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2021 (7) TMI 541 - AAR - GSTRate of GST - unbooked 11 units in the project , which did not get the approval for villa from local authorities before 31.03.2019 - levy of old GST rate or new GST rate - Whether the new tax rate of 7.5% (effective rate of 5% after excluding land portion), with no ITC, is applicable to the 11 unbooked units in the said VRINDHAVAN project? - applicability of answer given for the first question to 'VRINDHAVAN project to other similar projects in similar situations. HELD THAT - On a conjoint reading of the definitions of the terms and the clarification of CBIC by FAQs under F.No. 354/32/2019 - TRU dated 07.05.2019, it is evident that the option envisaged under Item (if) of Sl No. 3 of Notification No. 11/2017-Central Tax (Rate) dated 28.06.2017 as amended by Notification No. 03/2019-Central Tax (Rate) dated 29.03.2019 is in respect of the entire ongoing project and not in respect of part of the project. Further, as is clarified by CBIC, even if the commencement certificate issued is only for part of the project, the same shall be treated as an ongoing project - Hence, as per provisions of the said notification, the option to pay tax at the old rate can only be exercised project-wise and not for part of project or individual apartments / villas comprised in a project. Therefore, the option exercised by the applicant for paying tax at the rate as specified in Item (if) of S1 No. 3 of Notification No. 11/2017-Central Tax (Rate) dated 28.06.2017 as amended by Notification No. 03/2019-Central Tax (Rate) dated 29.03.2019 in respect of the ongoing project VRINDHAVAN is applicable for the entire 20 villas comprised in the project and not for the 9 villas as claimed by the applicant. Whether the answer given for the first question to VRINDHAVAN project is also applicable to the other similar projects in similar situations? - HELD THAT - The advance ruling is binding only on the applicant and the jurisdictional officer of the applicant. Hence the answer to the first question is applicable only to similar projects of the applicant in similar situations.
Issues Involved:
1. Applicability of the new tax rate of 7.5% (effective rate of 5% after excluding land portion), with no ITC, to the 11 unbooked units in the VRINDHAVAN project. 2. Applicability of the ruling for the VRINDHAVAN project to other similar projects in similar situations. Comprehensive, Issue-wise Detailed Analysis: Issue 1: Applicability of the New Tax Rate to the 11 Unbooked Units in the VRINDHAVAN Project Facts and Contentions: - The applicant, a partnership firm engaged in promoting gated community villa projects, opted for the old GST rate of 18% (effective rate of 12% after excluding land portion) for 9 units in the VRINDHAVAN project that were booked and approved by local authorities before 31.03.2019. - The remaining 11 units were unbooked and lacked local authority approval before 31.03.2019. The applicant did not opt for the old rate for these units, thereby making them liable to the new GST rate of 7.5% (effective rate of 5% after excluding land portion) without ITC as per Notification No. 11/2017-CT (Rate) dated 28.06.2017, amended by Notification No. 03/2019-CT (Rate) dated 29.03.2019. - The applicant argued that the option to pay tax at the old rate can be exercised for part of a project, not necessarily the entire project. Jurisdictional Officer’s Comments: - The officer noted that the applicant initially filed an option for 9 units under the VRINDHAVAN project, which was accepted. A subsequent request to include one more villa was rejected as it was filed after the deadline. Discussion and Conclusion: - The Authority examined the provisions of Notification No. 03/2019-CT (Rate) and the definition of "ongoing project" under Notification No. 11/2017-CT (Rate). - The term "ongoing project" includes projects where commencement certificates were issued before 31.03.2019, and construction started before this date, among other conditions. - CBIC FAQs clarified that the option to pay tax at the old rate must be exercised for the entire project, not part of it. - Therefore, the option exercised by the applicant for the old tax rate applies to the entire VRINDHAVAN project, not just the 9 units. Ruling: - The new tax rate of 7.5% (effective rate of 5% after excluding land portion), with no ITC, is not applicable to the 11 unbooked units. The old rate of 18% [9% CGST + 9% SGST] with ITC applies to all units in the VRINDHAVAN project. Issue 2: Applicability of the Ruling to Other Similar Projects Contentions: - The applicant sought clarification on whether the ruling for the VRINDHAVAN project would apply to other similar projects under similar circumstances. Legal Provision: - Section 103 of the CGST Act specifies that an advance ruling is binding only on the applicant and the jurisdictional officer concerning the applicant unless the law, facts, or circumstances change. Conclusion: - The ruling for the VRINDHAVAN project is applicable to other similar projects of the applicant under similar situations, provided the facts and circumstances remain unchanged. Ruling: - The answer to the first question regarding the VRINDHAVAN project is also applicable to other similar projects of the applicant in similar situations. Final Rulings: 1. The new tax rate of 7.5% (effective rate of 5% after excluding land portion), with no ITC, is not applicable to the 11 unbooked units in the VRINDHAVAN project. The old rate of 18% [9% CGST + 9% SGST] with ITC applies to all units in the project. 2. The ruling for the VRINDHAVAN project is applicable to other similar projects of the applicant in similar situations.
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