Fact: Quattroporteluxury Homes LLP is a limited Liability Partnership Firm engaged in the business of building villas for sale in Goa. They construct villas for sale when they are ready and after getting the occupancy certificate. During the last year due to financial constrains they borrowed money from Mr. Zubin Dubash amounting to Rs. 5,50,00,000/- on March 30, 2017 and during this year they received and advance of Rs. 11,23,74,756/- from said person and the applicant has paid GST accordingly on the said amount. The applicant submits that they have inadvertently paid the GST on the borrowings and later on due to financial difficulty decided to sell the same villa to Mr. Zubin Dubash.
Issue Involved: Determination of liability to pay tax on sale of villas after completion and obtaining necessary approvals from the competent authority.
Held: The Hon’ble AAR of Goa vide Advance Ruling No. GOA/GAAR/2 of 2018-19/2018-19/2270 dated September 20, 2018 stated with reference to the provision of GST Law construction of a complex, building, civil structure or apart 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. Further In case of supply of services involving transfer of property in land or undivided share of land, the value of supply of service and goods portion in such supply shall be equivalent to the total amount charged for such supply less the value of land or undivided share of land, as the case may be.
Therefore, amount received for sale of villa on or after the appointed day prior to issuance of occupancy certificate by the local panchayat is considered as construction services and GST is applicable on two third of the total amount charged for such supply. Hence, the same is taxable under GST Act @ 12%.
Citation: http://insta.instavat.in/PDF/GOA_ADVANCE-RULING-3.pdf