Developer liable to pay GST on value of building constructed & handed over to land owner under JDA

The applicant entered into an agreement with 6 people for construction & to handover residential apartment area, commercial area and 8 car parkings on land belonging to aforesaid six persons. The project was complete post 1.7.2017 i.e in GST regime. The applicant was of view that it was liable to pay service tax on taxable value of building constructed & handed over to land owner at time of completion of project at rate of 12% on aggregate value of building constructed and handed over to land owner and underlying value of land. Therefore, the applicant had filed instant application seeking advance ruling on issues that whether it was liable to pay GST on value of building constructed and handed over to land owner in terms of Joint Development Agreement and if there was liability to pay GST on what value was GST to be paid since there was no monetary consideration involved and ,further, whether applicant was liable to pay service tax up to 30-6-2017 and GST thereafter.

The applicant is supplying construction service of building/civil structure to supplier of development rights (land owner) against consideration in form of transfer of development rights.Notification No. 4/2018 – Central Tax (Rate) dated 25-1-2018, at para (b), stipulates that supplier of construction service, to supplier of development rights, is liable to pay GST for service provided to land owner in terms of Joint Development Agreement

Therefore, the applicant is liable to pay GST on value of building constructed and handed over to land owner in terms of Joint Development Agreement. The value on which applicant was liable to pay GST were to be determined in terms of para 2 of Notification No. 11/2017 – Central Tax (Rate) dated 28-6-2017. The applicant is liable to pay service tax/GST proportionate to services provided before/after 30-6-2017 respectively.

Nforce Infrastructure India (P.) Ltd – [2018] 100 taxmann.com 209 (AAR – KARNATAKA)