Sale of developed plots without receiving any advance from customers for undertaking development activities is not supply

Case Details: Authority for Advance Rulings, Kerala Dharmic Living (P.) Ltd., In re - [2021] 131 taxmann.com 164 (AAR - KERALA)

Judiciary and Counsel Details

• • Sivaprasad S. and Senil A.K. Rajan, Member
  • M.P. Tony, CA for the Applicant

Facts of the Case

The applicant was engaged in promotion of gated community villas for prospective villa buyers. It would buy land and divide same into plots and sell to villa buyers. It filed an application for advance ruling to determine liability of GST if it would buy land and after development, it would sell the developed plots to various customers. It submitted that the activity would be treated as sale of land and not to be treated as supply of goods or services as per Schedule III of the CGST Act.

AAR Held

The Authority for Advance Ruling observed that the applicant would not be receiving any advance from their customers for undertaking development activities in the plot and the plot would be sold after development. Hence the transaction would be in respect of sale of developed plots/land and to be covered by Paragraph 5 of Schedule III of the CGST Act which stipulates that sale of land shall be treated neither as a supply of goods nor a supply of service. Therefore, the transaction would not be liable to GST.