Land pooling not a supply under GST Act; construction activity by company for partners considered service

The pooling of land by way of amalgamation does not constitute a supply under the CGST/TGST Act, 2017. The construction activity undertaken by the Company with respect to the partners' share is considered a supply of service. The recovery of construction cost by the Company from the partners is the transaction value. The vesting of the constructed portion upon the partners does not independently constitute a supply.

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Issues Involved:
1. Whether the pooling of land by way of amalgamation constitutes a supply under the CGST/TGST Act, 2017.
2. Whether the construction activity undertaken by the Company with respect to the share belonging to the Partners would be treated as a Supply of Service under the CGST/TGST Act, 2017.
3. Whether the recovery of construction cost by the Company from the Partners would be the transaction value for the purpose of Section 15 of the CGST/TGST Act, 2017.
4. Whether the vesting of the constructed portion upon the Partners would independently constitute a supply besides the supply on account of recovery of construction cost by the Company.

Issue-wise Detailed Analysis:

1. Pooling of Land by Amalgamation as Supply:
The pooling of land by way of amalgamation of separate parcels (Land 1 and Land 2) does not constitute a supply under the CGST/TGST Act, 2017. The activity does not fall under any of the sub-clauses (1) to (3) of Section 7 of the CGST Act, 2017. Land is not considered 'goods' under Section 2(52) of the CGST Act, 2017, which only includes movable property. Therefore, the amalgamation of land parcels for constructing a multi-storied building does not qualify as a supply.

2. Construction Activity as Supply of Service:
The construction activity undertaken by the Company with respect to the share belonging to the Partners is treated as a Supply of Service under the CGST/TGST Act, 2017. According to clause 5(b) of Schedule II of the CGST Act, 2017, construction of a complex or building intended for sale, except where the entire consideration is received after the issuance of a completion certificate or after its first occupation, is considered a supply of service. Therefore, the construction activity by M/s Gowra Ventures Pvt. Ltd. is a supply of service.

3. Recovery of Construction Cost as Transaction Value:
The recovery of construction cost by the Company from the Partners is the transaction value for the purpose of Section 15 of the CGST/TGST Act, 2017. Since the Partners are also directors of M/s Gowra Ventures Pvt. Ltd., they are considered related persons under Section 15 of the CGST Act, 2017. The value of the construction service supplied by M/s Gowra Ventures Pvt. Ltd. to the Partners shall be 110% of the cost of provision of the said service, as per Rule 30 of the CGST Rules, 2017.

4. Vesting of Constructed Portion as Independent Supply:
The vesting of the constructed portion upon the Partners does not constitute an independent supply. The land and the superstructure have always remained the property of the respective parties as represented by their shares in the Project. No additional service or consideration has been received by owner1 for vesting the constructed portion to the Partners. Therefore, it cannot be treated as an independent supply.

Advance Ruling:
1. The pooling of land by way of amalgamation of separate parcels does not constitute a supply under the CGST/TGST Act, 2017.
2. The construction activity undertaken by M/s Gowra Ventures Pvt. Ltd. with respect to the share belonging to the Partners is a supply of service under the CGST/TGST Act, 2017.
3. The value of the construction service supplied by M/s Gowra Ventures Pvt. Ltd. to the Partners shall be 110% of the cost of provision of the said service.
4. The vesting of the constructed portion upon the Partners does not constitute an independent supply.

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