2023 (4) TMI 44 - AAAR - GST

Levy of GST - sale of commercial super built up area on behalf of MoHUA Government of India - Appellant is also 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 - sale of commercial built-up space - 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 - consideration received under an agreement to sell constructed units in a building which is under construction. Liability to pay GST on the sale of commercial super built up area on behalf of MoHUA Government of India - HELD THAT - Supplier means any person supplying the goods or services or both and it also includes an agent. The definition of agent includes a commission agent broker etc. acting as such on behalf of supplier in relation to the goods or services or both. Combined reading of the definitions of both the supplier and the agent as given in section 2(5) and Section 2(105) respectively of the CGST Act 2017 makes it clear that the appellant is an agent of MoHUA as they are in the business of supply of commercial built-up space on behalf of later. Therefore he is a taxable person as defined under Section 2(107) of CGST Act 2017 and is liable to discharge the tax liability as per statutory provisions - It is clear from the Explanation (i) to Section 22 and Clause (vii) of Section 24 of the CGST Act 2017 that the appellant is required to be registered while acting as an agent for supply of services and is a taxable person as per Section 2(107) of the CGST Act 2017. Therefore the responsibility to collect and/ or deposit GST on the taxable supply of goods or services as an agent of MoHUA lies with the appellant since he is engaged in the sale of commercial built-up area on behalf of MoHUA. Whether or not MoHUA Government of India is liable to pay GST on the sale of commercial built-up space? - HELD THAT - The exemption was granted vide S. No. 4 of Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017 (as applicable upto 25.07.2018) to the Services by Central Government State Government Union territory local authority or governmental authority by way of any activity in relation to any function entrusted to a municipality under article 243 W of the Constitution. The said notification was amended vide Notification No. 14/2018-Central Tax(Rate) dated 26.07.2018 and against S. No. 4 in column (3) the words Central Government State Government Union territory local authority or have been omitted. It shows that after the above amendment the exemption under the notification is admissible only if such services are provided by a government authority . There are no force in the claim of the appellant that the functions of Municipalities given in Twelfth Schedule of the Constitution covers construction of commercial built-up space in the redevelopment projects - In the present case the appellant is selling the commercial built-up space to the private entities and this activity cannot be treated as a function of Municipality as envisaged under article 243W of the Constitution of India which provides powers authority and responsibilities of the Municipalities. Moreover the commercial built-up spaces are for the purpose of sale to individual buyers who will use them for their commercial gain and this by no stretch of imagination this can be termed as a facility meant for use of common public. Whether the appellant is liable to pay GST on the services supplied under GST regime i.e. w.e.f 01.07.2017 even if a part of the consideration had been received prior to 01.07.2017? - HELD THAT - As per the statutory provisions they are liable to pay GST on the services supplied under GST regime i.e. w.e.f 01.07.2017 even if a part of the consideration had been received prior to 01.07.2017. FAQ on GST in respect of Construction of Residential Complex by Builders/ Developers were issued by the department merely as a clarification. Appellant s liability to pay GST on a consideration received under an agreement involving sale of constructed units in a building which is under construction - HELD THAT - The appellant has reiterated the plea already advanced before the DAAR and the same have been sufficiently addressed by the authority while passing the impugned Order. Therefore there are no reason to go to this aspect any further. Appeal dismissed.

Summary

Issues Involved:
1. Liability to pay GST on the sale of commercial super built-up area on behalf of MoHUA.
2. Liability of MoHUA, Government of India, to pay GST on the sale of commercial built-up space.
3. Applicability of GST on services supplied under GST regime when part of the consideration was received prior to 01.07.2017.
4. Liability to pay GST on consideration received under an agreement to sell constructed units in a building which is under construction.

Issue-wise
Detailed Analysis:

1. Liability to Pay GST on Sale of Commercial Super Built-Up Area on Behalf of MoHUA:
The appellant contended that they are not liable to pay GST on the sale of built-up space by MoHUA because they are not suppliers of any goods or services in the transaction between MoHUA and the purchaser. The Delhi Authority for Advance Ruling (DAAR) held that the appellant is liable to pay GST under Section 9(1) of the CGST Act, 2017, as they are covered under 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. The appellant's activities were examined, and it was found that they are engaged in selling the commercial built-up area through e-auction on behalf of MoHUA. The sale deed with the successful bidder is signed by the nominated officer of MoHUA, and the appellant acts as a facilitator of the execution of the sale deed. Therefore, the appellant is considered an agent of MoHUA and is liable to pay GST as a taxable person.

2. Liability of MoHUA, Government of India, to Pay GST on Sale of Commercial Built-Up Space:
The appellant argued that the construction activities and sale thereof are exempted from tax under Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017, being in relation to a function entrusted to a municipality under Article 243W of the Constitution. However, the exemption was amended vide Notification No. 14/2018-Central Tax(Rate) dated 26.07.2018, and the words "Central Government, State Government, Union territory, local authority or" were omitted. The exemption is now admissible only if such services are provided by a "governmental authority." The appellant's activities of selling commercial built-up space to private entities do not qualify as a function of a municipality under Article 243W of the Constitution, which relates to welfare activities without commercial consideration.

3. Applicability of GST on Services Supplied Under GST Regime When Part of the Consideration Was Received Prior to 01.07.2017:
The appellant contended that they are not liable to pay GST on the sale of built-up space prior to 01.07.2017. However, as per statutory provisions, they are liable to pay GST on the services supplied under the GST regime from 01.07.2017, even if part of the consideration was received prior to this date. The FAQ issued by the department merely serves as a clarification and does not alter the statutory provisions.

4. Liability to Pay GST on Consideration Received Under an Agreement to Sell Constructed Units in a Building Which Is Under Construction:
The appellant reiterated their plea that they are not liable to pay GST on consideration received under an agreement to sell constructed units in a building under construction. This issue was sufficiently addressed by DAAR, which held that the appellant 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.

Conclusion:
The Appellate Authority upheld the Order dated 05.10.2018 of the Delhi Authority for Advance Ruling, finding no merit in the appeal filed by the appellant. The appeal was dismissed as devoid of merit, affirming the appellant's liability to pay GST on the sale of commercial built-up area on behalf of MoHUA, the non-applicability of exemption for MoHUA's activities, and the applicability of GST on services supplied under the GST regime and on the sale of constructed units in a building under construction.