TaxTMI 
TaxTMI 
GST on TDR
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....ST on TDR<br> Query (Issue) Started By: - Narayan Pujar Dated:- 14-11-2024 Last Reply Date:- 17-5-2025 Goods and Services Tax - GST<br>Got 13 Replies<br>GST<br>Hi, I have come across a transaction wherein the JDA has been entered in Pre-GST regime but the construction has been commenced and completed after 1-4-2019 [during new GST regime for real estate]. How will tax on the following be treated? 1. GST on development rights. 2. GST on construction services to landowners. 3. GST on sale of apartments to customers. Will all or any be covered in ST with no implication under GST as the agreement was entered in Pre-GST? Reply By Sadanand Bulbule: The Reply: Dear querist Refer the following judgement. The subject issue is well settled. ....
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.... 2024 (5) TMI 1254 - SC ORDER- PRAHITHA CONSTRUCTIONS PRIVATE LIMITED VERSUS UNION OF INDIA & ORS. Reply By Amit Agrawal: The Reply: As land development rights are already transferred in pre-gst regime (i.e. prior to 01.07.2017), there cannot be any GST imposed on landowner against land development rights so transferred by him. Here, I am presuming that JDA is duly registered prior to 01.07.2017 & there is no dispute about factual position (i.e. land development rights are already transferred in pre-gst regime). For above views, it is immaterial IMHO that actual construction was started & completed after 01.04.2019. These are ex facie views of mine and the same should not be construed as professional advic....
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....e / suggestion or recommendation. Reply By Amit Agrawal: The Reply: The ruling quoted in post at Sr. No. 1 above (i.e. 2024 (5) TMI 1254 - SC ORDER- PRAHITHA CONSTRUCTIONS PRIVATE LIMITED VERSUS UNION OF INDIA & ORS.) has no application in the given facts by the querist here. This is because in Prahitha Constructions Private Limited Versus Union of India - 2024 (2) TMI 902 - TELANGANA HIGH COURT, it is noted in Para 3.2 that JDA was executed on 28.12.2017 (i.e. under GST regime). These are ex facie views of mine and the same should not be construed as professional advice / suggestion or recommendation. Reply By Amit Agrawal: The Reply: And with regards to your second question (i.e. GST on construction servi....
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....ces to landowners), my views are as under: Builder has received entire consideration from landowner under service tax regime. And, builder had agreed to provide construction services to the landowner through JDA executed under pre-gst regime. Hence, builder was liable to pay service tax on his construction services to the landowner and not builder. Again, for above views, it is immaterial IMHO that actual construction was started & completed after 01.04.2019. In this regard, your attention is invited to Section 66B of the Finance Act, 1994 (32 of 1994) read with Section 142(11)(b) of the CGST Act, 2017. These are ex facie views of mine and the same should not be construed as professional advice / suggestion ....
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....or recommendation. Reply By Amit Agrawal: The Reply: And with regards to your third question (i.e. GST on sale of apartments to customers), my views are as under: IF customer has given consideration (at-least partly) to the builder before issuance of 'building completion certificate' and 'agreement to sale' between customer & builder is entered into under GST regime, then, GST will be payable against construction services provided by Builder to the customer. These are ex facie views of mine and the same should not be construed as professional advice / suggestion or recommendation. Reply By Sadanand Bulbule: The Reply: Dear all I have informed the querist to refer the Apex Court's judgement. I have ne....
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....ver said anything about its applicability or otherwise. Then why to create so much fuss on it? Does it not mislead the readers? The genius experts are free to express their "own views" and not to issue counter judgments. It's not in good taste. Reply By Amit Agrawal: The Reply: In my post at Sr. No. 4 above, please read relevant line in 2nd Para as follows: .............. .................. Hence, builder was liable to pay service tax on his construction services to the landowner and not GST. These are ex facie views of mine and the same should not be construed as professional advice / suggestion or recommendation. Reply By Amit Agrawal: The Reply: Dear Shri Sadanand Bulbule Ji, In your post at Sr. No. 1 above,....
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.... you have said that 'The subject issue is well settled' and quoted said SC ruling. As I hold different views of yours for 'subject issue' raised by the Querist, I have quoted differential factual aspect (which lead to my difference of opinion from you) which are quoted from very same underlying HC judgement (NOT counter judgement) which was challenged by the party before SC. This was done to explain my view point & reasons better to the Querist and other readers of this forum. I do not see anything done in bad taste here. Also, if one quotes counter judgements to justify his / her own views, I do not see any harm to anyone there. One can always counter such counter judgements too. I just focus on legal ....
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....issues under discussion. And I intend continuing doing do so even in future. Reply By Amit Agrawal: The Reply: And hence & with all due respect, I repeat the following views of mine with some additions for better clarity: The ruling quoted in post at Sr. No. 1 above (i.e. 2024 (5) TMI 1254 - SC ORDER- PRAHITHA CONSTRUCTIONS PRIVATE LIMITED VERSUS UNION OF INDIA & ORS.) has no application in the given facts by the querist here. This is because in Prahitha Constructions Private Limited Versus Union of India - 2024 (2) TMI 902 - TELANGANA HIGH COURT, it is noted in Para 3.2 that JDA was executed on 28.12.2017 (i.e. under GST regime). Said SC ruling has NOT dealt with the situation where the JDA was executed in ....
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....pre-gst regime. And hence, it cannot be said that said SC ruling has settled subject issue raised by the querist (where he has categorically stated that the JDA was executed in pre-gst regime & had asked for implications under GST in given situation). These are ex facie views of mine and the same should not be construed as professional advice / suggestion or recommendation. Reply By Sadanand Bulbule: The Reply: Dear all Plz refer Issue ID No.110308 on the subject under discussion. Further transfer of "Development Rights" being a "Construction Service" under Heading 9972 is taxable @18% as a supply of service under the GST Act. Reply By KALLESHAMURTHY MURTHY: The Reply: Dear Sir, 1. GST on development rights:- >I do agree....
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.... with Sri Amit Agrawal Sir. >TDR Agreement made in the pre-GST Period is exempted from GST. Please refer - FAQ (Part II) No. 7 issued by CBI&C vide circular F No. 354/32/2019-TRU dated 14-5-2019 for the following GST on TDR - GST on TDR @ 18% (9% CGST plus 9% SGST/UTGST) is payable on - (a) commercial apartments and (b) unbooked residential apartments as on the date of issue of completion certificate or first occupation of the project - FAQ (Part II) No. 7 issued by CBI&C vide circular F No. 354/32/2019-TRU dated 14-5-2019. The rate of tax is 18% subject to a tax amount which is limited to 1% or 5% of the value of the apartment depending upon whether the TDR/FSI is used for an affordable residential apartment or other than an affo....
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....rdable residential apartment. 2. GST on construction services to landowners:- >GST @ 18% on the construction portion of Land Owner Share at an agreed ratio. 3. GST on the sale of apartments to customers. > Effective Rate @12% inclusive of Land Cost at 1/3rd or 18% excluding land cost. Reply By Sadanand Bulbule: The Reply: 2025 (5) TMI 633 - PATNA HIGH COURT - SHASHI RANJAN CONSTRUCTIONS PRIVATE LIMITED VERSUS UNION OF INDIA, CENTRAL BOARD OF INDIRECT TAXES AND CUSTOMS, STATE OF BIHAR, ASST. COMMISSIONER OF STATE TAX, MUZAFFARPUR. Challenge to order and summary of order - challenge to N/N. 09/2023 dated 31.03.2023 as contained in Annexure-P8 and the N/N. 56 of 2023 dated 28.12.2003 - extension of time limit specified under sub-secti....
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....on (10) of Section 73 of the CGST Act for issuance of order under sub-section (9) of Section 73 of the GST Act for recovery of tax not paid or short paid or input tax credit wrongly availed or utilized upto 31st March, 2024 for the Financial Year 2018-19 - main contention of petitioner is that the impugned order has been passed without consideration of the provisions of the Act, the rules made thereunder and also notification fixing the liability only in respect of the development agreement on or after 01.04.2019 - violation of principles of natural justice - mistake of fact apparent on the record or not. HELD THAT:- The petitioner does not get any right on the said property until the completion of the project. After the project is complet....
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....ed and completion certificate is issued, the petitioner gets a right to sell the area of the property which is called "Developers Area". There are no substantial material to establish that with execution of the development agreement, the petitioner got ownership in the land. It is held that the transfer of development rights as it stands is amenable to GST and cannot be brought within the purview of sale of land subject to clause (b) of Paragraph 5 of Schedule II, sale of building (as per Entry 5 of Schedule-III of the GST Act). The petitioner has not controverted the submission of the State that vide notification no. 11/2017 dated 28.06.2017, construction of a complex, civil structure etc. intended for sale to a buyer was made exigible to....
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.... GST except where the entire consideration has been received after issuance of completion certificate or after its first occupancy, whichever is earlier. In this case, it has been specifically pleaded by the State-respondent that the consideration had been received by the petitioner in the form of transfer of development rights, which happened long before the issuance of completion certificate or first occupancy. This Court agrees that in this case, the petitioner cannot claim that it had received the consideration after the issuance of completion certificate or first occupancy. The State-respondents are correct in contending that the construction of a complex, civil structure etc. intended for sale to a buyer was made exigible to GST exce....
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....pt where the entire consideration has been received after issuance of completion certificate or after its first occupancy, whichever is earlier. There would be no ambiguity in the above-mentioned notifications. Conclusion - There is no ambiguity with regard to liability of the petitioner on account of 'GST' on 'RCM' basis on the constructions services rendered by him in lieu of the developments rights under the Development Agreement dated 27.11.2014. There are no reasons to entertain the present writ application - application dismissed. Reply By Sadanand Bulbule: The Reply: 2025 (3) TMI 1443 - APPELLATE AUTHORITY FOR ADVANCE RULING, TELANGANA - IN RE: M/S. MADDI SEETHA DEVI. Receipt of consideration by the developer as per N/N. 04....
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..../2018-CT (Rate) dt.25.01.2018 or not - transfer of land or transfer of 'development rights' to the developer by the landowner - Whether the liability to pay GST or service tax as applicable arises on the developer immediately on receipt of development rights or immediately on conveyance of the flats to be constructed by way of an allotment letter? Whether GST is applicable when consideration for the service was received prior to enactment of CGST Act, 2017 in the light of clause (b) of Section 142 (11) of GST Act, 2017? - HELD THAT:- The appellant is of opinion that since the JDA was entered on 01.01.2016 i.e., before introduction of GST, TDR attracts service tax for transfer of land by the appellant to the builder for the pur....
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....pose of construction (para 14.3 of their appeal). It is observed that Advance Ruling Authority or Appellate Authority are constituted under the CGST/SGST Act, 2017 to provide clarification on matters under GST Act and Rules made thereunder. Section 97 (2) of the Chapter XVII provides for spectrum of issues on which the advance ruling can be sought for under the Act. Neither the Advance Ruling Authority nor this Appellate Authority have any jurisdiction to decide on the taxability under Finance Act, 1994. Therefore, the attempt of the appellant to seek a ruling to the effect that, in the facts of this case, the supply of TDR attracted Service Tax cannot be countenanced. Whether GST is required to be paid when the developer has paid GST on t....
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....he entire value of construction complex including the cost incurred for construction of flats to the landowner appellant? - HELD THAT:- The appellant has raised a query which is not posed before the Advance Ruling Authority. In terms of Section 101 (1) of CGST Act, 2017, the Appellate Authority can, after giving the parties to the appeal or reference an opportunity of being heard, pass such order as it thinks fit, confirming or modifying the ruling appealed against or referred to. Further, it is not open to the appellant to introduce new grounds in an appeal when admittedly these grounds were not raised before the original authority. Hon'ble Supreme Court has in the case of Commissioner of Cust & C Ex, Goa vs Dempo Engineering Wor....
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....ks Ltd. [2015 (4) TMI 961 - SUPREME COURT], held that Tribunal cannot allow an appeal on new grounds when the same were neither raised in reply to the show cause notice nor were argued before the Adjudicating Authority - Thus, when a question is not raised before the Advance Ruling Authority, the Appellate Authority cannot entertain the same in appeal. Conclusion - i) The transfer of development rights is considered as receipt of consideration by the developer. ii) GST liability arises at the time of transfer of possession or rights in the constructed property, not at the time of receipt of development rights. The appeal is dismissed and the impugned ruling of Advance Ruling Authority is upheld. No.- AAAR. COM/12/2022, Order-in-Appe....
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....al No. AAAR/03/2025 Dated.- February 20, 2025<br> Discussion Forum - Knowledge Sharing ....