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2018 (10) TMI 1054 - AAR - GSTLevy of GST - freehold sale of commercial built-up space to general public - Supply of service or not - RERA Act - Function entrusted to a municipality - POT Rules. Whether the applicant is liable to pay GST on sale of commercial super built up area on behalf of MoHUA, Government of India, by considering the applicant also as the supplier of service while selling such commercial built-up space as an agent on behalf of the Government of India in the colonies under redevelopment? - Held that - The MOU between the MoHUA & NBCC is not on Principal-to-Principal basis. It is also not on partnership /joint venture /collaboration basis. There is no mutual revenue, profit or loss sharing arrangement between the two. The applicant is not acquiring any right or interest in the project. It is not selling the commercial built-up units on its own account. The applicant is simply acting as an agent of MoHUA - Since, it is admitted by the applicant that they are constructing and selling the commercial built-up space on behalf of the Ministry of Housing and Urban Affairs (MoHUA), it is held that they are covered as agent in Section 2(5) of the CGST Act, 2017. From the combined reading of Sections 2(5), 2(105), 2(107), 22 and 24 of the CGST Act, 2017, it is clear that the applicant is covered in the definitions of Agent , Supplier and Taxable Person in respect of the said project while providing services on behalf of the Ministry of Housing and Urban Affairs. Further, the applicant is falling under the categories of persons under Section 22 and also under Section 24 requiring compulsory registration in respect of the said project - the contention of the applicant that they cannot be construed as supplier of service as they are selling the commercial built up space on behalf of the Ministry of Housing and Urban Affairs (MoHUA) is not acceptable. Accordingly, they are liable to pay GST under Section 9(1) of the CGST Act, 2017, being taxable person as per Section 2(107) of the said Act in respect of the said project. The sale of the commercial built-up area by the applicant on behalf of MoHUA cast a responsibility on the applicant to also collect and/or deposit GST on the taxable supply of goods or services, even, if they are acting only as an agent of the MoHUA - The contention of the applicant that they are not covered in the definition of promoter under Section 2(zk) of the Real Estate Regulation Act, 2016 does not appear to be relevant in the present case. Whether the MoHUA, Government of India, is liable to pay GST on sale of commercial built-up space, and whether it relates to any function entrusted to a municipality under Article 243W of the Constitution? - Held that - The Ministry of Housing and Urban Affairs cannot be called Municipality under Articles 243P and 243Q of the Constitution of India - The Government of India (Allocation of Business) Rules, 1961 has allocated wide ranging functions to the Ministry of Housing and Urban Affairs. However, it cannot be said that such responsibilities relates to functions entrusted to municipalities under Article 243W and Twelfth Schedule to the Constitution of India. The services for commercial built-up space by the Ministry of Housing & Urban Affairs (MoHUA) are not covered in Twelfth Schedule r/w Article 243W of the Constitution of India and hence not exempted from payment of GST under S. No. 4 of Notification No. 12/2017 - Central Tax (Rate) dated 28.06.2017. Further, from 26.07.2018, the exemption is limited to services supplied by the Governmental Authorities. Also, the said services are not covered in S. No. 6 of the said Notification. Whether the applicant is liable to pay GST on sale of built-up space for which part of the consideration was received prior to 01.07.2017, and partly on or after 01.07.2017? - Held that - The construction of commercial built-up space is a continuous supply of service and in many cases, the part of the service may be rendered in pre-GST period i.e. upto 30.06.2017 and remaining part of the service may be supplied in GST period i.e. on or after 01.07.2017. In such cases, Point of Taxation Rules, 2011 issued under Finance Act, 1994 could be referred to for determination of liability to pay Service Tax - The claim of the applicant that such sale of commercial space was exempted from payment of Service Tax under S. No. 39 of Notification No. 25/2012 - ST dated 20.06.2012 is not being examined as the same is beyond the jurisdiction of this Authority. The commercial built up space on which some amount of Service Tax had been paid or was payable shall be covered under GST wef 01.07.2017 subject to the provisions of Section 142(11) (b) of the CGST Act, 2017. Whether the applicant is liable to pay GST on consideration received under an agreement to sale of constructed units in a building which is under construction? - Held that - The applicant is liable to pay GST on sale of commercial built-up units, as the same has been defined as supply of service under Clause 5(b) of Schedule-II of CGST Act, 2017. Ruling - The applicant is covered in the definitions of Agent under Section 2(5), Supplier under Section 2(105) and Taxable Person under Section 2(107) of the CGST Act, 2017 in respect of the said project while providing services on behalf of the Ministry of Housing and Urban Affairs. Hence, they are liable to pay GST under Section 9(1) of the CGST Act, 2017. The MoHUA, Government of India, is not exempted from payment of GST on sale of commercial built-up space, as it does not relates to any function entrusted to a municipality under Article 243W of the Constitution. Hence, the exemption under S. No. 4 of Notification No. 12/2017 - Central Tax (Rate) and parallel notifications under SGST and IGST are not admissible. The applicant is liable to pay GST on the services supplied under GST regime i.e. w.e.f 01.07.2017, even if part of the consideration had been received prior to 01.07.2017. The applicant is liable to pay GST on the sale of commercial built-up area which is under construction, as the same is a supply of service under clause 5(b) of Schedule Il of the CGST Act, 2017.
Issues Involved:
1. Liability of the applicant to pay GST on the sale of commercial super built-up area on behalf of MoHUA. 2. Liability of MoHUA to pay GST on the sale of commercial built-up space. 3. GST applicability on the sale of built-up space where part of the consideration was received before 01.07.2017. 4. GST applicability on consideration received under an agreement to sell constructed units in a building under construction. Issue-wise Analysis: 1. Liability of the applicant to pay GST on the sale of commercial super built-up area on behalf of MoHUA: The applicant argued that they are not liable to pay GST as they act merely as an agent of MoHUA and do not qualify as a "taxable person." However, the judgment clarified that the applicant is indeed an "agent" under Section 2(5) of the CGST Act, 2017, as they carry out the business of supply on behalf of MoHUA. Consequently, the applicant is also a "supplier" under Section 2(105) and a "taxable person" under Section 2(107) of the CGST Act, 2017. Therefore, the applicant is liable to pay GST under Section 9(1) of the CGST Act, 2017, on the sale of commercial built-up area. 2. Liability of MoHUA to pay GST on the sale of commercial built-up space: The judgment examined whether MoHUA's activities fall under functions entrusted to a municipality under Article 243W of the Constitution, which would exempt it from GST. It was determined that MoHUA does not qualify as a "governmental authority" as defined in the CGST Act and its activities do not align with the functions listed in the Twelfth Schedule of the Constitution. Hence, MoHUA is not exempt from paying GST on the sale of commercial built-up space under S. No. 4 of Notification No. 12/2017 - Central Tax (Rate) dated 28.06.2017, as amended by Notification No. 14/2018-Central Tax (Rate) dated 26.07.2018. 3. GST applicability on the sale of built-up space where part of the consideration was received before 01.07.2017: The judgment clarified that GST is applicable on the amount received on or after 01.07.2017, even if part of the consideration was received before this date. This is in line with Section 142(10) and Section 142(11)(b) of the CGST Act, 2017, which state that services supplied on or after the appointed day in pursuance of a contract entered into prior to the appointed day shall be liable to tax under the provisions of the CGST Act. 4. GST applicability on consideration received under an agreement to sell constructed units in a building under construction: The judgment held that the sale of constructed units in a building under construction is treated as a "supply of service" under Clause 5(b) of Schedule II of the CGST Act, 2017. Therefore, the applicant is liable to pay GST on the sale of commercial built-up area under construction. Ruling: 1. The applicant is liable to pay GST under Section 9(1) of the CGST Act, 2017, as they are considered an "agent," "supplier," and "taxable person" in respect of the project while providing services on behalf of MoHUA. 2. MoHUA is not exempt from paying GST on the sale of commercial built-up space as it does not relate to any function entrusted to a municipality under Article 243W of the Constitution. 3. The applicant is liable to pay GST on services supplied under the GST regime from 01.07.2017, even if part of the consideration was received before 01.07.2017. 4. The applicant is liable to pay GST on the sale of commercial built-up area under construction as it is considered a "supply of service" under Clause 5(b) of Schedule II of the CGST Act, 2017.
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