Case Law Details
In re Dharmic Living Private Limited (GST AAR Kerala)
Sale of developed plots without receiving any advance from their customers for undertaking development activities is neither a supply of goods nor a supply of service
The Kerala Authority of Advance Ruling (Kerala, AAR) in the matter of M/s Dharmic Living Private Limited [Advance Ruling No. KER/117/2021 Dated May 28, 2021], ruled that the sale of developed plots / land without receiving any advance from their customers for undertaking development activities is neither a supply of goods nor a supply of service as it is covered by Para 5 of Schedule III of the Central Goods and Services Tax Act, 2017 (CGST Act).
M/s. Dharmic Living Private Ltd (“the Applicant”) is a company registered in Tamil Nadu and engaged in the promotion of gated community villas in the State of Kerala for the prospective villa buyers. The Applicant started the activities in April 2019. They first identify locations suitable for the gated community villa projects and buy the land in their own name and take layout approval in their name and promote the villas to various villa buyers. And in another situation they identify locations suitable for the gated community villa projects and enter into agreement with the landlords for the purchase of the entire land area required for the project. The total area of land is divided into various plots and the layout approval is taken in the name of landlord and the villa approval is taken either in the name of landlord or in the name of villa buyers from concerned local authorities at their expense. In certain cases they redevelop the project that are uncompleted by other developers and will construct villas for the prospective villa buyers.
In some situation they buy land in their own name and develop the land and after getting lay out approval in their name will sell the plots to various prospective buyers without any construction activities. There is only the development of plots and sale of such developed plots. In such cases no advances are received from customers for undertaking the plot development and the plot is sold for a consideration to various buyers after the development work is over.
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