TaxTMI 
TaxTMI 
TaxTMI 
2025 (11) TMI 1627
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....ence to the corresponding provisions of the KSGST Act, Rules and the Notifications issued thereunder. 3. The facts of the issue 3.1 The applicant is engaged in the business of developing apartments and villas on self-owned land as well as through joint ventures with third-party landowners. They also undertake turnkey projects and provide works contract services. On 08.04.2022, the applicant entered into a Joint Development Agreement (JDA) with a landowner, Shri S. Madhava Menon (hereinafter referred to as the landowner), for the construction of a residential apartment complex. Prior to this, the landowner had executed a JDA with M/s Powerlink Builders Private Limited on 17.11.2014, which was subsequently cancelled by mutual agreement on 07.04.2022. M/s Powerlink Builders did not collect any advance from prospective apartment buyers during the period of their agreement. However, they had prepared architectural drawings for an apartment complex, obtained approvals from the Thiruvananthapuram Municipal Corporation under Building Permit No. E9/BA/434/14 (which was later renewed on 03.08.2022), and secured clearances from the Fire & Rescue Department, Pollution Control Board, and ....
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....was granted opportunity for personal hearing on 20.06.2025. Shri. M.Thajudeen, Chartered Accountant represented the applicant for personal hearing, and reiterated the contentions made in the application. 6. Discussion and Findings. 6.1. The application is admissible and is fit to pronounce advance ruling as it falls under the ambit of the section as per sub section 2(g) of section 97. 6.2 The issue was examined in detail. The facts are as follows: the landowner, holding freehold rights over 17.36 Ares of land as described in 'Schedule A' of the agreement, approached the applicant to develop the said land by constructing a multi-storied residential building complex, for which requisite approvals had already been obtained. Based on mutual consent, the landowner and the applicant executed a Joint Development Agreement. As per the agreement, both parties concurred that the total apparent consideration for the land described in Schedule A and the built-up area described in Schedule B is Rs. 3,87,72,500/ -. The landowner agreed to sell a portion of the land to the applicant or their nominees, and in return, the landowner shall receive 11 apartments, with a built-up area of appro....
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....he DEVELOPER for the purposes of implementation of the project as envisaged in this Agreement, and the DEVELOPER shall thereafter be authorized to commence construction of the 'BUILDING COMPLEX' on the said fand in accordance with the plans approved and/or sanctioned by the Competent Authority with or without acceptable modifications and take such steps as may be necessary or expedient and incidental to carry out the development of the said land at their own costs and expenses. For the said purpose, the DEVELOPER shall be entitled to appoint Architects, Engineers, Surveyors, Contractors, Agents and other personnel and shall be entitled to take all such steps as may be necessary or incidental for such development and construction work at their own costs and expenses." 6.7 From the above clause, it is evident that the agreement contemplates a transfer of development rights by the landowner to the applicant/developer for the purpose of project execution. 6.8 As per the terms of the agreement between the landowner and the applicant, the landowner agrees to sell a portion of the land (as specified in Schedule A of the agreement) to the developer or its nominees. In exchange, the l....
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....evelopment rights (TDR) and, in return, has supplied constructed flats (along with certain amenities) to the landowner free of cost. This clearly establishes that the transaction falls within the definition of "supply" under the CGST Act, 2017. 7.1.3 As per entry 5(b) of Schedule II of CGST Act 2017, construction of complex, building, civil structure or part thereof, including a complex or building intended for sale to a buyer, wholly or partly, except where the entire consideration has been received after issuance of completion certificate, where required, by the competent authority or after its first occupation whichever is earlier. Thus, if some conditions are satisfied, construction of a complex, building, civil structure or part thereof, including a complex or building intended for sale to a buyer takes on the character of supply. From the above, it is clarified that the activity of the applicant being developer/promoter is related to supply under CGST Acts. 7.1.4 In the present case, the Developer has entered into an Agreement to provide construction services in accordance with the terms set out in Clause 5(b) of Schedule II. In return the land owner has agreed to trans....
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....bes various scenarios under which the developer-promoter or land promoter is liable to pay GST. 8.1.3 Serial No. 3 of Notification No. 11/2017-CT(R) (as amended by Notification No. 03/2019-CT(R)) prescribes the following for construction of residential apartments: Construction of residential apartments, other than affordable residential apartments, in a Residential Real Estate Project (RREP), intended for sale to a buyer (including the landowner under a Joint Development Agreement), wholly or partly-except where the entire consideration has been received after issuance of the completion certificate or first occupation, whichever is earlier-the applicable GST rate is 5% (2.5% CGST + 2.5% SGST). No Input Tax Credit (ITC) shall be available to the supplier of services. 8.1.4 Vide Notification No.03/2019 CT(R) dated 29.03.2019, taxpayers were given one-time option to opt for old tax regime in case of ongoing projects, i.e. projects which commenced on or before 31.03.2019. If this option was not exercised by the taxpayer, then such projects would automatically fall under the new GST rate structure prescribed in the Notification, which is: • 1% GST without Inp....
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....fordable residential apartment project." • For an apartment project to be considered "other than-affordable residential apartment", both of the following conditions must be met: 1. Carpet area exceeding 60 sq. metres (metropolitan cities) or 90 sq. metres (non-metropolitan cities), and 2. Gross amount charged for the apartment exceeding Rs. 45 lakhs. (to get the value) • While the project clearly meets the first criterion (area > 90 sq. metres), there is no mention in the AAR application or its enclosures regarding the gross amount charged by the builder or promoter for each apartment. • Therefore, based on available data, the project satisfies one of the two required conditions to be classified as a "project other than affordable residential apartment". The second condition relating to the amount charged remains unverified due to lack of disclosure in the documents submitted. 8.1.7 Since the applicant entered into a Joint Development Agreement with Shri S. Madhava Menon on 08.04.2022 for the construction of a residential apartment complex, and the project does not qualify as an affordable residential apartment project, th....
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....dment of Notification No. 11/2017 Central Tax (Rate) dated 28.06.2017. 9.1.5 As per Serial No. 41A, Heading 9972 of Notification No. 04/2019-Central Tax (Rate) dated 29.03.2019, read with Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017, any service by way of transfer of development rights (TDR) or Floor Space Index (FSI), including additional FSI, on or after 1st April 2019 for the construction of residential apartments by a promoter in a project intended for sale to buyers (whether wholly or partly), is exempt from GST, subject to the condition that the entire consideration is not received after issuance of the completion certificate or first occupation of the project, whichever is earlier. 9.1.6 Where the exemption applies, the promoter is liable to pay GST on a reverse charge basis, on such proportion of the value of TDR or FSI (including additional FSI), or both, as is attributable to the residential apartments that remain un-booked as on the date of issuance of the completion certificate or first occupation, whichever is earlier. 9.1.7 The GST liability is to be computed using the following formula: GST Payable = GST payable on TDR/FSI had there ....
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.... rights or FSI (including additional FSI) related to construction of residential apartments; • . On the supply of construction services by the promoter where the consideration is received in the form of development rights or FSI (including additional FSI); In all such cases, the liability to pay central tax shall arise on the date of issuance of the completion certificate for the project by the competent authority, or on the date of first occupation, whichever is earlier. 10. Based on the analysis of the agreement and the relevant provisions of the GST law as outlined above, the following conclusions can be drawn: 10.1 As per Sl. No. 41A - Heading 9972 of Notification No. 04/2019-Central Tax (Rate) dated 29.03.2019, read with Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017, as well as Notification Nos. 05/2019 and 06/2019, both dated 29.03.2019, the service by way of transfer of development rights (TDR) or Floor Space Index (FSI) (including additional FSI), received on or after 1st April 2019 for the construction of residential apartments by a promoter intended for sale (wholly or partly), is exempt from GST, provided that the entire consideration....