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TMI Blog2021 (7) TMI 544X X X X Extracts X X X X X X X X Extracts X X X X ..... ara 4 of the N/N. 11/2017-CT (Rate) dated 28.06.2017 as amended by N/N. 03/2019-CT (Rate) dated 29.03.2019 and accordingly the project qualifies to be eligible for exercise of option by the applicant to pay tax on the construction of the apartments in the project at the rates as specified for item (ie) or (if) of SI No. 3 of the said notification. Rate of tax on the services of construction of different types of residential apartments in the project-Shanti Homes, Pothencode rendered to their customers during the period from 01.07.2017 to 31.03.2019 - HELD THAT:- The project Santhi Homes does not fall under any of the schemes listed in sub-paras (a) to (h) of Para 6.6 above and hence the services of construction of residential apartments in the project rendered by the applicant do not qualify for the concessional rate of tax of 12% under any of the sub-items or items of SI No. 3 of the N/N. 11/2017-Central Tax (Rate) dated 28.06.2017. Therefore, the services of construction of all the 12 different types of residential apartments as mentioned in the question in the project-Santhi Homes is liable to GST at the rate of 18% as per Item (i) of SI No. 3 of N/N. 11/2017-Central Tax (R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nation 2 to Section 54 prescribes the relevant date for making the application under different situations - In the instant case the relevant date is the date of payment of tax as prescribed in clause (h) of Explanation 2 of Section 54. - KER/119/2021 - - - Dated:- 30-5-2021 - SHRI. SIVAPRASAD.S, IRS SHRI. SENIL A. K. RAJAN, MEMBER Authorized Representative : Shri. M. Unnikrishnan, Chartered Accountant M/s. VKL Builders India Private Ltd (hereinafter referred to as the applicant) is engaged in the construction of flats in Thiruvananthapuram. 2. At the outset, the provisions of the Central Goods and Services Tax Act, 2017 (hereinafter referred to as CGST Act) and the Kerala State Goods and Services Tax Act, 2017 (hereinafter referred to as KSGST Act) are same except for certain provisions. Accordingly, a reference hereinafter to the provisions of the CGST Act, Rules and the notifications issued there under shall include a reference to the corresponding provisions of the KSGST Act, Rules and the notifications issued there under. 3. Brief facts of the case: 3.1. The applicant was required to exercise option for determination of rate of tax for all its ongoing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... towards undivided share of land was already done in pre - GST period; whether the one-third deduction as provided for in Para 2 of Notification No. 11/2017 can again be taken where the value of undivided share already appropriated is lower than one-third of the total amount receivable for project including land value? c. What is applicable rate of tax for the period after 01.04.2019 where option was already exercised in the following categories of flats and eligibility for 1/3rd deduction as per Para 2 to the extent consideration for undivided share of land is also included; i. Single Apartment Type - D - 471 Sqft if total consideration charged is less than ₹ 45 lakhs. ii. Single Apartment Type - H - 464 Sq ft if total consideration charged is less than ₹ 45 lakhs. iii. Single Apartment Type - I- 464 Sqft if total consideration charged is less than ₹ 45 lakhs. iv. 1 BHK Apartment Type - B - 672 Sq ft if total consideration charged is less than ₹ 45 lakhs. v. 1 BHK Apartment Type - C - 627 Sq ft if total consideration charged is less than ₹ 45 lakhs. vi. 1 BHK Apartment Type - L - 743 Sq ft if total consideration char ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... if) prescribes the rate of tax on the construction of residential apartments other than affordable residential apartments in an ongoing project in respect of which the promoter has exercised option to pay tax at the rates as specified under the respective items (ie) and (if). 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 (ie) or (if) of SI 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-Shanti Homes, Pothencode before the jurisdictional Commissioner on 09.05.2019. Now, the primary questions to be answered are regarding the rate of tax and taxable value of the different types of residential apartments in their ongoing project namely- Shanti Homes, Pothencode for the period before and after 01.04.2019 ie. the date of introduction of the new tax structure for real estate sector. 6.2. In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment certificate or the building permit or the construction permit, by whatever name called issued by the competent authority to allow or permit the promoter to begin development works on an immovable property, as per the sanctioned plan. As per clause (xiv) of Para 4 of the said notification the term apartment shall have the same meaning as assigned to it in clause (e) of section 2 of the Real Estate (Regulation and Development) Act, 2016. Section 2 (e) of the Real Estate (Regulation and Development) Act, 2016 defines the term apartment as follows; Apartment whether called block, chamber, dwelling unit, flat, office, show room, shop, godown, premises, suit, tenement, unit or by any other name, means a separate and self-contained part of any immovable property, including one or more rooms or enclosed spaces, located on one or more floors or any part thereof, in a building or on a plot of land, used or intended to be used for any residential or commercial use such as residence, office, shop, showroom, or godown or for carrying on any business, occupation, profession or trade, or for any other type of use ancillary to the purpose specified. 6.5. Clause (xvi) of Para 4 of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntended for sale to a buyer, wholly or partly, except where the entire consideration has been received after issuance of completion certificate attracted GST at the rate of 18% [9%- CGST + 9% - SGST] as per entry at Item (i) of SI No. 3 of the said notification and the provisions of Paragraph 2 of the notification applied for valuation of the service. Subsequently, the notification was amended by Notification No. 20/2017 Central Tax (Rate) dated 22.08.2017 to substitute item (iii) and insert items (iv), (v) and (vi) in SI No. 3 of the said notification. The said notification was further amended by Notification No. 24/2017 Central Tax (Rate) dated 21.09.2017 to substitute item (vi) and insert item (vii) in SI No. 3. The said notification was further amended by Notification No. 31/2017 Central Tax (Rate) dated 13.10.2017 to substitute item (vii) and insert items (viii) and (ix) in SI No. 3. The said notification was again amended by Notification No. 01/2018 Central Tax (Rate) dated 25.01.2018 to substitute sub-item (c) of item (iv); insert sub-item (da), (db) and (g) in item (iv); insert sub-item (da) in item (v); substitute item (ix) and insert item (x), (xi) and (xii) in SI No.3. C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ication of Government of India, in Ministry of Finance, Department of Economic Affairs vide F. No. 13/6/2009-INF, dated the 30th March, 2017. The construction services provided under the schemes listed at (a), (b), (c), (f) and (g) are eligible for the concessional rate of tax of 12% from 22.08.2017 and at (d), (e) and (h) above are eligible for the same from 25.01.2018. 7. From the facts as disclosed in the application, the Commencement Certificate / Building Permit in respect of the project namely-Shanti Homes, Pothencode was issued before 31.03.2019; further the apartments being constructed under the project was partly booked before 31.03.2019 and the completion certificate has not been issued before 31.03.2019. Therefore , the project satisfies all the conditions of the definition of ongoing project in clause (xx) of Para 4 of the Notification 11/2017-CT (Rate) dated 28.06.2017 as amended by Notification No. 03/2019-CT (Rate) dated 29.03.2019 and accordingly the project qualifies to be eligible for exercise of option by the applicant to pay tax on the construction of the apartments in the project at the rates as specified for item (ie) or (if) of SI No. 3 of the said ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (b) amount charged for transfer of land or undivided share of land, as the case may be. On a plain reading of the above provision, it evident that the taxable value of service specified at item (i) of the said notification is the total amount charged for the supply less the value of land or undivided share of land and the value of land or undivided share of land shall be deemed to be one third of the total amount charged for the supply. The CBIC has issued FAQ's on Real Estate Sector under F.No. 354/32/2019 - TRU dated 07.05.2019 wherein it is clarified as follows; Question No. 36: Can a developer take deduction of actual value of land involved in sale of unit instead of taking deduction of deemed value of land as per Paragraph 2 to Notification No. 11/2017 - CTR? Ans : No. Valuation mechanism prescribed in paragraph 2 of the notification No. 11/2017 - CTR dated 28.06.2017 clearly prescribes one-third abatement towards value of land. Therefore, the value of land or undivided share of land is deemed to be one-third of the total amount charged for the supply irrespective of the actual value of land and accordingly the applicant is eligible to avail d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation before the expiry of two years from the relevant date in such form and manner as may be prescribed. Explanation 2 to Section 54 prescribes the relevant date for making the application under different situations. In the instant case the relevant date is the date of payment of tax as prescribed in clause (h) of Explanation 2 of Section 54. In view of the observations stated above, the following rulings are issued; RULING a. What is the rate of tax for services provided to the customers for the period 01.07.2017 to 31.03.2019 as per Notification No. 11/2017-Central Tax (Rate) dated 28.06.2017 as amended? The services of construction of all the 12 different types of residential apartments as mentioned in the question in the project-Santhi Homes, Pothencode during the period from 01.07.2017 to 31.03.2019 is liable to GST at the rate of 18% [9% - CGST + 9% - SGST] as per Item (i) of SI No. 3 of Notification No. 11/2017-Central Tax (Rate) dated 28.06.2017. b. What is the value of services, for services for the period 01.07.2017 onwards for which appropriation towards undivided share of land was already done in pre - GST period; whether the one-third deduction as ..... X X X X Extracts X X X X X X X X Extracts X X X X
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