External Development and Infrastructure Development charges would form part of value of construction services: AAAR

Appellate Authority for Advance Ruling, Haryana Ashiana Housing Ltd., In re – [2022] 138 taxmann.com 92 (AAAR-Haryana)

The appellant was engaged in the construction of residential complexes. It filed an application for advance ruling to determine whether the statutory charges i.e. External Development Charges (EDC) and Infrastructural Development Charges (IDC) recovered by the appellant from buyers and paid further to respective Government Authorities would form part of value of taxable supplies being made by it.

The Authority for Advance Ruling (AAR) held that these statutory charged would form part of value of taxable supplies and GST would be payable. It filed appeal against the order of AAR.

The Appellate Authority for Advance Ruling (AAAR) observed that there is specific section 15 of CGST Act which authorises the inclusion of such fee or Charges or Levies etc. in the value of Supply of Service. In the instant case, EDC and IDC charges would form a ‘consideration’ for the construction service provided in respect of the flats. Therefore, the appeal was liable to be dismissed and ruling of AAR was upheld.