Subdividing land into smaller plots & adding amenities will not amount to GST supply when sold: AAR

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  • By Taxmann
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  • Last Updated on 5 April, 2022

GST Supply; Sale of plots of land;

Case Details: Authority for Advance Rulings, Goa Shantilal Real Estate Services, In re - [2022] 136 337 (AAR - GOA)

Judiciary and Counsel Details

    • Smt. Sarita S. Gadgil and Pradnyasheel Jumle, Member
    • Vinesh Pikale, AR for the Applicant.

Facts of the Case

The applicant was a real estate developer carrying on the business of construction of residential apartments, shops and development of plots. It acquired large parcel of land and land would be converted into smaller plots through some value addition work such as roads, poles or drainages. It filed an application for advance ruling to determine whether sale of plots would be treated as supply under GST.

AAR Held

The Authority for Advance Ruling observed that the applicant would convert land into smaller plots through some value addition work such as roads, poles or drainages. The amenities such as roads, poles, or drainages constructed by applicant on parcels of land would be available for use to every plot holder without any title to it. The plot owner or collectively all plot owners would not be in a position to sell these poles, roads or drainages. The principal transaction would be sale of land and these amenities would be a natural part of sale of plot of land and these would not in any way change nature of land or of transaction or activity being that sale of land. As per entry 5 of Schedule III of GST, 2017, sale of land is activity or transaction which shall be treated neither as a supply of goods nor a supply of services. Thus, sale of plots would not amount to supply.

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