2021 (10) TMI 327 - AAR - GST

Rate of GST - old rates of GST or new rates - ongoing projects construction of which had started before 01.04.2019 - definition of affordable residential apartment has been changed w.e.f. 01.04.2019 vide Notification No.03/2019-Central Tax (Rate) dated 29.03.2019 - Whether this new definition is applicable in respect of flats (having carpet area of 60 sqm and value up to ₹ 45 lacs) of ongoing projects and collect tax @ 8% on all advances received after 01.04.2019 where (i) 1st booking money received after 01.04.2019; and (ii) 1st booking money received before 01.04.2019. HELD THAT - In the instant case, the applicant has exercised option to pay tax at old rates. Hence, the effective tax rate of 1% or 5%, as the case may be, as introduced vide Notification No.03/2019Central Tax (Rate) dated 29.03.2019 is found not to be applicable in respect of the said 06(six) projects, as discussed. The rate notification is amply clear to specify that liability to pay tax at old GST rate which was leviable prior to 01.04.2019 upon filing of option in Annexure-IV and levy of tax at new rate introduced w.e.f. 01.04.2019 is mutually exclusive. There is no scope to pay tax at both the rates on or after 01.04.2019. The definition of affordable residential apartment is not applicable in respect of the 06(six) projects involved in the instant case for the following reasons (i) Affordable residential apartment shall mean a residential apartment in a project which commences on or after 1st April, 2019. But here all the projects are found to have been commenced before 1st April, 2019; (ii) Affordable residential apartment shall mean a residential apartment in an ongoing project in respect of which the promoter has not exercised option to pay tax at the rates as specified for item (ie) or (if) i.e., old GST rates. But in the instant case, the promoter has exercised option to pay central tax and state tax at the rate which was leviable prior to 01.04.2019. Where a promoter exercises option in Annexure-IV to pay tax at the rate as specified for item (ie) or (if) against serial number 3 of the Notification No. 3/2019 Central Tax (Rate) dated 29.03.2019, there is no scope to pay tax at a reduced rate of 1% or 5% (effective rate), as the case may.

Summary

Issues Involved:
1. Applicability of the new definition of 'affordable residential apartment' for ongoing projects.
2. GST rate applicable for advances received after 01.04.2019 for ongoing projects.

Issue-wise Detailed Analysis:

1. Applicability of the New Definition of 'Affordable Residential Apartment':

Applicant's Submission:
- The applicant is engaged in constructing residential flats and has ongoing projects that started before 01.04.2019.
- The definition of 'affordable residential apartment' changed effective 01.04.2019 via Notification No.03/2019-Central Tax (Rate) dated 29.03.2019.
- The applicant queried whether the new definition applies to flats with a carpet area of 60 sqm and value up to ?45 lakhs for ongoing projects, affecting the GST rate on advances received post-01.04.2019.

Revenue's Submission:
- Flats with a carpet area of 60 sqm and value up to ?45 lakhs in metropolitan cities, and 90 sqm in non-metropolitan cities are considered affordable residential apartments.
- For ongoing projects booked on or before 31.03.2019, if the promoter opts to pay tax at old GST rates, the effective GST rate remains 8%.
- For projects where the first booking money is received after 01.04.2019, the new GST rate of 1% applies.

Authority's Observations:
- The definition of 'affordable residential apartment' per Notification No. 03/2019-Central Tax (Rate) includes projects commencing on or after 01.04.2019 or ongoing projects where the promoter hasn't opted for old tax rates.
- The applicant's projects commenced before 01.04.2019 and the promoter opted for old GST rates, thus the new definition does not apply.
- The applicant's reliance on the Maharashtra Authority for Advance Ruling in Prajapati Developers is irrelevant as it predates the new notification.

Conclusion:
- The new definition of 'affordable residential apartment' does not apply to the applicant's ongoing projects where the promoter opted to pay tax at old GST rates.

2. GST Rate Applicable for Advances Received After 01.04.2019:

Applicant's Submission:
- The applicant contends that for projects where the first booking money is received after 01.04.2019, the new definition of affordable housing should apply, and GST should be charged at 1% or 5%.

Revenue's Submission:
- For ongoing projects where the first booking money is received before 01.04.2019, the old GST rate of 8% applies if the promoter opted for it.
- For projects where the first booking money is received after 01.04.2019, the new GST rate of 1% applies.

Authority's Observations:
- The applicant's projects meet the criteria of 'ongoing projects' as defined in Notification No.03/2019-Central Tax (Rate).
- The applicant exercised the option to pay tax at old rates, thus the effective tax rate of 1% or 5% does not apply to these projects.
- The authority reiterated that the liability to pay tax at old GST rates and the new rates introduced from 01.04.2019 are mutually exclusive.

Conclusion:
- For the applicant's ongoing projects where the promoter opted for old GST rates, the GST rate remains at 8% for advances received after 01.04.2019.

Ruling:
- The definition of 'affordable residential apartment' is not applicable to the applicant's ongoing projects where the promoter opted to pay tax at old GST rates.
- There is no scope to pay tax at a reduced rate of 1% or 5% for these projects.