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2021 (6) TMI 481 - AUTHORITY FOR ADVANCE RULING, TAMILNADUClassification of services - Works Contract - Composite supply - activities of construction carried out by the applicant for its customer under the Construction Agreement - classifiable under Heading 9997, and chargeable to CGST E.1 9% under S.No.35 of Notification No.11/2017-CT (Rate) dated 28.06.2017 or otherwise? - HELD THAT:- ‘Works Contracts’ were subjected to Sales Tax on the Value of Goods involved in the works and on the labour and Service portion of the same contract, service tax was levied in the Pre-GST Era. These very contracts are treated as supply of service in the GST Era. Going by the extracts of the Minutes of the council meetings, it is evident that the carve out of Para 6 of Schedule II to the Act was only to avoid any legal challenge in view of the same types of contracts considered for taxation under the provisions of Laws under PRE-GST and under GST. This, in no way can be said to establish that Para 5 does not extend to cover composite supplies as claimed by the applicant and this contention holds no merit. In the case at hand, the applicant supplies the prospective buyer, the construction service of the ‘Unit’ intended for purchase by the buyer in the RREP being developed/ constructed by the applicant and the contract, i.e., the construction agreement is entered into for construction of the said ‘Unit’ of the project developed by them - in the facts of the case, the applicant being a Promoter of the approved RREP, the construction of a ‘Unit’ in the said RREP is an activity of Construction of part of the building with the intention for sale. Classification of services - HELD THAT:- The classification of service may be Construction, erection, commissioning, etc of the immovable property and the contract for execution may be a works contract, in which, while providing the service, there is a transfer of property in goods. The mode of supply does not determine the classification of Service. Classification of Service is to be done based on the Scheme of Classification and there are no reason to agree to the contention of the applicant that the service provided by them is not classifiable under SAC 9954 - In the case at hand, the applicant develops RREP along with all the infra structures and constructs the ‘Units’ of the RREP, i.e., construction of single /multiple dwelling unit and as such it clearly falls under construction services and the contention of the applicant to classify the same under 9997 is thus not entertainable and not tenable under law - In the case at hand, the most specific description being construction services, the subject activity falls under the SAC 9954 and therefore, the classification of service is ‘Construction Service’ only, for the purpose of Notification No. 11/2017-C.T.(Rate) dated 28.06.2017 as amended. The rate for construction of ‘Other than affordable residential apartments’, i.e., ‘Unit’ in the proposed RREP - Ashiana Shubam - Phase IV’, by the applicant, ‘promoter’ of the RREP, is as specified under SI.No. 3 (ia) which is 3.75% CGST and 3.75% SGST and the applicant has to satisfy the conditions stipulated in column (5) of the said entry.
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