Whether amount forfeited on account of breach of sale of land agreement taxable under GST

Last updated: 29 September 2021
Quick Summary
The Gujarat Authority of Advance Ruling (GAAR) has ruled that a forfeited deposit due to a breach of a land sale agreement is taxable under GST. The ruling clarified that the forfeited amount was not for the sale of land itself (which is outside GST's scope), but rather for the buyer's failure to fulfil the agreement. This failure was deemed a 'supply' under the GST Act, specifically relating to tolerating an act or situation, making it liable for GST.

Court :
Gujarat Authority of Advance Ruling (GAAR)

Brief :
In M/s. Fastrack Deal Comm Pvt. Ltd. [ADVANCE RULING NO. GUJ/GAAR/R/58/2020 dated July 30, 2020] M/s. Fastrack Deal Comm Pvt. Ltd. ("the Applicant") after entering into a sale agreement to sell a factory land to a "Mr.B" for a consideration didn't receive 80% of the value of consideration due to which has filed the current application seeking clarification of whether 20% the amount forfeited on account of breach of agreement of sale of land is liable to Goods and Services Tax ("GST") or not.

Citation :
ADVANCE RULING NO. GUJ/GAAR/R/58/2020 dated July 30, 2020

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1 Year PLAN
1999
(Excl. of GST ₹359)

BEST VALUE
2 Years PLAN
3499
(Excl. of GST ₹629)

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Bimal Jain
Published in GST
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