TaxTMI 
TaxTMI 
2021 (1) TMI 368
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....s submitted that they want to sell factory land to Mr. B for Rs. 1 crore. Mr. B showing acceptance to the sale agreement, gives advance money amounting to Rs. 20 lakhs which is 20% of the total sale amount. Now for some reasons Mr. B could not complete the transaction upon which Fastrack forfeits amount of Rs. 20 lakhs. 3. Accordingly, an applicant sought advance ruling on the following question : 1. Whether the amount forfeited by Fastrack will attract GST? 2. Who will be considered as Service Receiver and Service Provider? 3. When sale of land is not treated as supply as per Schedule III of GST Act, 2017, whether forfeiture of advance pertaining to sale of land will be treated as supply and accordingly attrac....
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....ity of Advance Ruling. We members of the Advance Ruling have requested to submit the copy of agreement held between applicant and Mr. B (customer). Findings and Discussion 7. We have considered the submissions made by the Applicant in their application for advance ruling as well as the submissions made by authorized signatory, during the personal hearing proceedings on 09-07-2020 before this authority. We also considered the issue involved, on which advance ruling is sought by the applicant, relevant facts & the applicant's interpretation of law. At the outset, we would like to state that the provisions of both the CGST Act and the GGST Act are the same except for certain provisions. Therefore, unless a mention is specifically made to....
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.... that Mr. B i.e. customer has agreed that in case he fails to give full payment as per the dates mentioned in the contract, the amount paid to the applicant would be forfeited by him. Now, it is clearly seen that aforesaid transaction/ activity of forfeiture nowhere involves sale of land. Applicant has received money not on account of sale of land but on account of non fulfillment of conditions as stipulated in the agreement by the prospective customer. Hence the said income of Rs. 20 lacs of the applicant is not due to sale of factory land but it is due to breach of condition of contract by Mr. B. It can be termed as a consideration to the applicant for "refraining or tolerating or doing an act" of Mr. B to not complete the transaction, wh....
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....he provider to carry out obligation specified in the contract. In case obligation/condition of the contract is not fulfilled by the recipient, then such act is squarely covered under clause 5(e) of Schedule-II. Therefore, this activity constitutes supply in terms of Section 7(1) of CGST Act, 2017 and accordingly is taxable. 14. As per Section 7(1) of the CGST Act, 2017, activities referred to in Schedule II are covered under the scope of supply of goods and service. Clause 5(e) to Schedule II to CGST Act 2017, declares that 'agreeing to the obligation to refrain from an act, or to tolerate an act or a situation, or to do an act' shall be treated as supply of service. The amount, which was received from Mr. B and forfeited by the ....