AAR: UDS Sale Deed by Landowner Does Not Qualify as ‘Sale of Land’; GST Applies

The petitioner, M/S Sripriya Constructions Private Limited, is a Chennai-based real estate company which is involved in the development and promotion of small-sized residential apartments.

Question Asked by Petitioner

“Whether this execution of Sale Deed by the landowner for the UDS area covering the built up area to be constructed by the applicant would be sufficient ground to claim exclusion as sale of land under Item No. 5 of Schedule III of the CGST Act/TNGST Act resulting in non-liability in the hands of the Applicant on the construction of built up area to the buyers notwithstanding the fact that the same are treated as Sale of land (including building) in the Sale Deed to be executed by the land owners for the Saligramam project in favour of the Applicant’s buyers for the sale of apartments that are allocated to us.”

Advance Ruling

As per the Tamil Nadu Authority for Advance Ruling, “The applicant’s claim of exclusion as sale of land for the Sale Deed executed by the landowner for the UDS area including the built up area constructed by the applicant resulting in non-liability in their hands on the construction of built up area to the buyers for the sale of apartment that were allocated to them as per the Joint Venture Development Agreement does not fall under Item No.5 of Schedule III of the CGST Act / TNGST Act.”

Therefore, the authority rejected the claim of the applicant and stated that the said transaction does not qualify as a pure sale of land under Item No. 5 of Schedule III of the CGST/TNGST Act, and GST is applicable on it.