2020 (6) TMI 542 - AAR - GST

Benefit of reduced rate - houses constructed with a carpet area of 60 square metres per house - Entry Number 3(v)(da) of the Notification No.11/2017-Central Tax (Rate) as amended by Notification No.01/2018-Central Tax (Rate) dated 25.01.2018 - HELD THAT - The applicant has not fulfilled the condition mentioned at Para-10 above and therefore the benefit of Entry No.3(v)(da) of Notification No 11/2017-Central Tax(Rate) dated 28.06.2017 (as amended by Notification No.01/2018-Central Tax (Rate) dated 25.01.2018)is not applicable to them.

Summary

Issues Involved:
1. Definition and eligibility of an 'affordable housing project' for reduced GST rates.
2. Applicability of reduced GST rates to Part-B of Sector-4 of the township.
3. Interpretation of 'housing project' under relevant notifications and the RERA Act.

Issue-wise Detailed Analysis:

1. Definition and Eligibility of an 'Affordable Housing Project':
The applicant sought to benefit from the reduced GST rate under Entry No.3(v)(da) of Notification No.11/2017-Central Tax (Rate), as amended by Notification No.01/2018-Central Tax (Rate). This provision applies to low-cost houses up to a carpet area of 60 square metres per house in an affordable housing project with infrastructure status. An affordable housing project is defined as using at least 50% of the FAR/FSI for dwelling units with a carpet area not exceeding 60 square metres.

2. Applicability of Reduced GST Rates to Part-B of Sector-4:
The applicant argued that Part-B of Sector-4 should be considered an independent project for affordable housing. They claimed that 74.08% of the FSI in Part-B was used for units with a carpet area of up to 60 square metres, thus qualifying for the reduced GST rate. However, the authority noted that the entire Sector-4, including Part-A and Part-B, shared common land, facilities, and entrance. Therefore, Part-B could not be considered a standalone project.

3. Interpretation of 'Housing Project':
The term 'housing project' is not defined under the CGST Act or the notification. The authority interpreted it generically as a project with common facilities, common area, common entrance, and common land. Since Part-B shared these features with Part-A, it could not be treated as an independent project. The applicant's reliance on the RERA Act's definitions was deemed irrelevant for determining the GST notification's applicability.

Conclusion:
The authority concluded that the entire Sector-4 must be considered as a single housing project. Since less than 50% of the FAR/FSI of the entire Sector-4 was used for units with a carpet area of up to 60 square metres, the project did not qualify as an affordable housing project under the relevant notification. Consequently, the applicant was not eligible for the reduced GST rate.

Ruling:
The applicant is not eligible for the benefit of the reduced GST rate under Entry No.3(v)(da) of Notification No.11/2017-Central Tax (Rate), as amended by Notification No.01/2018-Central Tax (Rate), for houses constructed with a carpet area of 60 square metres per house.