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2019 (5) TMI 493 - AAR - GSTConcessional rate of GST - supply of works contract service in respect of Original Works pertaining to construction of a Low Cost House in an AHP - Benefit of N/N. 01/2018-CentraI Tax (Rate) dated 25.01.2018 - HELD THAT - Entry (v) (da) of Notification 01/ 2018, no-where restricts the benefit to a Developer only. The Notification entry is qua the supply of service and not qua the person and therefore once a project qualifies as an AHP, the benefit of concessional rate of tax would be available in respect of works contract services pertaining to Low Cost Houses, irrespective of it supplied by the or the Contractor. In the subject case the project qualifies as an AHP, and the benefit of concessional rate of tax would thus be available to the applicant. The applicant will be eligible for concessional rate @ 12% in the project. The concessional rate will applicable only for residential units of upto 60 sq mts., in their project and not for commercial units.
Issues Involved:
1. Eligibility of Notification 01/2018-Central Tax (Rate) dated 25.01.2018 for concessional GST rate of 12% on supply of works contract service for construction of Low-Cost Houses in an Affordable Housing Project (AHP). Issue-wise Detailed Analysis: 1. Eligibility of Notification 01/2018-Central Tax (Rate) dated 25.01.2018 for concessional GST rate of 12%: Applicant's Contentions: M/s. Puranik Construction Pvt. Ltd. filed an application seeking an advance ruling on the applicability of a concessional GST rate of 12% for their proposed residential project in Nerul, Navi Mumbai. The project consists of 135 buildings, predominantly residential with flats having a carpet area of up to 60 sq. meters, qualifying it as a Low-Cost House (LCH) under an Affordable Housing Project (AHP). The applicant claimed that since more than 50% of the Floor Space Index (FSI) is used for LCH, the project qualifies as an AHP given infrastructure status under the Department of Economic Affairs (DEA) Notification dated 30.03.2017. The applicant argued that the concessional rate of 12% GST, as per Notification 01/2018-Central Tax (Rate) dated 25.01.2018, should apply to their project. They cited previous rulings and clarifications to support their claim that the benefit of the concessional rate is available to any supplier of works contract services for LCH in an AHP, not just developers. They also provided an Architect Certificate and other documents to substantiate their claim that the project qualifies as an AHP. Jurisdictional Officer's Contentions: The jurisdictional officer agreed with the applicant, stating that the project qualifies as an AHP under the DEA Notification and supported the applicant's eligibility for the concessional GST rate of 12% for the construction of LCH. However, they contended that the concessional rate should not apply to commercial units within the project. Observations and Findings: The Authority for Advance Ruling (AAR) examined the facts, documents, and submissions. They noted that the project uses 98.5% of its FSI for flats with carpet areas below 60 sq. meters, qualifying it as an AHP under the DEA Notification dated 30.03.2017. The relevant notification and clarification from the Ministry of Finance were reviewed, confirming that the concessional GST rate of 12% applies to low-cost houses in AHPs. The AAR found that the applicant's project meets the criteria for an AHP, thus qualifying for the reduced GST rate of 12% for residential units with carpet areas up to 60 sq. meters. The benefit of the reduced rate is applicable only for supplies made after 25.01.2018, the date of the relevant notification. The AAR clarified that the reduced rate does not apply to commercial units or residential units exceeding 60 sq. meters in carpet area. Conclusion: The AAR ruled that the applicant is eligible for the concessional GST rate of 12% for the construction of residential units up to 60 sq. meters in their project, as per Notification 01/2018-Central Tax (Rate) dated 25.01.2018. The concessional rate does not apply to commercial units within the project. The ruling aligns with the principles laid down in previous cases and clarifications by the Ministry of Finance.
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