Sale of developed plot is different from sale of land and covered under supply of construction service: AAAR

Case Review: Appellate Authority for Advance Ruling Gujarat Dipesh Anilkumar Naik, In re - [2022] 135 taxmann.com 99 (AAAR-GUJARAT)

Judiciary and Counsel Details

• • Milind Torawane and Seema Arora, Member
  • Avinash Poddar for the Appellant.

Facts of the Case

The appellant was a farmer having a vacant land outside the municipal area of town. He has got necessary approvals from the Plan Passing Authority(the Jilla Panchayat) as per which the seller of land was required to develop the primary amenities like sewerage and drainage line, water line, electricity line, land leveling for road, pipe line facilities for drinking water, street lights, telephone line etc. He would then sell the individual plots to different buyers without any construction. He filed an application for advance ruling to determine whether GST would be applicable in sale of developed land.

AAR Held

The Authority for Advance Ruling held that GST shall be applicable on sale of plot of land for which, as per approval of the respective authority (the Jilla Panchayat), primary amenities such as, Drainage line, water line, electricity line, land leveling etc. are to be provided. It filed appeal against the order.

The Appellate Authority for Advance Ruling observed that the appellant didn’t produce any evidence to prove that price charged for individual plots sold to buyers would not include price of common facilities which the individual buyers shall be entitled to enjoy or use. The sale of developed plot would not be equivalent to sale of land but it would be a different transaction. The sale of developed land would be covered under the scope of “construction of civil structure or a part thereof, intended for sale to a buyer’. Therefore, sale of such plots would amount to supply of service and GST would be payable at 18%.