GST on property delivered by builder as part of JDA - Value of Supply - GST

Facts:

JDA registered in Aug 2017. 6 floor commercial property construction.
Developer completed construction in Dec 2021.
Occupancy certificate received in Jan 2022.
Developer issued allotment letter in March 2022.

Valuation:

Valuation of the constructed area as per the local registration office is Rs.2000 per sq ft.
But developer sold his share of the ground floor of the commercial Constuction to his buyers for Rs.8000. Their registration value to their is Rs.8000 per sq ft.
Landlords did not sell any part of their share

Question(s):

The value of the constructed area differs from floor to floor in a commercial construction. If ground floor is Rs.8000 per sq ft the the price for each subsequence floor is less than Rs.8000

Ground Floor: Rs.8000 per sqft

1st Floor: Rs.7000 per sqft

2nd Floor: Rs.6000 per sqft

3rd floor : Rs.5000 per sqft

4th floor: Rs.4000 per sqft

5th floor: Rs.3000 per sqft

6th floor: Rs.2000 per sqft

In such a scenario how will the value of the property be calculated for levy of GST for landlords ?
Is there a possibility or is it as per GST law if the GST dept values the entire 6 floors square footage at Rs.8000 per sq ft ?
How will the GST dept determine the value of square footage on each floor for landlords ?
Are there any GST tribunal decisions on this subject matter ?

Hey! This is a classic and quite nuanced issue under GST on Joint Development Agreements (JDA). Let me break down your queries regarding valuation and GST on property delivered by builder in such cases:

Background:

JDA started in 2017, construction done by 2021, OC received in 2022.
Ground floor sale value is Rs. 8,000/sqft, higher than other floors.
Different floors have different market values.
Landlords have not sold their share, but property is being delivered to them as consideration.

1. How to calculate GST value on property delivered to landlords (as per JDA)?

Under GST, the value of supply in a JDA is the open market value (OMV) of the property delivered to the landowner (landlord) or the amount agreed upon, whichever is higher.

Section 15 of CGST Act (Valuation rules) applies.
The circle rate or guidance value declared by local authority (e.g., registration value) is often taken as a base for OMV.
If actual sale value is higher (like Rs. 8,000/sqft for ground floor), it may be considered if supported by market evidence.

In your case:

The OMV can vary floor-wise, so value for each floor should be taken as per the local market.
So, the GST value on landlord’s share should be calculated based on the actual floor-wise market value of the property delivered.

2. Can GST department value entire 6 floors at Rs. 8,000/sqft?

The department can revalue the supply based on evidence if it believes that transaction value is not reflective of market price.
But charging GST on entire floors at Rs. 8,000/sqft when market for higher floors is lower may be challenged.
Generally, tax authorities accept floor-wise valuation if supported by market data or circle rates.

3. How will GST dept determine floor-wise valuation for landlords?

Department will look at:
- Local registration (circle) rates for each floor.
- Sale deeds of similar properties/floors nearby.
- Expert valuation reports.
- Actual agreements and transaction values.
Based on these, department will assign OMV for each floor or unit delivered to landlord and compute GST accordingly.

4. Any GST tribunal or judicial decisions on this?

Several Advance Rulings and tribunal decisions suggest:
- GST value in JDA is to be determined on the fair market value or circle rate.
- Floor-wise valuation is accepted if supported by data.
- Overvaluation by department without evidence can be challenged.

For example:

Maharashtra AAR rulings have accepted floor-wise valuation based on circle rates.
Tribunal rulings have upheld that market value is key and arbitrary application of one floor rate on entire property is incorrect.

Summary & Practical tips:

Point	Suggestion / Takeaway
Valuation basis	Floor-wise market value or circle rates
Department approach	May reassess but must rely on evidence
Challenging overvaluation	Use market data, expert reports, and AAR rulings
Documentation	Maintain proper valuation reports & agreements