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TMI Blog2018 (10) TMI 1054X X X X Extracts X X X X X X X X Extracts X X X X ..... and Urban Affairs (MoHUA), it is held that they are covered as “agent” in Section 2(5) of the CGST Act, 2017. From the combined reading of Sections 2(5), 2(105), 2(107), 22 and 24 of the CGST Act, 2017, it is clear that the applicant is covered in the definitions of “Agent”, “Supplier” and “Taxable Person” in respect of the said project while providing services on behalf of the Ministry of Housing and Urban Affairs. Further, the applicant is falling under the categories of persons under Section 22 and also under Section 24 requiring compulsory registration in respect of the said project - the contention of the applicant that they cannot be construed as “supplier” of service as they are selling the commercial built up space on behalf of the Ministry of Housing and Urban Affairs (MoHUA) is not acceptable. Accordingly, they are liable to pay GST under Section 9(1) of the CGST Act, 2017, being taxable person as per Section 2(107) of the said Act in respect of the said project. The sale of the commercial built-up area by the applicant on behalf of MoHUA cast a responsibility on the applicant to also collect and/or deposit GST on the taxable supply of goods or services, even, if ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7.2017 subject to the provisions of Section 142(11) (b) of the CGST Act, 2017. Whether the applicant is liable to pay GST on consideration received under an agreement to sale of constructed units in a building which is under construction? - Held that:- The applicant is liable to pay GST on sale of commercial built-up units, as the same has been defined as ‘supply of service’ under Clause 5(b) of Schedule-II of CGST Act, 2017. Ruling:- The applicant is covered in the definitions of “Agent” under Section 2(5), “Supplier” under Section 2(105) and “Taxable Person” under Section 2(107) of the CGST Act, 2017 in respect of the said project while providing services on behalf of the Ministry of Housing and Urban Affairs. Hence, they are liable to pay GST under Section 9(1) of the CGST Act, 2017. The MoHUA, Government of India, is not exempted from payment of GST on sale of commercial built-up space, as it does not relates to any function entrusted to a municipality under Article 243W of the Constitution. Hence, the exemption under S. No. 4 of Notification No. 12/2017 - Central Tax (Rate) and parallel notifications under SGST and IGST are not admissible. The applicant is liable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t on yearly basis, determine the amount, accrued in excess of 20% of the total cost of the said redevelopment work which is required to be deposited in Consolidated Fund of India. MoHUA will be responsible for allotment/handing over of commercial space to the allottees/shopkeepers/schools after completion of the project. L DO shall be responsible for relocation and rehabilitation of JJ clusters, if any. 3. In terms of the MOU dated 25.10.2016, the applicant has announced sale of commercial super built-up area on behalf of MoHUA through e-auction on MSTC website on 30.05.2017 and 05.12.2017. In the e-auction details given on MSTC website, inviting bid for sale of proposed built-up area in the buildings to be constructed by the applicant as part of re-development work, it is mentioned that the applicant is selling the proposed built-up area on behalf of MoHUA. The terms and conditions of such sale provide that Government of India through nominated officer will sign the agreement to sell and sale deed with the successful bidder. 4. The applicant had applied to Real Estate Regulatory Authority (RERA) on behalf of MoHUA, Government of India, for registration under the Act, but the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ernment, a State Government or any local authority in which they are engaged as public authorities, as may be notified by the Government on the recommendations of the Council, shall be treated neither as a supply of goods nor a supply of services. (3) Subject to the provisions of sub-sections (1) and (2), the Government may, on the recommendations of the Council, specify, by notification, the transactions that are to be treated as- (a) a supply of goods and not as a supply of services; or (b) a supply of services and not as a supply of goods. 9. In case of supply of goods and services within a State, it would be a dual GST, the Union/Centre and the State/Union Territory would simultaneously levy CGST and SGST/ UTGST on a common base. Provisions of CGST and SGST are in pari materia , levying tax on the same transactions in unified manner. 10. Under section 9 of the CGST Act, tax is payable by the taxable person on the transaction value of supply of goods or services, except in the situations carved out in section 9(3) and 9(4) of the Act where the receiver of the supply of goods or services is liable to pay tax. 9. Levy and collection. (1) Subjec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ided to recover such cost by selling built-up area in commercial building. The MOU states that applicant shall invest up to ₹ 1500 crore into the project from own funds and, for this, it would get interest @ 12% p.a. till it is returned. In addition, the applicant would receive 1% of the sale proceeds on account of sale related expenses. From these terms, it is clear that it is MoHUA which is selling such built-up area, not the applicant. In the developed area, the applicant is not acquiring any interest or right and, therefore, there is no question of it selling any built-up commercial area, being constructed by it, on its own account. 12. The fact that the applicant is not selling proposed built-up area in the buildings under construction on its own account but acting on behalf of the Government is also reflected from the fact that it has no control or right on the sale proceeds except for recovering the cost of development undertaken by it. The MOU specifically provides that the sale proceeds of the commercial built-up area shall be deposited in an escrow account which shall be managed. by Capital Management Committee constituted by the Government. Capital Management Co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... whether with or without structures thereon; or (iii) any development authority or any other public body in respect of allottees of- (a) buildings or apartments, as the case may be, constructed by such authority or body on lands owned by them or placed at their disposal by the Government; or (b) plots owned by such authority or body or placed at their disposal by the Government, for the purpose of selling all or some of the apartments or plots; or (iv) an apex State level co-operative housing finance society and a primary co-operative housing society which constructs apartments or buildings for its Members or in respect of the allottees of such apartments or buildings; (v) any other person who acts himself as a builder, coloniser, contractor, developer, estate developer or by any other name or claims to be acting as the holder of a power of attorney from the owner of the land on which the building or apartment is constructed or plot is developed for sale; or (vi) such other person who constructs any building or apartment for sale to the general public. Explanation :- For the purposes of this clause, where the person who constructs or converts a b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (1) (2) (3) (4) (5) 4 Chapter 99 Services by Central Government, State Government, Union territory, local authority or governmental authority by way of any activity in relation to any function entrusted to a municipality under article 243 W of the Constitution. Nil Nil 6 Chapter 99 Services by the Central Government, State Government, Union territory or local authority excluding the following services- a) services by the Department of Posts by way of speed post, express parcel post, insurance, and agency services provided to a person other than the Central Government, State Government, Union territory; b) services in relation to an aircraft or a vessel, inside or outside the precincts of a port or an airport; c) transport of goods or passengers; or d) any service, other than services covered under entries (a) to (c) above, provided to business entities. Nil Nil A similar exemption has been given ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... luding the handicapped mentally retarded. (j) Slum improvement and upgradation. (k) Urban poverty alleviation. (l) Provision of urban amenities and facilities such as parks, gardens, playgrounds. (m) Promotion of cultural, educational and aesthetic aspects. (n) Burials and burial grounds; cremations, cremation grounds; and electric crematoriums. (o) Cattle pounds; prevention of cruelty to animals. (p) Vital statistics including registration of births and deaths. (q) Public amenities including street lighting, parking lots, bus stops and public conveniences. (r) Regulation of slaughter houses and tanneries 19. The activities given in Twelfth Schedule quoted above, relevant to the present context, are urban planning including town planning, regulation of land use and construction of buildings and planning for economic social development. The applicant submits that construction and sale of houses (residential as well as commercial) by municipalities are in line with the provisions of Article 243W of the Constitution. Article 243W enables State Legislatures to endow municipalities with such powers as may be necessary for self-gove ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ral institutions; (b) central of architectural features, elevation and front age of buildings and structures; (c) dealing satisfactorily with areas of bad layouts, obsolete development and slum areas and re-location of population; (d) open spaces, gardens, playgrounds and recreation areas. (2) When the plans for an area or areas of Comprehensive development are prepared, whether or not separately, the Planning Authority shall fallow the same procedure before submission of these plans to the State Government for sanction as is provided by sections 25, 26, 27, 28, 29, 30 and 31 as respects a draft Development plan and submit such plan or plans from time to time to the State Government for sanction, alongwith a report - (a) explaining the proposals and the stages of development programme by which it is proposed to execute the plan or plans; (b) giving an appropriate estimate of the cost involved in executing the proposals of the plan or plans. (3) The State Government may, after consulting the Director of Town Planning by notification in the Official Gazette, sanction the plan or plans for the area or areas of comprehensive development either without ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al estate developer by the Municipality through competitive bidding. However, this was challenged by the appellants in the Bombay High Court on the following grounds: (a) That the scheme of financing of the project was unconventional and was not one that was, as a matter of policy, open and permissible to a governmental authority. The municipal authority could either have put up the construction itself departmentally or awarded the execution of the whole project to a building contractor. The method of financing and execution of the project are ultra vires the powers of the Municipal authority under the Act. (b) That the terms of the agreement with the developer that the latter be at liberty to dispose of the occupancy rights in the commercial complex in such manner and on such terms as it may choose would amount to an impermissible delegation of the Statutory functions of the Municipal Council under section 272 of the Act to the developer. (c) That the project, in effect, amounted to and involved the disposal of municipal property by way of a tong term lease with rights of sub-letting in favour of the developer violative of Section 92 of the Act . (d) That the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n was better than another. The contention that the project is ultra vires the powers of the Municipal Council is not acceptable. 23. Therefore, MoHUA is also not liable to pay GST on sale of commercial built-up space, as this relates to function entrusted to a municipality under Article 243W of the Constitution. The applicant is not liable to pay GST on sale of built-up space prior to 01.07.2017. 24. The applicant submits that some built-up space has already been sold through e-action on 30.05.2017 and, instalment of sale price has been received prior to 01.07.2017, i.e. prior to notification of GST laws. Section 173 of the GST Act, 2017 states that Chapter V of the Finance Act, 1994, which provides for levy of service tax on the services provided or to be provided, shall be omitted. However, section 174(2) saves the liability accrued under the said Chapter V of Finance Act, 1994. Prior to 01.07.2017, service tax was payable on every service , and included declared service under Finance Act, 1994. Under section 66E(b) of the said Act, construction of building/complex intended for sale to a buyer, where the consideration is received wholly or partly prior to issuance of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of I.-T., Tamil Nadu AIR 2005 SC 1455 = 2004 (11) TMI 13 - SUPREME COURT , relying upon its decision in Municipal Committee v. Manilal 1967(2) SCR 100 = 1966 (11) TMI 87 - SUPREME COURT OF INDIA and Pappu Sweets and Biscuits v. Commissioner of Trade Tax, U.P. 1998 (7) SCC 228 = 1998 (10) TMI 452 - SUPREME COURT OF INDIA , the Supreme court has held that subsequent legislation may be looked into to fix the proper interpretation to be put on the statutory provisions as stood earlier. Therefore, it can be inferred that the sale/leasing services provided by MoHUA prior to 01.07.2017, i.e. during service tax regime, are exempt, being in the nature of a function entrusted to municipality under Article 243W of the Constitution. 26. Even otherwise, GST cannot be levied on a part of consideration received for a continuing transaction which was not taxable earlier. It may be noticed that sale of flat is a single supply which is performed over a period of time. Under GST law, tax is payable on supplies made on or after 01.07.2017. But in a composite supply which has already commenced prior to 01.07.2017, the amount received after 01.07.2017 cannot be considered as considerat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rovisions in order to compute the profits or gains under that head. No existing principle or provision at variance with them can be applied for determining the chargeable profits and gains. All transactions encompassed by s. 45 must fall under the governance of its computation provisions. A transaction to which those provisions cannot be applied must be regarded as never intended by s. 45 to be the subject of the charge. This inference flows from the general arrangement of the provisions in the I.T. Act, where under each head of income the charging provision is accompanied by a set of provisions for computing the income subject to that charge. The character of the computation provisions in each case bears a relationship to the nature of the charge. Thus, the charging section and the computation provisions together constitute an integrated code. When there is a case to which the computation provisions cannot apply at all, it is evident that such a case was not intended to fall within the charging section. Otherwise, one would be driven to conclude that while a certain income seems to fall within the charging section there is no scheme of computation for quantifying it. The legis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f Schedule III. Clause (b) of paragraph (5) of the Schedule II is reproduced below: SCHEDULE Il ACTIVITIES TO BE TREATED AS SUPPLY OF GOODS OR SUPPLY OF SERVICES 5. Supply of services The following shall be treated as supply of services, namely: - (a)****** (b) construction of a complex, building, civil structure or a part thereof, including a complex or building intended for sale to a buyer, wholly or partly, except where the entire consideration has been received after issuance of completion certificate, where required, by the competent authority or after its first occupation, whichever is earlier. Explanation . - For the purposes of this clause - (1) the expression competent authority means the Government or any authority authorised to issue completion certificate under any law for the time being in force and in case of non-requirement of such certificate from such authority, from any of the following, namely: - (i) an architect registered with the Council of Architecture constituted under the Architects Act, 1972 (20 of 1972); or (ii) a chartered engineer registered with the Institution of Engineers (India); or (iii) a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2720/2013] = 2014 (10) TMI 986 - BOMBAY HIGH COURT - Under Article 243W, State Legislature may endow municipalities with powers and responsibilities in regard to planning, economic development, social justice, etc. [Para 36, 37] ii. Farzana Khan vs. Municipal Corporation of Greater Mumbai, 2018 SCC Online Bom 314 = 2018 (3) TMI 1654 - BOMBAY HIGH COURT - Under Maharashtra Regional Urban Planning Act, 1966, municipalities are entrusted with duties of town planning for planned development of urban areas. Development means inter alia building, engineering and other operations in or over land or redevelopment of any land. [Para 27 to 32] iii. Ram Krishan Mahajan vs. Union Territory of Chandigarh (2007) 6 SCC 634 = 2007 (7) TMI 690 - SUPREME COURT OF INDIA - Municipality fund can be applied for providing residential, commercial and medical facilities. [Para 13 15] iv. Nagarpalika Parishad vs. State of U.P., 2010 SCC Online All 1956: (2011) 84 ALR (SUM 19) = 2010 (10) TMI 1184 - ALLAHABAD HIGH COURT - Under the powers, authorities and responsibilities defined in Article 243W and 12th Schedule of Constitution, Nagar Palika Parishad co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Contract Service shall be treated as supply of services. Thus, there is no dispute as to whether or not Works Contract Service is supply of service. As per notification 11/2017-Central Tax (Rate) dated 28.06.2017, services provided to Central Government or State Governments by construction/ repair/ maintenance has been taxed at Nil rate of Central Tax, except for those cases where the construction is meant to be for commerce, industry or any other business or profession. In the instant case, as M/s. NBCC India Limited will construct and sell built-up space for commercial purposes such as shop, schools, etc., the applicant is liable to pay GST on such 40. Applicant is of the view that MoHUA, GOI, are not liable to pay GST on commercial built-up space as this relates to functions entrusted to party under Article 243W of the Constitution of India. 41. Article 243W of the Constitution of India, read with the 12th Schedule, stipulates that the functions relating to planning, land use regulations, roads, bridges, fire services, slum development and improvement, etc. are of the nature which is beneficial to all residents specially the weaker section of the society. These functions a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nsideration received under an agreement to sale of constructed units in a building which is under construction. RELEVANT NOTIFICATIONS: 48. S. No. 4 and 6 of Notification No. 12/2017 - Central Tax (Rate) dated 28.06.2017 and parallel SGST and IGST notifications: S.No. Chapter, Section, Heading, Group or Service Code (Tariff) Description of Services Rate (%) Condition (1) (2) (3) (4) (5) 4 Chapter 99 Services by Central Government, State Government, Union territory, authority or governmental authority by way of any activity in relation to any function entrusted to a municipality under article 243 W of the Constitution. Nil Nil 6 Chapter 99 Services by the Central Government, State Government, Union territory or local authority excluding the following services- a) services by the Department of Posts by way of speed post, express parcel post, life insurance, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Municipality may not be constituted in that urban area. However, it appears that Ministry of Housing and Urban Affairs (MoHUA) or NBCC are not covered in Article 243Q either as a Municipality or as an industrial establishment for a notified industrial township in place of a Municipality. 54. The Article 243W of the Constitution of India reads as under: 243W Powers, authority and responsibilities of Municipalities etc. Subject to the provisions of this Constitution, the Legislature of a State may, by law, endow- (a) the Municipalities with such powers and authority as may be necessary to enable them to function as institutions of self-government and such law may contain provisions for the devolution of powers and responsibilities upon Municipalities, subject to such conditions as may be specified therein, with respect to- (i) the preparation of plans for economic development and social justice; (ii) the performance of functions and the implementation of schemes as may be entrusted to them including those in relation to the matters listed in the Twelfth Schedule; (b) the Committees with such powers and authority as may be necessary to enable them t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (India) Limited has been appointed as implementing/executing agency by the Ministry of Housing and Urban Affairs (MoHUA), Government of India, for re-development of Nauroji Nagar, Sarojini Nagar and Netaji Nagar colonies in Delhi. The applicant is required to organise construction of GPRA (i.e. General Pool Residential Accommodation), GPOA (i.e General Pool Office Accommodation), commercial built-up space/area and supporting infrastructure such as local convenience shopping centre, banquet hall/community centre, creche, schools, hospitals/dispensary, ATM/Banks, parking facilities, parks and playgrounds etc. in place of old existing buildings. The applicant is also required to maintain the constructed buildings for thirty years after construction. However, the present application for Advance Ruling is only regarding GST liability on freehold sale of commercial built-up space to general public. 58. The terms and conditions of Memorandum of Understanding (MOU) dated 25.10.2016 between Ministry of Housing and Urban Affairs (MoHUA), Government of India and NBCC (India) Limited for redevelopment of Nauroji Nagar, Netaji Nagar and Sarojini Nagar GPRA colonies by NBCC, who has been appo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ost of the project shall be met from free hold sale of commercial BIJA in Nauroji Nagar (25 acres with BIJA of 2,97,000 sqm), parts of Sarojini Nagar (42 acres with BIJA of 5,09,990 sqm), and surplus Shops built as a part of Social Infrastructure in seven GPRA colonies executed by CPWD and NBCC, after keeping aside requisite number of shops for the existing allottees in all the colonies. 58.7 The sale shall be conducted through transparent bidding system using e-auction. 58.8 If the amount realised from the sale is not enough to meet the cost of construction, maintenance costs for 30 years and NBCC s investment with interest, then up to 10% of residential BIJA is to be sold by NBCC on free hold basis for further revenue generation. However, sale of residential space may be avoided. 58.9 NBCC shall invest upto ₹ 1,500 crore into the project from own funds, in phases, as and when required or as directed by the Capital Management Committee. NBCC is entitled to a fixed interest @ 12% per annum on their investment till it is returned. The investment along with interest shall be returned by MoHUA to NBCC from the amount realised through sale of commercial BIJA. 58.10 Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... epair of GPRA Colonies GPOA including social infrastructures, on submission of a detailed proposal by NBCC. The power to incur expenditure shall be delegated to NBCC in respect of colonies developed by them. CMC should be approached only in case of additional works beyond the amount approved for annual general maintenance. (ii) Common other services of saleable commercial built-up area : The regular maintenance of saleable built up area shall be on chargeable basis at the prevailing market rates in terms of per sft. area as mutually agreed and decided with the occupants/buyers. A sinking fund will be created from onetime lump sum payments from buyers for replacement of plant and equipment, special repairs and value additions during maintenance period. 58.15 The milestones with respect to time schedules will be fixed for completion of project. For any delay, attributable to Project Management Consultant (PMC), NBCC is liable to pay penalty at the rate of ₹ 5.00 per sq. feet per month on delayed uncompleted work, subject to overall limit of 10% of the agency charges of NBCC. 58.16 NBCC will incorporate advanced state of art technologies during construction, min ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g of disputes/litigation, if any, with the agencies/contractors engaged for the construction. 60.4 NBCC shall execute the project only after getting building plans approved as per the statutory requirements and after approval of design by the Empowered Committee. 60.5 NBCC shall obtain environmental clearance for the redevelopment work in three colonies assigned to them from SEIAA, Delhi. 60.6 The supervision of all the works shall be done by the NBCC, which shall strictly adhere to the quality norms applicable as per specifications, IS codes, National Building Codes etc. 60.7 NBCC would be responsible for maintenance of the assets, services of the GPRA GPOA including supporting social infrastructure (including special repairs) for a period of 30 years. The expenditure shall be met from the Maintenance Corpus Fund created from the sale proceeds. 60.8 The regular maintenance of saleable built up area shall be done by NBCC on chargeable basis in terms of per sft. area at the prevailing market rates, as mutually agreed and decided with the occupants/buyers. 60.9 NBCC shall handover the completed structures and services of GPRA complex GPOA including S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eposited into the Escrow Account. The interest accrued thereon shall also be credited to the Escrow Account. 66. NBCC shall open and maintain separate Books of Accounts for each colony to be redeveloped by them. NBCC shall submit quarterly returns of the physical and financial progress of the project to MoHUA in the format prescribed by the CMC. 67. The ownership of GPRA and GPOA including social infrastructure shall continue to be with the Government of India and these shall be handed over to the Government after completion. 68. After completion and commissioning of the redevelopment project, any surplus funds available shall be deposited into the Consolidated Fund of India. 69. The Jurisdictional Officer (CGST) has argued that the applicant is M/S NBCC (India) Limited and not the MoHUA and therefore the question no. 2 i.e. whether MoHUA is required to pay GST or not, should not be admissible for advance ruling in terms of Section 95 and 97 of the CGST Act. 70. The above view of the Jurisdictional officer (CGST) has been considered. However, ruling in respect of question no. 1 i.e. whether NBCC (India) Limited is required to pay GST or not, cannot be given unless ta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , the role of the applicant in the entire project is that of an agent of MoHUA i.e. the applicant is an executing,/implementing agent of the MoHUA. 74. However, the allotment letter/demand letter to the successful bidder is to be issued by the applicant. Also, as per the terms and conditions of Sale, any amount towards GST on payment shall also be payable by the allottee/buyer to the applicant. 75. The MOU between the MoHUA NBCC is not on Principal-to-Principal basis. It is also not on partnership /joint venture /collaboration basis. There is no mutual revenue, profit or loss sharing arrangement between the two. The applicant is not acquiring any right or interest in the project. It is not selling the commercial built-up units on its own account. The applicant is simply acting as an agent of MoHUA. 76. Section 2(5) of the CGST Act, 2017 reads as follows: agent means a person, including a factor, broker, commission agent, arhatia, del credere agent, an auctioneer or any other mercantile agent, by whatever name called, who carries on the business of supply or receipt of goods or services or both on behalf of another; 77. Since, it is admitted by the applicant tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rtain cases: Notwithstanding anything contained in sub-section (1) of section 22, the following categories of persons shall be required to be registered under this Act,- (vii) persons who make taxable supply of goods or services or both on behalf of other taxable persons whether as an agent or otherwise; 85. From the above, it is observed that under Explanation (i) to Section 22 and Clause (vii) of Section 24 of the CGST Act, 2017, the applicant is compulsorily required to be registered while acting as an agent for supply of services. 86. Hence, the applicant can be called taxable person as per Section 2(107) of the CGST Act, 2017. 87. From the combined reading of Sections 2(5), 2(105), 2(107), 22 and 24 of the CGST Act, 2017, it is clear that the applicant is covered in the definitions of Agent , Supplier and Taxable Person in respect of the said project while providing services on behalf of the Ministry of Housing and Urban Affairs. Further, the applicant is falling under the categories of persons under Section 22 and also under Section 24 requiring compulsory registration in respect of the said project. 88. Hence, the contention of the applicant th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he said amendment, the exemption under S. No. 4 of Notification No. 12/2017- Central Tax (Rate) dated 28.06.2017 is admissible only if such services are provided by a governmental authority . 94. The expression governmental authority has not been defined in Notification No. 12/2017 - Central Tax (Rate) dated 28.06.2017 but the same has been defined in Explanation to Clause (16) of Section 2 of the IGST Act, 2017 as follows: Explanation .-For the purposes of this clause, the expression governmental authority means an authority or a board or any other body, (i) set up by an Act of Parliament or a State Legislature; or (ii) established by any Government, with ninety per cent. or more participation by way of equity or control, to carry out any function entrusted to a municipality under article 243W of the Constitution; 95. Hence, a governmental authority must be set up or established specifically to carry out any function entrusted to a municipality under Article 243W of the Constitution. However, MoHUA has not been established for the purposes of discharging functions entrusted to Municipalities. Hence, the Ministry of Housing and Urban Affairs (MoHUA ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under decision in that case. Hence, the said case law is not relevant in the present case. 101. The applicant has also argued that in the case of G.B. Mahajan and Others vs. Jalgaon Municipal Council and Others, (1991) 3 SCC 91 = 1990 (9) TMI 349 - SUPREME COURT , the legality of construction of a commercial complex by a Municipality has been upheld by the Hon ble Supreme Court of India. However, the said judgment is not relevant in the present case as the said judgement pertains to a case where construction of a Central Administrative building intended to be used by the Municipal Council for locating its own offices and an adjacent structure to be used as a vegetable market and a commercial complex on a plot of land owned by the Municipality was being executed through a Developer of real estate using his own funds and which was challenged on the argument that the local authority instead of executing the project itself had wrongly entered into an agreement with the developer for its financing and execution. The said judgement does not deal with the issue of scope of Article 243 W or Twelfth Schedule of the Constitution of India. 102. The applicant has also mentioned para ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... could be applied for providing residential, commercial and medical facilities. In the said case, scope of Article 243W or Twelfth Schedule of the Constitution was not discussed. Hence, the said judgement is not relevant in the present case. 105. Similarly, in para 7, 8 and 10 of the Judgement of Hon ble Supreme Court in the case of Nagarpalika Parishad vs State of UP reported in 2010 SCC online All 1959 = 2010 (10) TMI 1184 - ALLAHABAD HIGH COURT , the issue was whether Additional District Magistrate was empowered to restrain the Municipality from auction of shops. The scope of activities covered under Article 243W or Twelfth Schedule of the Constitution was not subject matter of the judgment. Hence, the said judgement is not relevant in the present case. 106. It has been submitted by the applicant during the hearing that as per Section 42 of the Delhi Municipal Corporation Act, 1957, the obligatory functions of the Corporation includes: (k) the construction and maintenance of municipal markets and slaughter houses and the regulation of all markets and slaughter houses. (wa) the preparation of plans for economic development and social justice. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... MMC is misplaced. 112. Further, the Ministry of Housing and Urban Affairs cannot be called Municipality under Articles 243P and 243Q of the Constitution of India. 113. The Government of India (Allocation of Business) Rules, 1961 has allocated wide ranging functions to the Ministry of Housing and Urban Affairs. However, it cannot be said that such responsibilities relates to functions entrusted to municipalities under Article 243W and Twelfth Schedule to the Constitution of India. 114. In view of the above, it is held that services for commercial built-up space by the Ministry of Housing Urban Affairs (MoHUA) are not covered in Twelfth Schedule r/w Article 243W of the Constitution of India and hence not exempted from payment of GST under S. No. 4 of Notification No. 12/2017 - Central Tax (Rate) dated 28.06.2017. Further, from 26.07.2018, the exemption is limited to services supplied by the Governmental Authorities. Also, the said services are not covered in S. No. 6 of the said Notification. Question No. 3 115. The third issue for decision is whether the commercial built up area against which a part of the consideration has been received prior to 01.07.2017 i.e. p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r the Rules framed under the statute. In Service Tax, the provision to exclude the value of land was sought to be provided by exemption Notification No. 26/2012 - ST dated 20.06.2012 which had been issued under Section 93 (1) of Finance Act, 1994. The scope of the said Section 93 of the said Act, was limited to grant of exemption provided the service tax was leviable under Section 66/66B of the Finance Act, 1994. It was held that the abatement to the extent of 75% or 70% by a notification or a circular cannot substitute the lack of statutory machinery provisions to ascertain the value of services involved in a composite contract. 120. The reliance of the applicant on the judgement of the Hon ble High Court of Delhi in the case of Shri Suresh Kumar Bansal v/s Union of India = 2016 (6) TMI 192 - DELHI HIGH COURT is entirely misplaced. Firstly, the said case pertains to provisions of Section 67 of the Finance Act, 1994, Rule 2A of the Service Tax (Determination of value) Rules, 2006 and Notification No. 26/2012 - ST dated 20.06.2012 whereas the present application for advance ruling is regarding various provisions of the CGST Act, 2017. 121. The claim of the applicant that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ccupied, as on the appointed date 01.07.2017? The sec. 142(10) and 142(11) of the CGST Act, 2017 provides for the provisions to deal with the liability towards the ongoing projects. These provisions are explained with reference to the following possible situations:- (i) when the total consideration was received prior to 30.06.2017 from the customers in respect of the property under construction (for which neither occupancy certificate was received nor it is yet to be occupied) - Service tax is/was payable on the consideration received @15% on 1/4th of the consideration; and there would be no GST on the same. (Sec. 142(11)(b)- refers); (ii) when a part of the consideration was received prior to 30.06.2017 from the customers in respect of the property under construction (for which neither occupancy certificate was received nor it is yet to be occupied) - Service tax (ST) is/was payable on the consideration received prior to 01.07.2017 i.e.: @15% on 1/4th of the consideration; and there would be no GST to the extent of that amount for which ST was paid/payable. For the remaining consideration paid/payable on or after 01.07.2017, GST is payable with reference ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g sale of immovable property. On the other hand, para 5(b) of Schedule-Il of the CGST Act, 2017 specifically provide that construction of a complex, building, civil structure or a part thereof, including a complex or building intended for sale to a buyer, wholly or partly, except where the entire consideration has been received after issuance of completion certificate, where required, by the competent authority or after its first occupation, whichever is earlier, will be treated as Supply of Services. 128. It is observed that during Service Tax regime, an Explanation was inserted by the Finance Act, 2010 in the definition of taxable service of Construction of Complex and Commercial or Industrial Construction Service [section 65(105)(zzzh) and 65(105)(zzq)]. Thereby, the construction of buildings intended for sale wholly or partially by builder or other person authorized by builder before, during or after construction was deemed to be service provided by builder to the buyer. The Explanation provided that in case entire sum is received from the prospective buyers after grant of completion certificate by the authorities competent to issue such certificate, it shall not be a ta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t is liable to pay GST on sale of commercial built-up units, as the same has been defined as supply of service under Clause 5(b) of Schedule-II of CGST Act, 2017. Ruling 133. The applicant is covered in the definitions of Agent under Section 2(5), Supplier under Section 2(105) and Taxable Person under Section 2(107) of the CGST Act, 2017 in respect of the said project while providing services on behalf of the Ministry of Housing and Urban Affairs. Hence, they are liable to pay GST under Section 9(1) of the CGST Act, 2017. 134. The MoHUA, Government of India, is not exempted from payment of GST on sale of commercial built-up space, as it does not relates to any function entrusted to a municipality under Article 243W of the Constitution. Hence, the exemption under S. No. 4 of Notification No. 12/2017 - Central Tax (Rate) and parallel notifications under SGST and IGST are not admissible. After amendment of S. No. 4 of the said Notification by Notification No. 14/2018 - Central Tax (Rate) dated 26.07.2018, only services provided by governmental authority are exempted which does not cover the MoHUA. Further, MoHUA, Government of India is not a Municipality under Art ..... X X X X Extracts X X X X X X X X Extracts X X X X
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