Order Date: 8 September 2022

Facts-

• The Applicant, Rabia Khanum is an individual who owns land and plans to convert that land into residential sites and sell them to individuals.
• The applicant submitted that they will be developing the land as per regulations of the District Town and Country Planning Act. The Karnataka Real Estate Regulation Act and other zonal regulations that would be applicable while obtaining sanction of the plan. The development of land includes formation of roads, formation of rain water drains, laying of electricity cables, water pipes, sewerage lines, drilling of bore wells for supply of water, construction of water tank for storage and supply of water, setting up of a power sub-station and obtaining connection from Electricity board for supply of electricity etc, which are basically required for human inhabitation. Without providing these basic necessities, the concerned authorities will not grant permission to sell the plots to individuals for construction of houses.
• The applicant submitted that they need to handover the works of the roads, drains, parks, playgrounds, bus stops, places identified for construction of places of worship etc. to the DTCPA authorities. From then, they will start collecting taxes from the owners for maintenance. For all the unsold plots, the applicant has to start paying taxes till they are sold. The development works will then become the property of the authorities and are not sold or transferred to any individual. The transfer of the ownership of the said plots will happen under The Transfer of Property Act.
• The applicant submitted that they will not be entering into an agreement with any prospective buyer, where consideration is separately identified between cost of the plot and cost of development. 
• They would enter into agreement of sale with the prospective customers towards sale of individual sites and receive advances for the same. On receipt of the full consideration, the sale deed will be executed.
• Applicant submitted that the Schedule III of the CGST Act, 2017 clearly specifies that sale of land is neither sale of goods nor services and since they are developing the land and selling it as sites they are seeking ruling on the same.

Issue-

• Whether the GST is applicable for the consideration received on sale of site and for the advance received towards sale of site and on sale of plots/sites even when they are sold after completion of works related to basic necessities?

Order-

• The Authorities observed that CBIC has issued circular No.177 dated: 03.08.2022 and has issued clarification on whether sale of land after leveling, laying down of drainage lines etc., is taxable under GST. Thus, CBIC has clarified that land may be sold either as it is or after some development such as leveling, laying down of drainage lines, water lines, electricity lines and sale of such developed land is also sale of land and is covered by Sr. No. 5 of Schedule III of the Central Goods and Services Tax Act, 2017 and accordingly does not attract GST.
• The Authorities held that GST is not applicable for the consideration received on sale of site and for the advance received towards sale of site and GST is not applicable on sale of plots/sites even when they are sold after completion of works related to basic necessities.