In re Sunil Vishvasrao Khune (GST AAR Maharashtra)
The Maharashtra Authority for Advance Ruling considered whether construction and development of commercial units on land held as a capital asset, followed by sale of some units and leasing of the remaining units, constituted activities undertaken in the course or furtherance of business. The applicant, a retired Nashik Municipal Corporation employee, and his wife had purchased the land in 2003 from surplus funds. They demolished the existing structure and developed a commercial project named “ONE GANGAPUR”. The applicant contended that the property remained a personal investment and that a few units would be sold only to finance construction, while the remaining units would generate retirement rental income.
Accordingly, neither activity was alleged to constitute a supply under section 7 of the CGST Act. The AAR rejected this contention. It held that the inclusive definition of “business” under section 2(17) encompasses trade, commerce and similar activities irrespective of pecuniary benefit, volume, frequency, continuity or regularity. Construction and sale of commercial units to prospective purchasers was a commercial activity and amounted to supply in furtherance of business. Leasing the remaining commercial units for regular rental income was likewise a commercial activity and a taxable supply. The source of construction funds—personal savings, borrowings or otherwise—was irrelevant. Construction services were classifiable under Heading 9954 and taxable at 18% under Notification No. 11/2017-Central Tax (Rate), dated 28 June 2017.
Want to Read the Complete Judgment?
You have read the free case summary. Unlock the full judgment, the detailed judicial reasoning and the downloadable PDF, along with every other premium judgment on TaxGuru.
Already subscribed? Log in
One subscription covers the entire premium judgment library, not just this case.
