Dear CA community
Facts:
1. Landlords entered into JDA with developers in Aug 2017 to build a commercial complex.
2. As per the JDA the developers will be getting 50% of the complex and 50% of the land in lieu of the development. The JDA clearly earmarks how the square footage is divided between landlords and builders.
There are multiple landlords and their shares are clearly elaborated in the JDA but as undivided shares.
3. Current status of the project is that construction is not complete. It is due to be completed in the next 3 to 4 months post.
4. Occupancy certificate has not been obtained from govt yet
5. No allotment letter has been issued by the builders yet to the landlords
6. The owners have not sold any share of theirs nor they intend to sell
7. The builders have sold a minor part of their share
8. The clause dealing with GST in the JDA states the below:
"The service tax/GST any pertaining to the owners share, if any applicable as per Govt rules shall be born by the owners"
9. None of the landlords have GST numbers. Builder has GST number.
Question:
1. In the first place are landlords liable to pay GST in the above case ? Especially since they are not selling their share.
2. There is an expert opinion everywhere that the applicability of the GST to landlords will depend on the way the JDA is written. What does that mean ? While clause in the JDA is critical in this context ? What attracts GSY liability for a landlord ?
2. If they are liable to pay GST then when are they supposed to pay ? After issue of allotment letter from the builder or at the time of entering into JDA i.e. in Aug 2017 ?
3. If liable to pay GST then can the landlords transfer the money to builder bank account and pay the GST using builder's GST number ? We are being told that builder can specify that part of the GST he is paying is for landlords share.
4. If liable to pay GST then are the landlords allowed to create respective GST numbers of their own and each one pays their own respective GST ? What will happen if some of the land lords pay GST and some dont ? Remember landlords are getting undivided but clearly earmarked shares as per the JDA.
Please help.
Rgds
CAclubindia
