Levy of GST— In the instant case, the appellant is has submitted that he is a farmer having a vacant land outside the municipal area of town for which he has got necessary approvals from the Plan Passing Authority(the Jilla Panchayat) as per which the seller of land was required to develop the primary amenities like sewerage and drainage line, water line, electricity line, land leveling for road, pipe line facilities for drinking water, street lights, telephone line etc.
He would then sell the individual plots to different buyers without any construction on the same but by providing the primary amenities as mentioned above, which are mandatory requirements of the approved Plan Passing Authority (the Jilla Panchayat).
The appellant had filed an application for Advance Ruling on the above matter with the Gujarat Advance Ruling Authority asking the following question seeking Advance Ruling:
“Whether GST is applicable on sale of plot of land for which, as per the requirement of approval by the respective authority (the Jilla Panchayat), primary amenities such as, Drainage line, water line, electricity line, land leveling etc. are to be provided by the applicant?
The Gujarat Authority for Advance Ruling has ruled that GST is applicable on sale of plot of land for which, as per approval of the respective authority (the Jilla Panchayat), primary amenities such as, Drainage line, water line, electricity line, land leveling etc. are to be provided by the applicant.
In the present case, the appellant is the owner of the land, who develops the land/gets the land developed with an infrastructure such as Drainage line, Water line, Electricity line, Land leveling etc. as per the requirement of the approved Plan Passing Authority (Jilla Panchayat) and thereafter, sells such developed land as plots. The appellant’s sales price includes the cost of the land as well as the cost of common amenities as mentioned above, on a proportionate basis. Schedule II of the CGST Act, 2017 pertains to activities or transactions to be treated as ‘supply of goods or supply of services’.
As per clause 5(b) of the Schedule-II of the CGST Act, 2017, ‘construction of civil structure or a part thereof, intended for sale to a buyer’ is a ‘Supply of service’ and, hence, is liable to the Goods and Services Tax(GST). Thus, the activity of sale of developed plots would be covered under the clause ‘‘construction of civil structure or a part thereof, intended for sale to a buyer’.
Held that— The transaction/activity of the appellant is not covered under Entry No.5 of Schedule-III of the CGST Act, 2017 as it is a sale of developed plots and is a supply of taxable service falling under the head ‘Construction services’ appearing at Sr.No.3 of Notification No.11/2017-Central Tax(Rate) dated 28.06.2017(as amended from time to time) issued under the CGST Act, 2017 and is liable to GST at 18%.