Applicability of GST on Land owners share of constructed residential flats, JDA entered before the commencement of construction

Last updated: 26 August 2020

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This case concerns M/s S.K. Properties, who sought an advance ruling on the applicability of GST to flats allocated to landowners under a Joint Development Agreement (JDA) signed before construction commenced. They also enquired about the applicable GST rates and valuation. However, the applicant later decided to withdraw their application for the advance ruling.

Court :
Karnataka AAR

Brief :
1. The applicant sought Applicability of GST on Land owners share of constructed residential flats, since Joint development agreement entered between Land owner and Builder entered before the commencement of construction of the building and Constructed residential flats handed over before completion. 2. If GST Applicable on point 1, what will be the rate of GST and the value on which GST is applicable. 3. Applicability of GST on Land owners share of constructed residential flats, since Joint development agreement entered between Land owner and Builder entered before the commencement of construction of the building and constructed residential flats handed over after completion.

Citation :
Advance Ruling No. KAR ADRG 41/2020

Details of the Case:

Petitioner Name/ Appellant	M/s S.K. Properties
Appeal Number	Advance Ruling No. KAR ADRG 41/2020
Judgment By	GST AAR Karnataka

ORDER UNDER SECTION 98(4) OF THE CGST ACT,2017 & UNDER 98(4) OF THE KGST ACT, 2017

1. M/s S.K. Properties, Flat No.100, Annai Residency, Ground Floor, 4th Main, Hoysala Nagar, Ramamurthy Nagar, Bangalore-560016, Karnataka, having GSTIN number 29ACNFS98921ZD, have filed an application for Advance Ruling under Section 97 of CGST Act, 2017 & KGST Act, 2017 read with Rule 104 of CGST Rules 2017 & KGST Rules 2017, in form GST ARA-01 discharging the fee of Rs. 5,000/- each under the CGST Act and the KGST Act.

2. The applicant is a partnership firm, engaged in construction of residential apartments, The Applicant entered into an agreement with land lord M/s Panchajanya builders & developers to construct 32 residential apartment which consists of Total super Built up area is 41096 SFT out of which land owner share built up area is to the extent of 16,415 SFT, as per agreement. In this regard, the applicant sought advance ruling in respect of the following questions.

i. Applicability of GST on Land owners share of constructed residential flats, since joint development agreement entered between Land owner and Builder entered before the commencement of construction of the building and constructed residential flats handed over before Completion.

ii. If GST applicable on point 1, what will be the rate of GST and the value on which GST is applicable.

iii. Applicability of GST on Land owner’s share of constructed residential flats, since Joint development agreement entered between Land owner and Building and Constructed residential flats hand over after completion.

iv. If GST applicable on point 3, what will be the rate of GST and the value on which GST is applicable.

3. The applicant had filed application through online ARA-O1 portal on 11-09-2018. However, the applicant has filed physical copy of the application along with a letter dated 24.07.2020, requesting this authority to permit them to withdraw their application for advance ruling.

4. In view of the above, we pass the following

RULING

The Application filed by the Applicant for advance ruling is disposed off as withdrawn.

To view the judgement order, find the enclosed file

FAQ :

The main issue was whether GST is applicable to the share of constructed residential flats received by a landowner under a Joint Development Agreement (JDA) entered into before construction began.

The application for advance ruling was filed by M/s S.K. Properties, a partnership firm engaged in constructing residential apartments.

The applicant asked about the applicability of GST on the landowner's share of flats when the JDA was signed before construction and when flats were handed over before or after completion. They also inquired about the GST rate and valuation.

The applicant, M/s S.K. Properties, requested to withdraw their application for advance ruling, and the authority disposed of the application as withdrawn.

Attached File : 40_2410_skproperties.pdf

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