Benami Transactions Act

[Balakrishnan Ramalingam]

One 'A' is giving loan to a land owner 'B'. In turn 'B' executes a Power of Attorney to one 'C' who is an employee of 'A'. 'C' develops the land as plots, builds roads etc., with the finance from 'A'. 'C' starts selling the plots to various people in various dates. Technically the money goes to 'B' and returns back the same to 'A' towards loan he received from them.

My questions are:

1. Will this transaction fall under Binami Trans ACT?

2. The position of 'C' under GST. Is he liable to GST ? if so on which value?

[DR.MARIAPPAN GOVINDARAJAN]

It is not a benami transaction. GST is applicable on the basis of services rendered by the builder.

AI Summary

Benami transaction: arrangement not benami; GST liability arises on the builder's development services and consideration. A financier provides funds while an employee holds power of attorney, develops and sells plots with money flowing from purchasers to the landowner and back to the financier; this arrangement is not a Benami Transaction. Separately, GST applies to the developer/builder on the basis of services rendered in development and sale, with tax liability assessed on the consideration for those services.