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TMI Blog2019 (3) TMI 924X X X X Extracts X X X X X X X X Extracts X X X X ..... uired, by the competent authority or after its first occupation, whichever is earlier , the value of the supply of service has been notified by the Government as per Section 15(5) of the CGST Act as the total amount charged for such supply less the value of land or undivided share of land, as the case may be, and the value of land or undivided share of land, as the case may be, in such supply shall be deemed to be one third of the total amount charged for such supply where the total amount means the sum total of consideration charged for construction service and amount charged for transfer of undivided share of land, as the case may be. The value of supply of services provided by the Applicant in the project One Crest in Chennai, wherein the Applicant has entered into two separate agreements, viz., one for Sale of undivided share of land and the other for Construction with the customers, the measure of levy of GST on the supply of service of Construction shall be 2/3rd of the total value charged for construction service and amount charged for transfer of undivided share of land, as per entry No. 3(i) of Notification No. 11/2017-C.T.(Rate) dated 28.06.2017 as amended an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Applicant, the construction activity is commenced on the said land to develop the project which inter-alia includes obtaining requisite approvals, awarding contracts etc. iii. The interested customer approached the Applicant for buying unit in the project. iv. Once the commercials are agreed between the customer and the Applicant two agreements viz., Land and Construction Agreements are entered with the customer and executed simultaneously. Thereafter, on receipt of 80% of total sale consideration, deed of sale is executed and registered in favour of customer for transferring the ownership of undivided share in land to the customer. v. The payment to be made by the customer is based on milestone linked to the stage of completion of the construction activity. vi. The unit is handed to the customer only after Deed of sale is executed and registered and the applicant obtains the completion certificate from the competent authority. 2.3 The Applicant has stated that Schedule II of CGST Act specifies that supply related to construction of a complex or building is treated as supply of service except where full consideration has been received after issuance of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fter execution and registration of Sale Deed. Clause 11 of this agreement states that a separate Construction Agreement has been executed on the same date for construction of an Apartment on this property. 4.2 It is seen that the Construction Agreement is for construction of an apartment, of the specifications mentioned in the agreement, for the buyer by the Applicant for a consideration as per a payment schedule/milestones. Clause 5 of this agreement states that the completed apartment will be handed over on completion of obligations under this agreement and Agreement of Sale. Clause 10 of this agreement states that in case Agreement of sale of undivided share is registered before completion of payments under this agreement, the Applicant would still proceed with the construction. Clause 12 states that the buyer shall hold the land as an undivided share of the total land of the project along with other buyers and at no time can the buyer demand partition of the undivided share of land. Clause 13 states that a separate Agreement for Sale has been executed for purchase of undivided share of land. Clause 16 states that this agreement will be cancelled by executing a deed of canc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ub-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 Schedule III of the CGST ACT provides for activities or transactions which shall neither be treated as supply of goods nor services and Entry 5 of the Schedule is as follows: Sale of land and, subject to clause (b) of paragraph 5 of Schedule II, sale of building. Schedule II provides for activities or transactions which shall be treated as supply of goods or services and entry No.5 of the Schedule is as follows: 5. Supply of services the following shall be treated as supply of services, namely:- (a) renting of immovable property; (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. In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... council shall be determined in such manner as may be prescribed. Notification 11/2017- Central Tax (Rate) dated 28.06.2017 as amended and No. II(2)/CTR/532(d-14)/2017 vide G.O. (Ms) No. 72 dated 29.06.2017 as amended provides the applicable rate of CGST and SGST in respect of construction of complex or building covered under entry 5(b) of Schedule III of CGST Act, 2017 and TNGST Act respectively. The relevant extracts from notification are as under: SI.No. Chapter, Section, Heading, Group or Service Code (Tariff) Description of Services Rate (per cent.) Condition 3 Heading 9954 (Construction services) (i) 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. (Provisions of paragraph 2 of this notification shall apply for ..... X X X X Extracts X X X X X X X X Extracts X X X X
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