In re Sripriya Constructions Private Limited (GST AAR Tamilnadu)
This ruling by the Goods and Services Tax (GST) Authority for Advance Ruling (AAR), Tamil Nadu, pertains to M/s. Sripriya Constructions Private Limited, a Chennai-based developer. The applicant entered a Joint Development Agreement (JDA) to construct four apartments, with two allocated to the landowner and two for sale. Historically, the applicant executed separate sale deeds for the undivided share (UDS) of land and construction agreements, paying stamp duty on UDS and GST on construction. However, a new circular from the Tamil Nadu Government (Circular No. 45438/L1/2023 dated December 14, 2023) introduced a “composite value” for land and building for property registration and stamp duty purposes for first sale categories. The applicant contended that since a single sale deed on this composite value would now cover both land and built-up area, their activity should be considered a “sale of land” and thus fall under Item No. 5 of Schedule III of the CGST/TNGST Act, resulting in no GST liability on the construction component.
The AAR meticulously examined the interplay between the GST Act, the Registration Act, and the new Tamil Nadu circular. It clarified that construction of a complex intended for sale is generally considered a “supply of service” under Schedule II, entry 5(b) of the CGST/TNGST Act, attracting GST unless the entire consideration is received after the issuance of a completion certificate or first occupation. The AAR noted that the new “composite value” norm for stamp duty and registration charges, while streamlining the registration process and augmenting state revenue, is distinct from GST implications. Stamp duty and registration charges are state-imposed taxes on property transactions and have no direct bearing on GST liability, which is levied on the supply of goods and services.
