Levy of GST— In the instant case, the applicant is a registered tax payer and a land owner and has entered into a development agreement with M/s. PHL and entrusted the land to M/s. PHL by way of a joint development agreement in the year 2016.

M/s. PHL will hand over 27% of the developed property to the applicant. The applicant is desirous of clarification regarding liability of transfer of development rights and time of supply under GST.

Questions raised for advacnce ruling are as follows—

1. Whether transfer of land or transfer of 'development rights' to the developer by the landowner is to be considered as receipt of consideration by the developer as per Notification No.04/2018-CT (Rate) dt.25.01.2018 and as per the clarifications issued after introduction of GST and prior thereto towards the construction of flats in the residential complex to be taken up by the developer for the landowner?

2. Whether the liability to pay GST or service tax as applicable arises on the developer immediately on receipt of development rights or immediately on conveyance of the flats to be constructed by way of an allotment letter?

The submissions made by the applicant indicate that they as “land owner-promoter” have entered into a joint development agreement (JDA) with the “developer-promoter” on area sharing basis for Residential Real Estate Project (RREP) in Jan’ 2016. The GST structure on real estate services has been greatly altered with effect from 01.04.2019 through Notification No. 03/2019 and Notification No. 04/2019 dated: 29.03.2019.

Held that—Yes, Transfer of development rights by the landowner to the developer is consideration received by such developer for supply of construction service.

The liable to pay GST by the developer-promoter shall arise at the time of transfers possession or right in the constructed complex or constructed flats and not at the time of receipt of development rights.