2018 (12) TMI 535 - AAR - GST

Landowner liable for GST on premises distribution under joint development agreement

In Re: Patrick Bernardinz D’Sa

The ruling determined that the landowner, as a supplier of taxable services through a joint development agreement with a builder, is liable to pay GST on ... Levy of GST - landowner - The builder offered to develop and promote a multistoried residential apartment cum commercial building in the property - premises allotted to him, which he intends to distribute among his family members - Held that:- The applicant, being the person Who has supplied development rights to a developer in respect of his land, is liable to registration and payment of tax - Section 22 of the CGST Act 2017 tells about the persons liable for registration and stipulates that Every supplier, who makes a taxable supply of goods or services or both, shall be liable to be registered, if his aggregate turnover crosses the threshold limit prescribed in the Act. The applicant has not furnished any information with regard to transfer of possession of the constructed flats / commercial area or allotment order of the same, in the instant application and hence the authority presumes that the possession of the constructed flats / commercial area has not been handed over to the Applicant, as on date - the Applicant is supplier of a taxable service by way of transfer of undivided share of land and hence is liable to register himself and discharge the tax accordingly. The applicant being the land owner is liable to pay GST on premises allotted to him, which he intends to distribute among his family members. Issues:1. Liability of the landowner to pay GST on premises allotted for distribution among family members.Analysis:The applicant, a landowner, entered into a joint development agreement with a builder for a residential/commercial building. The key issue was whether the landowner is liable to pay GST on the premises allotted to him for distribution among family members. The applicant sought an advance ruling on this matter.During the personal hearing, the applicant explained that he contributed only his land and, in return, received a share of 50% of the total flats constructed and 50% of the commercial construction. The construction was completed in January 2018.The Authority for Advance Rulings considered the submissions made by the applicant and the relevant provisions of the CGST Act. The applicant was registered with GSTN for filing the application, indicating liability for registration. The applicant's agreement with the builder for the development of his land made him a supplier of taxable services.Notification No. 4/2018-Central Tax (Rate) dated 25.01.2018 was examined, which states that persons supplying development rights to a developer against consideration in the form of construction services are liable to be registered. The applicant, as a supplier of development rights, was found liable for registration and tax payment.The ruling emphasized that the applicant, as a registered person under the CGST Act, was liable to pay GST on the premises allotted to him for distribution among family members. The ruling was based on the applicant's role as a supplier of a taxable service through the transfer of an undivided share of land.Considering the above analysis, the ruling concluded that the applicant, as the landowner, is indeed liable to pay GST on the premises allotted to him for distribution among family members. The ruling clarified the applicant's tax liability in this scenario.In summary, the judgment addressed the liability of the landowner to pay GST on premises allotted for distribution among family members, based on the applicant's role as a supplier of taxable services through a joint development agreement with a builder.