Mystery of Time of supply under JDA Unveiled! – Goods and Services Tax – GST – By: – Pragya Singh – Dated:- 30-1-2018 – Introduction: Real Estate is an important part of the economy and is accountable for extensive part of development investment, advancement of the nation s infrastructure. The taxation of the real estate segment has also been challenging and litigated in many aspects. There are many open issues in relation to the determination of point of taxation and valuation under both direct and indirect taxes. In this article I have dealt with the determination of time of supply in case of issue of development rights and supply of construction service as consideration under a joint development agreement. In a Joint Development Agreement (JDA) the land owner gives development rights to the developer/builder to develop the land owned by the landowner. The built up area of the complex shall be shared by the land owner and the builder upon an agreed ratio. The developer/builder shall
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ring into a conveyance deed or similar instrument (e.g. allotment letter) . Time of Supply under GST: Section 13 of the CGST Act, 2017 deals with the provisions relating to the determination of time of supply of services. The time of supply shall be Date of issue of invoice or the date of receipt of payment whichever is earlier In cases where the invoice is not issued within 30 days of completion of service, it shall be the date of completion of service or the date of receipt of payment whichever is earlier. In cases where the time of supply cannot be determined as per the above two clauses, then it shall be the date on which the recipient shows the receipt of services in his books of accounts. Further it is also relevant to refer to the following definition of continuous supply of service under Section 2 (33) of the Act and Section 31 (5) dealing with issue of invoices. continuous supply of services means a supply of services which is provided, or agreed to be provided, continuously o
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y be observed that clauses (a) and (b) of sub section (2) of section 13 are not applicable in this case, as neither any invoice is raised by the builder on landowner, nor any payment received. As per clause (c) the time at which the landowner shows the receipt of service in his books of accounts would be the time of supply. If the landowner is retaining such units for his own use, he would recognise the same as his capital assets and if the landowner is going to again sell such units, he would recognise the same as his stock in trade. So it can be taken that the builder would be liable to pay GST at the time, when the landowner recognises the receipt of units from the builder. However from builder s point of view it would be very difficult to conclude when the landowner recognises receipt of service. Thus the determination of time of supply was no less than a mystery. These confusions have been resolved by Notification No. 4/2018-Central Tax (Rate) dated 25th January, 2018. The clarifi
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