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TMI Blog2021 (7) TMI 541X X X X Extracts X X X X X X X X Extracts X X X X ..... ted as an ongoing project - Hence, as per provisions of the said notification, the option to pay tax at the old rate can only be exercised project-wise and not for part of project or individual apartments / villas comprised in a project. Therefore, the option exercised by the applicant for paying tax at the rate as specified in Item (if) of S1 No. 3 of Notification No. 11/2017-Central Tax (Rate) dated 28.06.2017 as amended by Notification No. 03/2019-Central Tax (Rate) dated 29.03.2019 in respect of the ongoing project VRINDHAVAN is applicable for the entire 20 villas comprised in the project and not for the 9 villas as claimed by the applicant. Whether the answer given for the first question to VRINDHAVAN project is also applicable to the other similar projects in similar situations? - HELD THAT:- The advance ruling is binding only on the applicant and the jurisdictional officer of the applicant. Hence the answer to the first question is applicable only to similar projects of the applicant in similar situations. - KER/116/2021 - - - Dated:- 28-5-2021 - SHRI. SIVAPRASAD.S, IRS SHRI. SENIL A.K. RAJAN. MEMBER Authorized Representative : Shri. M.P. Tony, Chartered Ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3, Clause No.(if) of Notification No.11/2017-Central Tax (Rate) dated 28-06-2017 as amended by Notification No. 03/2019 - Central Tax (Rate) dated 29-03-2019) for the 9 units which were already booked and got the approval from local authorities before 31.03.2019 and have not opted the old rate of tax for the balance 11 units since they are unbooked and not got approval from local authorities before 31.03.2019. In the Option Form Annexure IV, only 9 villas were included and balance 11 villas were not included. The Form Annexure IV with only 9 villas was accepted by the proper officer. Since they have not opted for the old rate of 18%, for the balance 11 villas, they are made liable to pay GST at the new rate of 7.5% without ITC, (as per item (ia) in SI.No.3 in the Notification) effective tax rate being 5% after excluding land portion. 4. The applicant requested advance ruling on the following; 1. Whether the new tax rate of 7.5% (effective rate of 5% after excluding land portion), with no ITC, is applicable to the 11 unbooked units in the said VRINDHAVAN project? 2. Whether the answer given for the first question to 'VRINDHAVAN project is also applicable to other sim ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es that this is a form for exercising onetime option to pay tax on construction of apartments in a project . That means the option is to pay tax on construction of apartments and accordingly, the option is on unit or villa wise and not on project wise. Point No.5 in the form also ask data for the number, type and carpet area of the apartments for booking or sale in the project . 5.6. Moreover, applicant had filed the Form Annexure IV by exercising the option to pay tax at old rate only for 9 Villas stating clearly in the Form itself by attaching a separate list of 9 villas opting the old tax rate and the authority had also accepted such Annexure and raised no objection in opting the old tax rate only for 9 villas in the project. 5.7. Based on the above points, applicant is of the view that the new tax rate of 5% (effective rate after excluding land portion), with no ITC, is applicable to the 11 unbooked units in the said VRINDHAVAN project. They are also of the view that the above principle applied for VRINDHAVAN project is also applicable for similar projects under similar situations. 6. Comments of the Jurisdictional Officer: The jurisdictional officer submitt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 19 -Central Tax (Rate) dated 29.03.2019 substituted the rate for services related to real estate sector with effect from 01.04.2019 and also made provisions for continuing the old rate of tax (as it existed up to 31.03.2019) for the ongoing projects. The provisions for continuing the old rate of tax for the ongoing projects were incorporated in Items (ie) and (if) of Sl No. 3 of the Notification No. 11/2017 CT (Rate) dated 28.06.2017 as amended and the Item at (if) (ii) being in respect of construction of residential apartments other than affordable residential apartments is the provision that is applicable to the applicant. The condition prescribed under the above provision for continuing with the payment of tax at the old rates in respect of ongoing projects was that the registered person shall exercise within the specified time an option in the prescribed form to pay tax on construction of apartments in the project at the rates as specified for Item (if) of Sl No. 3 of the said notification. Accordingly, the applicant exercised option in the prescribed form for paying tax at the old rate for their ongoing project namely; VRINDHAVAN stating that the option is in respect of 9 un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... T (Rate) dated 28.06.2017 as amended by Notification No. 03/2019 CT (Rate) dated 29.03.2019; wherein it is specified that the term 'project shall mean a Real Estate Project or a Residential Real Estate Project. In clause 4(xviii) of the said notification it is stated that the term Real Estate Project (REP) shall have the same meaning as assigned to it in Section 2(zn) of the Real Estate (Regulation and Development) Act, 2016. 8.4. Section 2 (zn) of the Real Estate (Regulation and Development) Act, 2016 defines Real Estate Project as follows; Real Estate Project means the development of a building or a building consisting of apartments, or converting an existing building or a part thereof into apartments, or the development of land into plots or apartments as the case may be, for the purpose of selling all or some of the said apartments or plots or building, as the case may be, and includes the common areas, the development works, all improvements and structures thereon, and all easement, rights and appurtenances belonging thereto. 8.5. As per clause (xix) of Para 4 of the said notification the term Residential Real Estate Project (RREP) shall mean a REP in w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of apartments in the ongoing projects at the effective old rates of 8% and 12% with ITC has to be exercised for each ongoing project separately. As per RERA, 2016, project wise registration is allowed. So, the promoter may exercise different options for different ongoing projects being undertaken by him. Q.No. 29: What is the meaning of the term first occupation referred to in clauses (i) to (id) of Entry 3 of Notification No. 3/2019? Whether, in case of an ongoing project, where part occupation certificate has been received in respect of some of the premises comprised in the ongoing project, the Promoter is entitled to exercise the option of 1% / 5% (without ITC) or @ 8%/12% (with ITC) available in terms of Notification No. 3/2019 CT (R), in respect of the balance ongoing project? Ans : The term first occupation appearing in Schedule II para 5 (b) and in notification No. 11/2017 - Central Tax (Rate) dated 29-03-2019 means the first occupation of the project in accordance with the laws, rules and regulations laid down by the Central Government, State Government or any other authority in this regard. Where occupation certificate has been issued for part (s) of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ions of the terms and the clarification of CBIC as extracted above it is evident that the option envisaged under Item (if) of Sl No. 3 of Notification No. 11/2017-Central Tax (Rate) dated 28.06.2017 as amended by Notification No. 03/2019-Central Tax (Rate) dated 29.03.2019 is in respect of the entire ongoing project and not in respect of part of the project. Further, as is clarified by CBIC, even if the commencement certificate issued is only for part of the project, the same shall be treated as an ongoing project. Hence, as per provisions of the said notification, the option to pay tax at the old rate can only be exercised project-wise and not for part of project or individual apartments / villas comprised in a project. Therefore, the option exercised by the applicant for paying tax at the rate as specified in Item (if) of S1 No. 3 of Notification No. 11/2017-Central Tax (Rate) dated 28.06.2017 as amended by Notification No. 03/2019-Central Tax (Rate) dated 29.03.2019 in respect of the ongoing project VRINDHAVAN is applicable for the entire 20 villas comprised in the project and not for the 9 villas as claimed by the applicant. 9. The second question raised by the applicant ..... X X X X Extracts X X X X X X X X Extracts X X X X
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