2021 (8) TMI 341 - AAR - GST

Classification of services - rate of GST - construction service provided by the Applicant to M/s. Provident Housing Limited under the project Provident Neora Provident Capella to M/s. Puravankara Limited under the project Provident Parksquare - applicability for lower rate of CGST as provided in Sl.No.3-Item (V)-sub item (da) vide N/N. 11/2017-CT (Rate) dated 28-06-2017 - HELD THAT - Regarding the condition whether the project is an affordable housing project which has been given infrastructure status vide notification of Government of India, in Ministry of Finance, Department of Economic Affairs vide F.No. 13/6/2009-INF, dated the 30th March, 2017, the applicant has not provided any evidence in support of his claim that the above projects are covered under the said notification. If the above projects are affordable housing projects and are given the infrastructure status as per notification of Government of India, in Ministry of Finance, Department of Economic Affairs vide F.No. 13/6/2009-INF, dated the 30th March, 2017, the contract of supply by the applicant would be covered under the Entry No. 3(v)(da) of Notification 11/2017 Central Tax (Rate) dated 28.06.2017 and liable to tax at the rate of 12%. In case the projects are not an affordable housing projects and are not given the infrastructure status as per notification of Government of India, in Ministry of Finance, Department of Economic Affairs vide F.No. 13/6/2009-INF, dated the 30th March, 2017, the contract of supply by the applicant would not be covered under the Entry No. 3(v)(da) of Notification 11/2017 Central Tax (Rate) dated 28.06.2017, but covered under Entry No. 3(xii) of Notification 11/2017 Central Tax (Rate) dated 28.06.2017 and liable to tax at the rate of 18%.

Issues:
1. Admissibility of the application under Section 97(2)(e) of the CGST Act, 2017.
2. Interpretation of whether construction services qualify for lower CGST and SGST rates under Notification No. 11/2017-CT (Rate) dated 28-06-2017.
3. Verification of conditions for services to be covered under Entry No. 3(v)(da) of the Rate Notification.

Analysis:
1. The applicant, a private limited company engaged in construction contracts, sought an advance ruling on the eligibility for lower tax rates under CGST and SGST Acts for services provided to specific projects.
2. The applicant argued that their projects qualified as affordable housing projects under Notification No. 11/2017, meeting the criteria for reduced tax rates.
3. The Authority reviewed the applicant's interpretation of law, focusing on the definition of affordable housing and infrastructure status under the relevant notifications.
4. The Authority examined the conditions under Entry No. 3(v)(da) of the Rate Notification, emphasizing the requirements related to works contract services, original works, and affordable housing project status.
5. It was noted that the contract involved construction of immovable property, falling under works contract as per the CGST Act, 2017.
6. The Authority analyzed the meaning of "original works" in the context of the projects undertaken by the applicant, concluding that the second condition was satisfied.
7. However, the applicant failed to provide evidence supporting their claim that the projects qualified as affordable housing projects with infrastructure status as per the relevant notification.
8. Based on the findings, the Authority ruled that if the projects met the criteria for affordable housing projects with infrastructure status, the services would be taxed at 6% under CGST and SGST Acts; otherwise, the tax rate would be 9%.

This detailed analysis of the judgment provides insights into the issues addressed by the Advance Ruling Authority regarding the eligibility of construction services for lower tax rates under the CGST and SGST Acts based on specific project criteria and notifications.

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