DLF Limited Vs Commissioner of Central Goods and Service Tax and others (Punjab and Haryana High Court)
The petitioner approached the Advance Ruling Authority under Rule 98 of the Central Goods and Services Tax Rules, 2017, seeking clarification on whether charges collected for preferential location of flats should be taxed independently or together with the main construction and development activity.
The Authority, through an order dated 28.08.2020, held that the charges collected for preferential location of flats were liable to be taxed separately from the charges received towards construction and development. The petitioner challenged this ruling before the appellate authority under Section 101 of the Central Goods and Services Tax Act, 2017, but the appeal was dismissed on 28.03.2022.
Subsequently, the issue was considered in the 54th meeting of the GST Council on 09.09.2024. The Council recommended that preferential location charges collected by developers should not be taxed separately, but instead be treated as part of the supply of construction services. Acting on this recommendation, the Government of India issued a clarification through a circular dated 11.10.2024 under Section 168(1) of the Act. The circular clarified that the choice of location of an apartment forms an integral part of construction services and that preferential location charges are part of the consideration for construction services before issuance of the completion certificate. Therefore, such charges would attract GST at the same rate as construction services.
