Latest GST Judgments

For Full Access To All Latest Judgments on GST
Click Here To Subscribe Now
Take a tour of our GST Library

Applicant is required to deduct one third value of land for the transaction of sale of residential/ commercial property with undivided rights of land

Valuation of Supply — Authority for Advance Ruling —– Value of transaction of sale of residential/ commercial property—Value of undivided land-- – The applicant engaged in the business of construction. They buy land and develop residential/ commercial property on that land. The applicant submitted that on the basis of such plan and approvals they enter into the agreement with prospective buyers for such residential /commercial property. The agreements entered into are for inclusive of land or undivided share of land basis. The cost of land that is being transferred to the buyers on inclusive of land or undivided share of land basis need to be allowed to be deducted as a whole and not as provided in Not No. 11/2017-CT (Rate) and 08/2017-I.T (Rate) both dated 28.06.2017 as one third (33.33%) of the value, because in applicant’s case the cost of Land is distinctly determinable and is more than one third (33.33%) of the consideration value of sale of property. The applicant sought an Advance Ruling as to what will be the value of supply for the transaction of sale of residential/ commercial property with undivided rights of land; in the case of construction of residential/commercial complex, the builder charges an amount which is inclusive of land or undivided share of land. In applicant’s case the value of Land is clearly ascertainable. In that case actual cost of Land can be deducted for the for the purpose of arriving at the taxable value of supply. Held that:- The Hon’ble Authority for Advance Ruling held that the value to be arrived in terms of deeming provision of Para 2 of Notification no. 11/2017-CT (Rate) dated 28.06.2017, as amended by Noti. No.01/2018-C.T. (Rate), dated 25-1-2018. The applicant is required to deduct one third value of land or undivided shares from the total value charged for the subject supply in terms of above notification. — Karma Buildcon, In Re…. [2020] 26 TAXLOK.COM 089 (AAR-Gujarat)