The developer enters into sales/construction contracts with home buyers for the provision of construction services. GST applies to the real estate transaction in which the developer provides construction services to a home buyer. Aspects relating to the applicability of GST to real estate transactions under construction are dealt with in the following article: in many parts of the country, there is a practice of having a separate land register and a separate register for built housing. Thus, in such cases, an evaluation problem often arises. In the case of IN RE: M/S. KARA PROPERTY VENTURES LLP 2019 (3) TMI 924 – AUTHORITY FOR ADVANCE RULING, TAMILNADUthe Assessee has entered into two separate agreements, one for the sale of a share of unshared land and the other for the construction of a complex service for the buyer, with two separate considerations being required from the buyer. That is how a question was raised about the tax measure. The AAR decided that the two agreements were coexisting and ongoing simultaneously; Any contract cannot be terminated without the termination of the other, it is a single delivery, which falls entirely under entry 5 (b) of Schedule II of the Central Goods and Services Tax Act, which makes this transaction a « complex construction » service and it is therefore established that the GST can be raised to 2/3 of the total value of the two agreements. Sometimes the landowner can have the construction done for their own use for the purposes of their residence and agrees to share a potion with the developer even under a JDA model. In this case, the landowner never intends to sell his share of the built area.

So, in such a situation, if TDR is taxable? The author believes that TDR should not be taxable in such cases, as this was never done with the intention of doing business or as part of the owner`s promotion of a transaction. The conditions of Article 7 are therefore not fully met and therefore no delivery should be made. In addition, there will never be a business motive or profit in such transactions. However, it may also be argued that the definition of the term `transaction` in Article 2(17) is very broad and covers any trade, commerce, manufacture, profession, holiday, adventure or any other similar activity, whether or not it has a financial advantage, irrespective of the volume, frequency, continuity or regularity of that activity or transaction. Therefore, the activity of transferring development rights by a landowner, whether or not it is an individual, is a service subject to GST. But here again, the author has another argument that, if the government itself has already clarified in 2017 that the sale of antique jewelry and private used vehicles is not considered a delivery, because they are not intended to promote the activity. So why doesn`t the same principle apply to the exchange of TDR services and works? Does this mean that there will be separate principles that will apply to goods and be separated for services? The author understands controllability in such cases….