GST Applicability

[Ethirajan Parthasarathy]

Land aggregator is entrusted with the work of creating a large land Bank.

His scope of work is to pool together different (adjustment) land owners who will agree to sell the land to the aggregator or his nominee.

He does this on behalf of a corporate who are interested in a acquiring large area for constructing their godown/factory etc.

The aggregator's work involves conversion of land use, laying of approach road, removal of trees & structures, leveling of land etc. The land is sold to the company directly by the land owners. The company will pay the “X” amount to land owner and “Y” amount to land aggregator.

My question is whether the Land aggregator is liable to GST, If yes, whether on “Y” amount or total of X + Y. Can this be classified as “Composite Supply” of which principal supply is service in nature and hence the total of X+Y suffers GST @ 18%

[Punit Agarwal]

In my opinion:

Whether the Land value will be included in the Value of Supply totally depends upon the contract.

If the contract is only for arranging land owner to sell the land and make the land suitable for construction then the Value of land will not be included in Supply value. Amount to be shown separately for each services will help excluding the value of land from the supply value.

However, if the contract says that the aggregator to arrange all necessary amenities including land to make the land suitable for construction then the value will definitely be included.

AI Summary

GST applicability hinges on contract allocation: include land value in supply only if the contract bundles land with services. GST liability depends on contract terms: if the aggregator only arranges sales and provides preparatory services while landowners sell land directly, the land value may be excluded from the aggregator's supply by showing amounts separately. If the aggregator's contract effectively supplies or arranges the land or amenities as part of the service, the land value must be included in the value of supply. Classification as a composite supply with principal supply of service depends on whether the land is bundled into the service obligation.