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Developer had collected Preferential Location Charges with construction consideration, but AAR taxed it separately — Punjab & Haryana High Court quashed the rulings, holding PLC taxable as part of construction service itself.

Issue:
Whether Preferential Location Charges collected by the Assessee from buyers of residential/commercial apartments were taxable separately, or formed part of the composite supply of construction services and were liable to GST at the same rate as the main construction service.

Rule:
Section 168(1) empowers the Government to issue binding instructions or directions for uniform implementation of the Act. A circular issued as a clarification is binding on the Department and applies retrospectively.
As clarified by Circular dated 11.10.2024, “choice of location of apartment” is an “integral part of supply of construction services”; PLC is “part of consideration” for construction service before issuance of completion certificate; and PLC is “naturally bundled” with the main supply of construction service.

Application:
The Assessee had filed an application dated 10.06.2019 under Rule 98 seeking advance ruling on taxability of PLC. The Authority for Advance Ruling, by order dated 28.08.2020, had held that PLC was taxable independently from construction/development charges. The Appellate Authority, in appeal under Section 101, had upheld the said view on 28.03.2022.
Thereafter, the GST Council in its 54th meeting dated 09.09.2024 recommended that PLC collected by developers was not separately taxable and formed part of construction service. The Government accepted the recommendation and issued Circular dated 11.10.2024 under Section 168(1), clarifying that PLC attracts GST at the same rate as construction service.
Since the circular was binding on the Department and was clarificatory in nature, the earlier AAR and Appellate Authority rulings, which treated PLC as a separate taxable supply, could not survive.

Conclusion:
The High Court quashed the AAR order dated 28.08.2020 and the Appellate Authority order dated 28.03.2022, with necessary consequential relief to the Assessee.

Impact Analysis:
This judgment settles that PLC collected along with construction consideration is not a separate taxable supply; it forms part of composite supply of construction service. The ruling also reinforces that clarificatory circulars issued under Section 168(1) bind the Department and may apply retrospectively.

Title : DLF LIMITED vs. COMMISSIONER OF CENTRAL GOODS AND SERVICE TAX Court: THE HIGH COURT OF PUNJAB & HARYANA AT CHANDIGARH 
Citation : CWP No. 17530 of 2022
Dated : 13-05-2026
Provision : Under Section 101, 168(1)