Plot sales with bundled charges: basic infrastructure exempt, common amenities taxable under Section 7(1)

AAR Karnataka ruled on GST applicability for plot sales with bundled charges. Plot area consideration falls under Schedule III entry 5, exempt from GST as neither goods nor services supply. Basic infrastructure development charges are integral to plot value and not separately taxable as they become part of plot consideration. Common amenities and facilities charges constitute taxable services as buyers receive only access rights without title transfer, forming separate supply under Section 7(1) CGST Act. Corpus fund treatment depends on whether future expenses are known at collection time.

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Issues Involved:
1. Liability to charge GST on sale of plot, basic infrastructure development charges, and other common amenities and facilities charges.
2. Applicability of GST if booking and/or receipt of consideration and/or agreement for sale is entered prior to the release certificate.
3. Applicability of GST if the sale price is a consolidated price.

Summary:

Issue 1: Liability to charge GST on sale of plot, basic infrastructure development charges, and other common amenities and facilities charges.

The applicant is not liable to charge GST on the sale of plots and basic infrastructure development charges if the booking, receipt of consideration, agreement for sale, and sale deed execution occur after the release certificate. This is because the sale of land is neither a supply of goods nor services as per Entry No.5 of Schedule III of the CGST/KGST Act, 2017. However, the applicant is liable to charge GST on other common amenities and facilities charges as these are considered services and do not form part of the consideration for the land.

Issue 2: Applicability of GST if booking and/or receipt of consideration and/or agreement for sale is entered prior to the release certificate.

The applicant is not liable to charge GST on the sale of plots and basic infrastructure development charges if the booking, receipt of consideration, and/or agreement for sale are entered into before the release certificate, and the sale deed is executed after the release certificate. The rationale is similar to Issue 1, where the sale of land is not considered a supply of goods or services. However, GST is applicable on other common amenities and facilities charges even if the agreement is entered before the release certificate and the sale deed is executed after the release certificate.

Issue 3: Applicability of GST if the sale price is a consolidated price.

If the sale price is a consolidated price, then the charges proportionate to common amenities and facilities are applicable to GST. This is because the provision of access rights to common amenities and facilities is considered a separate supply under Section 7(1) of the CGST Act, 2017, and is thus liable to GST.

Ruling:

1. a) No GST on the sale of plots if all transactions occur after the release certificate.
b) No GST on Basic Infrastructure Development charges if all transactions occur after the release certificate.
c) GST is applicable on other common amenities and facilities charges if all transactions occur after the release certificate.

2. a) No GST on the sale of plots if booking and/or receipt of consideration and/or agreement for sale occur before the release certificate and the sale deed is executed after the release certificate.
b) No GST on Basic Infrastructure Development charges if booking and/or receipt of consideration and/or agreement for sale occur before the release certificate and the sale deed is executed after the release certificate.
c) GST is applicable on other common amenities and facilities charges if booking and/or receipt of consideration and/or agreement for sale occur before the release certificate and the sale deed is executed after the release certificate.

3. If the sale price is consolidated, GST is applicable on the proportionate charges for common amenities and facilities.

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