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2022 (5) TMI 341 - AAR - GSTExemption from GST - sub-contractors to the builder / Developer / Contractor of Affordable housing under PMAY Scheme - applicability of Serial No.3(i) of Notification No.03/2019-Central Tax (Rate) New Delhi, the 29th March, 2019 (parent Notification No. 11/2017-Central Tax (Rate), dated the 28th June, 2017 as amended by Notification No.30/2018-Central Tax (Rate), dated the 31st December, 2018 - Eligibility of concessional rate of CGST at 0.75% as per the Notification No.03/2019-Central Tax (Rate) New Delhi, the 29th March, 2019 amended from time to time. HELD THAT - It could be seen from the column 3 (description of the service) of entry number 3(i) of the principal notification No. 11/2017-Central Tax (Rate) dated 28.06.2017, as amended by the Notification No.3/2019-Central Tax (Rate) dated 29.03.2019, effective from 01.04.2019 that, the concessional rate of 0.75% CGST is applicable only to the promoter in respect of the Construction of affordable residential apartments in a Residential Real Estate Project (herein after referred to as RREP) which commences on or after 1st April, 2019. The concessional rate is also applicable in case of an ongoing RREP in respect of which the promoter has not exercised option to pay central tax on construction of apartments at the rates as specified for item (ie) or (if) below, as the case may be, in the manner prescribed therein. In the instant case it is an admitted fact that the applicant is not a promoter but a sub-contractor and hence the benefit of the said entry i.e. concessional rate of GST of 0.75%, for the proposed construction, is not applicable to the applicant - other details need not be examined as the entry itself is not applicable to the applicant.
Issues Involved:
1. Applicability of Serial No.3(i) of Notification No.03/2019-Central Tax (Rate) dated 29th March 2019 to the applicant who is a sub-contractor. 2. Eligibility of concessional rate of CGST at 0.75% as per Notification No.03/2019-Central Tax (Rate) dated 29th March 2019. Issue-wise Detailed Analysis: 1. Applicability of Serial No.3(i) of Notification No.03/2019-Central Tax (Rate) dated 29th March 2019 to the applicant who is a sub-contractor: The applicant, a proprietorship concern engaged in civil construction of residential premises, sought an advance ruling on whether Serial No.3(i) of Notification No.03/2019-Central Tax (Rate) dated 29th March 2019, which amends Notification No.11/2017-Central Tax (Rate), applies to their services as a sub-contractor for affordable housing under the PMAY scheme. The applicant argued that their project qualifies as an Affordable Housing Project (AHP) and should thus benefit from the concessional rate of CGST at 0.75%. Upon examination, it was noted that the applicant is a sub-contractor and not a promoter. The notification in question specifically applies to promoters involved in the construction of affordable residential apartments in a Residential Real Estate Project (RREP) commencing on or after 1st April 2019. The ruling clarified that the concessional rate is intended for promoters who have not opted for the higher tax rates specified for other items in the notification. Since the applicant is not a promoter, the benefit of the concessional rate of GST at 0.75% does not apply to them. 2. Eligibility of concessional rate of CGST at 0.75% as per Notification No.03/2019-Central Tax (Rate) dated 29th March 2019: The applicant contended that they should be eligible for the concessional rate of CGST at 0.75% for their construction services related to affordable housing projects. They supported their claim by referencing various rulings and clarifications, including those from the Maharashtra AAR and CBEC, which suggested that the concessional rate could apply to sub-contractors in certain conditions. However, the ruling emphasized that the concessional rate of 0.75% CGST is explicitly applicable to promoters as per the description in the notification. The notification's conditions and provisions are designed to apply to promoters who construct affordable residential apartments in RREPs. Since the applicant is a sub-contractor, they do not meet the criteria set forth in the notification. Therefore, the concessional rate of CGST at 0.75% is not applicable to the applicant. Ruling: 1. Serial No.3(i) of Notification No.03/2019-Central Tax (Rate) dated 29th March 2019 is not applicable to the applicant who is a sub-contractor for affordable housing under the PMAY Scheme. 2. The concessional rate of CGST at 0.75% as per entry No.3(i) of Notification No.11/2017-Central Tax (Rate) dated 28th June 2017, amended by Notification No.03/2019-Central Tax (Rate) dated 29th March 2019, is not applicable to the applicant as this rate is intended only for promoters, not sub-contractors.
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