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TMI Blog2020 (1) TMI 740X X X X Extracts X X X X X X X X Extracts X X X X ..... rea less than 60 sq. mtrs. Whether the benefit of concessional rate would be available to common amenities such as club house, swimming pool, etc., except corpus fund subscription and share application money, as mentioned in Annexure D of the agreement for sale? - HELD THAT:- Such services will qualify as composite supply of works contract service, where the principal supply would be, construction services. Accordingly, the rate applicable to the principal supply will also be applicable to common amenities. The word housing project cannot be confined only to dwelling units, it would also include within its fold, other common amenities, structures, etc. The jurisdictional office has also opined that Common amenities form part of the overall construction service and are always naturally bundled when offered to the customer. Therefore, such services will qualify as composite supply of works contract service wherein provision of construction services is the principal supply. Accordingly, the rate applicable to the principal supply will also be applicable to common amenities - the concessional rate of 12% will be charged on such amounts collected by the applicant from buyers of uni ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g in respect of the following questions. 1. Whether the dwelling units at Joyville, Virar qualify as low cost houses ? Consequentially whether the said dwelling units are eligible for the concessional rate of 12% under Entry (v) (da) of Notification No.11/2017 Central Tax (Rate) dated 28.6.2017 as amended by Notification No.1/2018-Central Tax (Rate) dated 25.01.2018 with effect from 25.01.2018? 2. Whether the benefit of concessional rate would be available to common amenities such as club house, swimming pool and amenities of like nature? 3. Whether the project of the Applicant at Joyville, Virar qualifies as an ongoing project under Notification No. 3/2019-Central Tax (Rate) dated 29.03.2019 so as to be eligible for the concessional rate of benefit under Notification No. 11/2017-Central Tax (Rate) dated 28.06.2017? 4. What would be the rate of Goods and Services Tax on the units at Joyville, Virar which do not qualify the criteria of low cost houses ? Whether 12% or 18% tax is to be levied on those units? At the outset, we would like to make it clear that the provisions of both the CGST Act and the MGST Act are the same except for certain provisions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mencement Certificate has been issued for the Phases before 31.03.2019, (b) Completion Certificate or Occupancy Certificate ( OC ) has not been issued for any Phase before 31.03.2019 and (c) Some of the units in each Phase have already been booked before 31.03.2019 and the money was received by the Applicant. 2.5 Applicant has also submitted that, Notification No. 112017 has been amended by Notification No. 032019-C.T. (Rate) dated 29.03.2019 ( Notification No.3/2019 ) whereby the applicable rates of GST have been reduced for services of the residential construction sector and in respect of ongoing projects (as defined under Clause 4. (xx) of Notification No. 03/2019. An option has been given to suppliers of such services to continue payment of GST as per the erstwhile applicable rates. It further provided that suppliers, choosing to continue at the old rates under Notification No. 11/2017 should file a form in Ann-IV to the Jurisdictional Commissioner. Applicant has filed Ann. IV for the RERA Phases 1, 2, 3, and 5 with the concerned authorities. 2.6 Applicant submits that the Government had issued Notification No. 01/2018 which extended the benefit of concessional ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ucted for the proper functioning of the real estate project and such amenities undoubtedly cover club house, swimming pool and other amenities of like nature. The meaning of the word project is not confined to only dwelling units, but it takes within fold its common amenities, structure and all improvements therein. On a bare perusal of Clause 2(zn), it can be said that even common amenities come within the purview of the definition of project and hence, the benefit under Entry (v)(da) of Notification No. 11/2017 should be made applicable for the common amenities as well since the same are ancillary supply to the principal supply of construction of dwelling units. 2.8.3 Alternatively, it is submitted that in the case of 904 units being constructed at Joyville Virar which satisfy the criteria of low cost house , the corresponding benefit of reduced rate of GST of 12% under Entry (V)(da) of Notification No. 11/2017 should be given to the common amenities like club house, swimming pool and amenities of like nature. 2.9 THE PROJECT AT JOYVILLE VIRAR QUALIFIES AS AN ONGOING PROJECT UNDER NOTIFICATION NO.03/2019 2.9.1 Applicant submits that Notification No.3/2019 has provi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndoubtedly qualify as ongoing project , since commencement certificate has been issued to the Project Copy of the commencement certificate, received from time to time has been submitted, additionally, a certificate of Architect certifying that the project had commenced before 31.03.2019 is also submitted); Site preparation is complete ; Occupation certificate (OC) has not been issued and Units are sold and at least one installment credited in the bank account . (Sample copy of invoices, evidencing the booking of apartments before 31st March, 2019 is submitted.) (Copy of the demand note and bank statement reflecting the amount being credited in the bank account of Applicant prior to 31.03.2019 is also submitted). They have already filed Form IV with the jurisdictional Commissioner on 07.05.2019 for the phases of the project, (A copy of Ann IV as filed with the Jurisdictional Commissioner at the central the state level is submitted.). 2.10 Applicant is also seeking clarity about the tax rate on the remaining units at Joyville Virar which do not satisfy the conditions attached to low cost house, whether the units can be taxed at 12% under Entry (V)(da) being part of the same ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (CGST @ 6% and SGST @ 6%) and applicant would be required to pay GST at normal applicable rate. Hence applicable GST @ 18%. 04. HEARING Preliminary hearing in the matter was held on 05.11.2019. Ms. Kanupriya Bhargava, Advocate and Sh. Arjyadeep Roy appeared and requested for admission of their application. Jurisdictional Officer, Ms. Manjiri Phansalkar, DC (E-611), LTU-4 also attended. The application was admitted and called for final hearing on 20.11.2019. Ms. Kanupriya Bhargava, advocate and Sh. Arjyadeep Roy Advocate along with Mr. Tinish Salot, C. A. and Mr. Himanshu Jani, CFO appeared and made oral and written submissions. During the course of Final Hearing, applicant submitted one agreement copy and also partly reframed Question No. 2. Jurisdictional Officer Ms. Manjiri Phansalkar, DC (E-611), LTU-4 also attended. 05. OBSERVATIONS AND FINDINGS: Heard both sides. 5.1 We have gone through the facts of the case, documents on record and submissions made by the applicant as well as the jurisdictional office. 5.2 Applicant has submitted that in the subject project at Joyville Virar, out of the 4 phases currently under development, Phases 2, 3 and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... installation, completion, fitting out, repair, maintenance, renovation, or alteration of,- (a) , (b) a civil structure or any other original works pertaining to a scheme under Jawaharlal Nehru National Urban Renewal Mission or Rajiv Awaas Yojana; (c) a civil structure or any other original works pertaining to the In-situ rehabilitation of existing slum dwellers using land as a resource through private participation under the Housing for All (Urban) Mission/Pradhan Mantri Awas Yojana, only for existing slum dwellers; (d) a civil structure or any other original works pertaining to the Beneficiary led individual house construction / enhancement under the Housing for All (Urban) Mission/Pradhan Mantri Awas Yojana; (e) ...; or (f) 6 -] (v) Composite supply of works contract as defined in 6 clause (119) of section 2 of the Central Goods and Services Tax Act, 2017, supplied by way of construction, erection, commissioning, or installation of original works pertaining to,- (a) .; ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 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; 5.3.5 According to sub item (da) of item (v), low-cost houses up to a carpet area of 60 square meters per house in 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 would attract a tax rate of 12%. This clause will be applicable to the applicant if the project undertaken by them is an affordable housing project which has been given infrastructure status vide Government of India notification mentioned above. 5.3.6 Department of Economic Affairs notification issued vide F. No. 13/6/2009-INF, dated the 30th March,2017 has included Affordable Housing under the column Infrastructure sub-sector against the category of Social and Commercial Infrastructure and has further defined Affordable Housing , as a housing project using at least 50% of the Floor Area Ratio (FAR)/Floo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... house in an affordable housing project, which has been given infrastructure status under notification F. No. 13/6/2009-INF, dated the 30th March, 2017 of MOP (DEA), attract concessional GST of 8% (the value of the undivided share of land is included in the price of the house). Whether the housing project qualifies as affordable housing project or not, shall be determined by the builder/ developer as per the definition of affordable housing given in the above mentioned notification (i.e., affordable housing has been defined as a housing project using at least 50% of FAR/FSI for dwelling units with carpet area of not more than 60 SQM). No certificate from any authority is required. 5.3.9 We find that the total FSI consumed in the said project is greater than 50% for flats having carpet area below 60 sq mtrs. and therefore, their project falls under the definition of Affordable Housing as in DEA Notification mentioned above. We also find that all the units in Phase 1, 2, 3 and 5 have been booked prior to 31.03.2019. 5.3.10 Hence, from a reading of the above clarification, notification and the clause (da) of item (v) of Notification No. 11/2017-C.T.(Rate) dated 28.06.201 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the principal supply and whether applicant will be eligible for concessional rate of GST, for such charges collected by them. 5.4.4 Advance Maintenance Charges are charges collected in advance from the purchasers of units/flats and are used for maintenance of flats, etc., during the period, after the possession is given to such buyers and before the society is formed. Hence, these charges cannot be considered as a part of composite supply where the principal supply is construction of dwelling units in an Affordable Housing project. Further, Vide F. No. 354/32/2019-TRU dated 14.05.2019, Government of India Ministry of Finance Department of Revenue (Tax Research Unit) issued FAQs (Part II) on real estate which is reproduced as under:- Sr.No. Question Answer 4 For the purpose of determining the threshold of ₹ 45 lakhs in case of affordable residential apartment , whether the following charges generally recovered by the developer from the buyer shall be included? Amenity Charges Society formation charges Advance maintenance Legal Charges For the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... services form an important part of the composite supply of works contract services provided by the applicant where the principal supply is construction of dwelling units in an Affordable Housing project. Hence concessional rate of 12% will be charged on such amounts collected by the applicant from buyers of units with area less than 60 sq mtrs. and GST @ of 18% will be charged on such amounts collected by the applicant from buyers of units with area greater than 60 sq mtrs. 5.5 Question No. 3:- Whether the project of the Applicant at Joyville, Virar qualifies as an ongoing project under Notification No. 3/2019-Central Tax (Rate) dated 29.03.2019 so as to be eligible for the concessional rate of benefit under Notification No. 11/2017-Central Tax (Rate) dated 28.06.2017? 5.5.1 As per Sr.No. (xx) of Notification No. 3/2019-C.T.(Rate) dated 29.03.2019 an on-going project is defined as under:- (xx) the term ongoing project shall mean a project which meets all the following conditions, namely- (a) commencement certificate in respect of the project, where required to be issued by the competent authority, has been issued on or before 31st March, 2019, and it is c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the above, we find that, the project of the Applicant at Joyville, Virar qualifies as an ongoing project under Notification No. 3/2019-C.T. (Rate) dated 29.03.2019. Further, the jurisdictional officer has also agreed that subject project is an ongoing project as per said Notification No. 3/2019-Central Tax (Rate) dated 29.03.2019. 5.6 Question No. 4:- What would be the rate of Goods and Services Tax on the units at Joyville, Virar which do not qualify the criteria of low cost houses ? Whether 12% or 18% tax is to be levied on those units? We find that that applicant s case is covered under the concessional rate of 12% (8% GST after deducting value of land), under Heading 9954 (Construction Services), (v) (da) of above mentioned Notification No. 11/2017, as amended since the project undertaken by them fails under the definition of Affordable Housing . The benefit of reduced rate would be available to them only in the cases of supply effected after 25.01.2018 i.e. the date on which Notification 1/2018-Central Tax (Rate) was issued and the benefit of this reduced rate would be applicable in case of only those flats which are of carpet area upto 60 sq mtrs., in this ..... X X X X Extracts X X X X X X X X Extracts X X X X
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