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of <h1>Liability for GST & Service Tax under Joint Development Agreement: Authority's Ruling</h1> The Authority ruled that the applicant is liable to pay GST on building construction under the Joint Development Agreement as per Notification No. ... Levy of GST - value of building constructed and handed over to the land owner in terms of the Joint Development Agreement - value of GST to be paid since there is no monetary consideration involved - Liability of service tax up to 30.06.2017. Held that:- In the instant case the applicant, a registered person, is supplying the construction service of building / civil structure to supplier of the development rights (the land owner) against consideration in the form of transfer of development rights. N/N. 4/2018-Central Tax (Rate) dated 25.01.2018, at para (b), stipulates that the supplier of construction service, to the supplier of development rights, is liable to pay GST for the service provided to the land owner in terms of the Joint Development Agreement - The applicant needs to pay tax towards the construction service provided to the land owner, on the value to be determined in terms of para 2 of the N/N. 11/2017-Central Tax (Rate) dated 28.06.2017. Liability to pay service tax up to 30.06.2017 - Section 142 (11) of the CGST/ KGST Act 2017 - Held that:- It is clearly evident from Section that the service tax is liable to be paid, which is leviable under the Finance Act' 1994, on the services provided up to Also the GST is liable to be paid under the CGST Act'2017 /KGST Act'2017, on the services provided after 01.07.2017 - the Applicant has to pay service tax / GST proportionate to the services provided before / after respectively. Ruling:- The applicant is liable to pay GST on the value of building constructed and handed over to the land owner in terms of the Joint Development Agreement. The value on which the applicant is liable to pay GST is to be determined in terms of para 2 of Notification No. 11/2017-Central Tax (Rate) dated 28.06.2017. The Applicant is liable to pay service tax / GST proportionate to the services provided before / after 30.06.2017 respectively. Issues:1. Liability to pay GST on building construction under Joint Development Agreement2. Determination of GST value in absence of monetary consideration3. Liability to pay service tax pre-GST and GST post-GSTAnalysis:Issue 1: Liability to pay GST on building construction under Joint Development AgreementThe applicant sought clarification on the GST liability for constructing and handing over a building to the landowner under a Joint Development Agreement. The Authority considered the applicant's submissions and relevant provisions. Notification No. 4/2018-Central Tax (Rate) dated 25.01.2018 specifies that a registered person supplying construction services against transfer of development rights is liable to pay GST. The applicant, being a registered person, falls under this category and is obligated to pay GST on the construction service provided to the landowner.Issue 2: Determination of GST value in absence of monetary considerationThe applicant raised a query regarding the determination of GST value when no monetary consideration is involved. The Authority referred to Notification No. 11/2017-Central Tax (Rate) dated 28.06.2017, which outlines the valuation method for services involving property transfer. As per the notification, the value of the supply shall be the total amount charged less the value of the land, with the land value deemed as one third of the total amount. This method provides clarity on determining the GST value in such scenarios.Issue 3: Liability to pay service tax pre-GST and GST post-GSTThe applicant inquired about the liability to pay service tax pre-GST implementation and GST post-GST regime. The Authority analyzed Section 142(11) of the CGST/KGST Act 2017, which mandates the payment of service tax under the Finance Act 1994 for services provided pre-GST and GST under the CGST Act 2017/KGST Act 2017 for services post-GST. Therefore, the ruling states that the applicant is liable to pay service tax/GST proportionate to the services provided before/after 30.06.2017, respectively.In conclusion, the Authority ruled that the applicant is liable to pay GST on the building construction under the Joint Development Agreement, the GST value is to be determined as per the specified notification, and the applicant is responsible for paying service tax/GST based on the timeline of service provision.
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