2024 (6) TMI 220 - AAR - GST

Levy of GST or exemption from GST - selling of residential units in the project Saviour Park after deemed completion or first occupation in that phase (Phase IV) of the project - unit sold after which date shall be treated as exempt from GST. Whether selling of residential units in the project Saviour Park after deemed completion or first occupation in that phase (Phase IV) of the project is taxable or exempt Supply? - HELD THAT - It is not the case that GDA has not given completion certificate within a specified time and thus it may be treated as deemed completion. On the other hand the GDA vide letter dt. 27.04.2023, received on 02.05.2023, denied to issue the completion certificate. Thus, with respect to 113 units of the project, it cannot be considered as deemed completion - in a single building if projects are registered under RERA as separate projects, those shall be treated as distinct projects. The applicant was engaged in the building of 1150 units in aggregate. The said project was divided in 4 phases. The first three phases have already been completed and delivered to the customers. The 4th phase was completed in two parts-169 units in one part and 113 units in second part. Any occupancy in the Phase IV the project without Completion Certificate/Occupancy Certificate is in contravention of Bye-laws of Ghaziabad Development Authority. The letter of possessions cannot be substitute the occupation certificate. Thus, having letter of possessions or sale deed does not necessarily imply that first occupation has taken place. If answer to the above is affirmative, unit sold after which date shall be treated as exempt from GST - HELD THAT - The Completion Certificate was denied to the applicant by GDA. Once, GDA denied Completion Certificate to the applicant. Hence, Completion Certificate cannot be said to be deemed approved. The first occupation cannot be said to be taken either. Thus, the sale of residential units in Phase IV of the project by the applicant is not sale of immovable property but sale of services and thus GST is leviable.

Summary

Issues Involved:
1. Taxability of selling residential units after 'deemed completion' or 'first occupation' in Phase IV of the project.
2. Date from which the units sold shall be treated as exempt from GST.

Summary:

Issue 1: Taxability of selling residential units after 'deemed completion' or 'first occupation' in Phase IV of the project

The applicant, M/s Savfab Buildtech Private Limited, sought an advance ruling on whether the sale of residential units in Phase IV of the project 'Saviour Park' after 'deemed completion' or 'first occupation' is taxable or exempt from GST. The applicant argued that GST is not leviable on the sale of immovable property, as per Section 9 of the CGST Act, 2017, and Schedule III of the CGST Act, 2017, which states that the sale of land and building is neither a supply of goods nor services. They contended that once a completion certificate is received or first occupation is given, GST should not be levied.

However, the Authority for Advance Ruling (AAR) found that the completion certificate was not granted by the Ghaziabad Development Authority (GDA) due to pending dues, and thus, the project cannot be considered as 'deemed completed.' The AAR noted that the applicant did not face issues obtaining completion certificates for the first three phases and Part I of Phase IV, but faced issues with Part II of Phase IV. The AAR emphasized that as per Para 5(b) of Schedule II of the CGST Act, 2017, the construction of a building intended for sale to a buyer is treated as a supply of services unless the entire consideration is received after the issuance of a completion certificate or after its first occupation.

The AAR concluded that the sale of residential units in Phase IV of the project by the applicant is not the sale of immovable property but a sale of services, and thus, GST is leviable.

Issue 2: Date from which the units sold shall be treated as exempt from GST

The AAR ruled that the units sold shall be treated as exempt from GST from the date on which the completion/occupancy certificate is obtained from the Ghaziabad Development Authority for Phase IV of the project.

Ruling:

1. The sale of residential units in Phase IV of the project by the applicant is not the sale of immovable property but a sale of services, and thus, GST is leviable.
2. The units sold shall be treated as exempt from GST from the date on which the completion/occupancy certificate is obtained from the Ghaziabad Development Authority for Phase IV of the project.

This ruling is valid only within the jurisdiction of the Authority for Advance Ruling, Uttar Pradesh, and subject to the provisions u/s 103(2) of the CGST Act, 2017, until declared void u/s 104(1) of the Act.