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2020 (8) TMI 529 - AAR - GSTRate of GST - Residential unit - construction of 45 individual residential houses - Benefit of Serial number (i), (v) or (va) of Notification No.11/2017-CT(R) dated 28.06.2017 as amended by Notification No. 03/2019 - CT (R) dated 29.03.2019 - services provided by the applicant to Sri Sathya Sai Trust for construction of low cost housing units for flood-affected individuals in Kerala - exemption from GST by Notification 12/2017- CT (R) dated 28.06.2017 as amended. HELD THAT - The rate of GST prescribed under this entry applies to construction of affordable residential apartments by a promoter in a residential real estate project intended for sale to a buyer except where the entire consideration is received after issuance of completion certificate. Further, the rate under this entry applies where the supply of the services involves transfer of land or undivided share of land and its value is included in the amount charged from the buyer. As per Para 2 (zze) of Notification No. 12/2017 CT (Rate) dated 28.06.2017; single residential unit means a self-contained residential unit which is designed for use, wholly or principally, for residential purposes for one family - The rate of GST applicable as per the above entry is 12%. The activity of construction of 45 individual residential houses at different locations on the land belonging to the individual beneficiaries undertaken by the applicant as per the agreement dated 16.11.2019 is rightly classifiable as composite supply of works contract as defined in Section 2 (119) of the CGST Act, 2017 supplied by way of construction of single residential units otherwise than as a part of a residential complex and is liable to GST at the rate of 12% as per Sl No.3 (v) of Notification No. 11/2017-Central Tax (Rate) dated 28.06.2017 as amended.
Issues Involved:
1. Applicability of GST rate under Notification No. 11/2017-CT(R) for construction services provided by the applicant. 2. Exemption from GST under Notification No. 12/2017-CT(R). Detailed Analysis: Issue 1: Applicability of GST Rate under Notification No. 11/2017-CT(R) The applicant, a non-governmental organization engaged in sustainable building solutions, sought an advance ruling on whether their services for constructing low-cost housing units for flood-affected individuals in Kerala fall under Serial numbers (i), (v), or (va) of Notification No. 11/2017-CT(R) as amended by Notification No. 03/2019-CT(R). The applicant argued that the houses being constructed meet the definition of affordable housing and should attract a concessional GST rate of 1.5% as per Sl No. 3 (i) of Notification No. 11/2017-CT(R). Upon examination, it was found that the services provided by the applicant do not fall under Sl No. 3 (i) of the Notification. The key reason is that the activity does not involve the construction of affordable residential apartments by a promoter in a residential real estate project intended for sale to a buyer. Instead, the activity involves constructing individual residential houses on land belonging to the beneficiaries, which falls under the definition of a "works contract" as per Section 2 (119) of the CGST Act, 2017. Therefore, the applicable GST rate is 12% [6% CGST and 6% SGST] as per Sl No. 3 (v) of Notification No. 11/2017-CT(R). Issue 2: Exemption from GST under Notification No. 12/2017-CT(R) The applicant also sought clarification on whether their services are exempt from GST under Notification No. 12/2017-CT(R). The ruling clarified that the services provided by the applicant are not exempt from GST. The construction of 45 individual residential houses at different locations for flood victims does not qualify for any exemption under the said notification. Conclusion:
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