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2020 (1) TMI 740 - AAR - GSTBenefit of concessional rate of tax - dwelling units at Joyville, Virar - low cost houses - benefit of concessional rate would be available to common amenities such as club house, swimming pool and amenities of like nature - ongoing project - whether the construction services provided by the applicant under the subject qualifies for the reduced GST rate of 12% as provided in Sr. No. 3 - item (v) - sub item (da) of Notification No. 01/2018-CT (Rate) dated 25.01.2018? - HELD THAT - The applicant s case is covered under the tax rate of 12% (8% GST after deducting value of land), under Heading 9954 (Construction Services), (v) (da) of above mentioned Notification No. 11/2017, as amended, since the project undertaken by applicant falls under the definition of Affordable Housing . The benefit of reduced rate would be available to applicant only in the cases of supply effected after 25.01.2018 i.e. the date on which Notification 1/2018-Central Tax (Rate) was issued and only in respect of dwelling units having carpet area less than 60 sq. mtrs. Whether the benefit of concessional rate would be available to common amenities such as club house, swimming pool, etc., except corpus fund subscription and share application money, as mentioned in Annexure D of the agreement for sale? - HELD THAT - Such services will qualify as composite supply of works contract service, where the principal supply would be, construction services. Accordingly, the rate applicable to the principal supply will also be applicable to common amenities. The word housing project cannot be confined only to dwelling units, it would also include within its fold, other common amenities, structures, etc. The jurisdictional office has also opined that Common amenities form part of the overall construction service and are always naturally bundled when offered to the customer. Therefore, such services will qualify as composite supply of works contract service wherein provision of construction services is the principal supply. Accordingly, the rate applicable to the principal supply will also be applicable to common amenities - the concessional rate of 12% will be charged on such amounts collected by the applicant from buyers of units with area less than 60 sq mtrs. and GST @ of 18% will be charged on such amounts collected by the applicant from buyers of units with area greater than 60 sq mtrs. Whether the project of the Applicant at Joyville, Virar qualifies as an ongoing project under Notification No. 3/2019-Central Tax (Rate) dated 29.03.2019 so as to be eligible for the concessional rate of benefit under Notification No. 11/2017-Central Tax (Rate) dated 28.06.2017? - HELD THAT - The project of the Applicant at Joyville, Virar qualifies as an ongoing project under Notification No. 3/2019-C.T. (Rate) dated 29.03.2019. Further, the jurisdictional officer has also agreed that subject project is an ongoing project as per said Notification No. 3/2019-Central Tax (Rate) dated 29.03.2019. What would be the rate of Goods and Services Tax on the units at Joyville, Virar which do not qualify the criteria of low cost houses ? - Whether 12% or 18% tax is to be levied on those units? - HELD THAT - The applicant s case is covered under the concessional rate of 12% (8% GST after deducting value of land), under Heading 9954 (Construction Services), (v) (da) of above mentioned Notification No. 11/2017, as amended since the project undertaken by them fails under the definition of Affordable Housing - The benefit of reduced rate would be available to them only in the cases of supply effected after 25.01.2018 i.e. the date on which Notification 1/2018-Central Tax (Rate) was issued and the benefit of this reduced rate would be applicable in case of only those flats which are of carpet area upto 60 sq mtrs., in this scheme which is covered in the category of affordable housing. In case of other flats which have carpet area more than 60 sq.mtrs. applicant would be required to pay GST at normal applicable rate i.e. @18% GST.
Issues Involved:
1. Qualification of dwelling units as 'low cost houses' and eligibility for concessional GST rate of 12%. 2. Applicability of concessional rate to common amenities such as club house, swimming pool, etc. 3. Qualification of the project as an 'ongoing project' under Notification No. 3/2019. 4. Applicable GST rate on units not qualifying as 'low cost houses'. Detailed Analysis: Issue 1: Qualification of Dwelling Units as 'Low Cost Houses' The applicant, a real estate developer, sought to determine if the dwelling units at Joyville, Virar qualify as 'low cost houses' under the GST regime, and thus eligible for a concessional rate of 12% GST. The project comprises multiple phases, with the majority of units having a carpet area of less than 60 sq. mtrs. The relevant Notification No. 11/2017-C.T. (Rate) dated 28.06.2017, amended by Notification No. 1/2018-C.T. (Rate) dated 25.01.2018, specifies a concessional rate for 'low cost houses' in an affordable housing project with infrastructure status. The project qualifies as such since more than 50% of the Floor Space Index (FSI) is utilized for units under 60 sq. mtrs. Thus, the units measuring less than 60 sq. mtrs. qualify as low cost houses and are eligible for the concessional rate of 12% GST. Issue 2: Applicability of Concessional Rate to Common Amenities The applicant contended that common amenities like club house, swimming pool, etc., should also benefit from the concessional rate as they are part of the composite supply of works contract services. The ruling agreed, stating that these amenities form part of the overall construction service and are naturally bundled with the principal supply of dwelling units. Therefore, the concessional rate of 12% applies to these common amenities for units under 60 sq. mtrs. However, charges like Advance Maintenance Charges collected for maintenance after possession and before society formation are not part of this composite supply and attract 18% GST. Issue 3: Qualification as an 'Ongoing Project' The applicant sought clarity on whether the project qualifies as an 'ongoing project' under Notification No. 3/2019-C.T. (Rate) dated 29.03.2019. The criteria include having a commencement certificate issued before 31.03.2019, no completion or occupation certificate issued, and units booked before 31.03.2019. The applicant's project met these conditions, and they had filed the required Annexure IV form. Hence, the project qualifies as an 'ongoing project' and is eligible for the concessional rate of 12% GST for units under 60 sq. mtrs. Issue 4: Applicable GST Rate on Non-Qualifying Units The applicant questioned the GST rate applicable to units exceeding 60 sq. mtrs. The ruling clarified that units not qualifying as 'low cost houses' (i.e., units with a carpet area greater than 60 sq. mtrs.) would be subject to the standard GST rate of 18%. Conclusion: - Issue 1: Dwelling units under 60 sq. mtrs. qualify as 'low cost houses' and are eligible for a concessional GST rate of 12%. - Issue 2: Common amenities associated with units under 60 sq. mtrs. are eligible for the concessional rate of 12%, while certain charges like Advance Maintenance attract 18% GST. - Issue 3: The project qualifies as an 'ongoing project' under Notification No. 3/2019, making it eligible for the concessional rate for units under 60 sq. mtrs. - Issue 4: Units exceeding 60 sq. mtrs. are subject to an 18% GST rate.
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