QUESTION
If a Land Owner builds a building himself on his own land and then sale its 2nd,
3rd and 4th Floor to customers, is GST applicable and what rate for FY 2018-19?.
The Land Owner has received 1.5 crore as advance in FY 2018-19 for 1st floor
Flat and will receive 6 crore more in FY 2019-20. Is he require to take
registration in GST? Secondly, what happens if Land Owner is already registered
in GST? The Land owner has not received Completion Certificate and the Land is a
Leased Plot.
ANSWER
Facts of the Case:
You own a land and you are constructing flats and selling the same. whether GST
is liable or not.
Law Applicable:
SCHEDULE II OF CGST ACT
5. Supply of services
(b) construction of a complex, building, civil structure or a part thereof,
including a complex or building intended for sale to a buyer, wholly or partly,
except where the entire consideration has been received after issuance of
completion certificate, where required, by the competent authority or after its
first occupation, whichever is earlier.
SCHEDULE III OF CGST ACT
ACTIVITIES OR TRANSACTIONS WHICH SHALL BE TREATED NEITHER AS A SUPPLY OF GOODS
NOR A SUPPLY OF SERVICE
5. Sale of land and, subject to clause (b) of paragraph 5 of Schedule II, sale
of building.
SECTION 22 OF CGST ACT
(1) Every supplier shall be liable to be registered under this Act in the State
or Union territory, other than special category States, from where he makes a
taxable supply of goods or services or both, if his aggregate turnover in a
financial year exceeds twenty lakh rupees:
Interpretation:
As per schedule II Construction of flats intended for sale is supply of service
except where the entire consideration has been received after issuance of
completion certificate.
Therefore if you have received any advance or part payment before completion
certificate then it is considered as supply of service as per Schedule II.
However if entire consideration is received after issuance of completion
certificate then only it is considered as sale of building and outside GST as
per Schedule III.
Conclusion:
Construction of flats intended for sale is supply of service except where the
entire consideration has been received after issuance of completion certificate.
As you have received consideration in advance then it is taxable supply and you
are not eligible for benefit related to completion certificate.
So far as registration is concerned, you are liable for registration under GST
as your aggregate turnover exceeds threshold limit of 20 lakhs.