Appellate Authority Confirms GST on TDR/FSI Sales

The appellate authority upheld the ruling of the Maharashtra Advance Ruling Authority, confirming that the sale of Transferable Development Rights (TDR)/Floor Space Index (FSI) is subject to GST under Heading 9972 at the rate of 18% (9% CGST + 9% SGST). The authority found no merit in the appellant's arguments, determining that TDR/FSI is a taxable supply of service under the CGST Act, 2017.

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Issues Involved:
1. Maintainability of the Advance Ruling Order.
2. Taxability of the sale of Transferable Development Rights (TDR)/Floor Space Index (FSI) under GST.
3. Classification and applicable rate of GST on TDR/FSI.
4. Definition and scope of "land" and "service" under the GST Act.
5. Applicability of various notifications and legal precedents.

Detailed Analysis:

1. Maintainability of the Advance Ruling Order:
The appellant contended that the Advance Ruling order is not maintainable since Advance Ruling can only be given on a transaction proposed to be undertaken and not on one already undertaken. However, the appellate authority rejected this argument, citing the legal principle "Quod Approbo Non Reprobo" which means one cannot both approbate and reprobate. The appellant had willingly approached the Advance Ruling Authority and participated in the proceedings, making it inappropriate to challenge the maintainability at the appellate stage.

2. Taxability of the Sale of TDR/FSI under GST:
The appellant argued that the sale of TDR/FSI is akin to the sale of land/immovable property and thus should not be subject to GST, as per Clause 5 of Schedule III of the CGST Act, 2017. However, the appellate authority held that TDR/FSI is not "land" but a "benefit arising out of land" and thus does not fall under the exemption provided for the sale of land. The authority referenced the ITAT ruling in the case of Income-tax Officer v. Shri Prem Rattan Gupta, which clarified that TDR is an immovable property but not land itself.

3. Classification and Applicable Rate of GST on TDR/FSI:
The appellate authority upheld the classification of TDR/FSI under Heading 9972, attracting GST at the rate of 18% (9% CGST + 9% SGST) as per Notification No. 11/2017-C.T. (Rate), dated 28.06.2017. The authority also referenced various notifications, including Notification No. 4/2018-C.T. (Rate) and Notification No. 13/2017-C.T. (Rate), to support the taxability of TDR/FSI under GST.

4. Definition and Scope of "Land" and "Service" under the GST Act:
The appellant referred to definitions of "land" under other statutes, arguing that TDR/FSI should be considered land and thus exempt from GST. However, the appellate authority emphasized that the CGST Act does not define "land" and that Schedule III should be interpreted strictly. The authority also clarified that the definition of "service" under the CGST Act is broad and includes anything other than goods, money, and securities, thereby encompassing TDR/FSI.

5. Applicability of Various Notifications and Legal Precedents:
The appellant cited various court judgments and notifications to argue against the taxability of TDR/FSI. However, the appellate authority found these references inapplicable or insufficient to alter the ruling. The authority noted that the explanatory notes to the notifications serve as guiding tools but do not override the notifications themselves. The authority also dismissed the appellant's argument that TDR is akin to money, reiterating that TDR does not fall under the definition of money as per the CGST Act.

Conclusion:
The appellate authority upheld the ruling of the Maharashtra Advance Ruling Authority, confirming that the sale of TDR/FSI is subject to GST under Heading 9972 at the rate of 18% (9% CGST + 9% SGST). The authority found no merit in the appellant's arguments and maintained that TDR/FSI is a taxable supply of service under the CGST Act, 2017.

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