, Main entrygate, swimming pool, botanical garden, and tennis court etc.
The applicant is providing basic necessary facilities for members so they will not face hurdles whenever they built their home on their plots. Out of the above mentioned facilities some facilities like plantation, drainage system, internal road and bore well facilities are must for plot selling for residential purpose as per Government regulation.

Issues: -

Whether the activity of purchase of land and selling the said land by converting in to integrated residential sub plots of varying sizes under name of “Bliss Homes” with basic facilities prescribed is liable to GST or not ?
If the same is liable for GST then under which category of supply it will fall and what will be the rate of GST on it?

Appellant Contention: -Appellant contended that it sales only developed land as plots.
As per Applicant interpretation under CGST Act, it will be considered as sale of land and the same is not supply of goods/services as stated in Schedule-III para 5. Hence, the sale of land is not taxable under GSTlaw.
“5. Sale of land and, subject to clause (b) of paragraph 5 of Schedule II, sale of building”
Clause (b) of paragraph 5 of Schedule II says as follows-
(b) Construction of a complex, building, civil structure or a part thereof, including a complex or building intended for sale to a buyer, wholly or partly, except where the entire consideration has been received after issuance of completion certificate, where required, by the competent authority or after its first occupation, whichever isearlier.
Explanation.—for the purposes of this clause
…………………………………………………..
2)the expression "construction" includes additions, alterations, replacements or remodelling of any existing civil structure;……

Reasoning of Judgment:-As per thesale deed, it is clear that the taxpayer is a land developer and selling developed plots in varied sizes as per the demand of the customer.

In view of the foregoing, the ruling is as under–

The activity of purchase of land and selling the said land by converting in to integrated residential sub plots of varying sizes under the name of “Bliss Homes” with the basic facility is liable toGST.
The activities of applicant will fall under the clause (b) of paragraph 5 of Schedule –II of Gujarat Goods and Services Tax Act and Central Goods and Services Tax Act. Hence the activities of the applicant attract 9% CGST and 9% SGST as per serial no 3 of Notification No. 11/2017 Central Tax (Rate) dated 28- 06-2017.

Comment:-Based on the rulings like Nforce Infrastructure Pvt. Ltd. [20 G.S.T.L. 184] and Maarq Spaces Pvt. Ltd, it can be said that where merely land development activities are undertaken, the same are likely to be taxed under GST. However, where development of land is naturally bundled with sale of land and sale is the principal supply in the bundled transaction, the transaction may be construed as composite supply not liable to GST. However, the given ruling is a bit confusing and the applicant has possession of the land and therefore, not limited to land developer.

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PJ/Case Law/2020-2021/3560

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