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TMI Blog2022 (10) TMI 773X X X X Extracts X X X X X X X X Extracts X X X X ..... of residential apartments rendered by the applicant are liable to GST at the rates prescribed under Item (ie) or (if) of Sl. No. 3 of the 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 - the services of construction of apartments provided by the applicant squarely fall within the description of services specified in Item (if) of S1 No. 3 of the 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 and accordingly the tax rates as prescribed in the said entry shall apply to the said services supplied by the applicant. Accordingly, the applicant is liable to pay GST at the rate of 18% in respect of the services of construction of residential apartments supplied by them. Taxable value of the services of construction of residential apartments rendered by them - HELD THAT:- The taxable value in respect of the service specified at item (if) of Sl.No. 3 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 la ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... IV. Whether any particular thing done by the applicant with respect to any goods and / or services or both amounts to or results in a supply of goods and / or services or both, within the meaning of that term. 4. Contentions of the Applicant: 4.1. The applicant submits that they enter into two agreements with the customers who want to have an apartment in their project. Firstly, an agreement for sale of undivided share of the land is executed between the company and the customer in which a particular number of undivided shares are agreed to be sold to the customer based on the square feet of the apartment proposed to be purchased by the customer. Along with the said agreement, another agreement for constructing the apartment is also executed between the company and the customer entrusting the work of constructing the apartment to the company. The value of the undivided share of the land is shown in the agreement for sale. A registered sale is executed in favour of the customer showing the said value of undivided share as the land cost and stamp duty is paid. Also, cost of construction of the proposed apartment as valued by a valuer is also to be shown as per the amendmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has informed that instead of collecting 12% for the gross amount, they are collecting 18% on the charges for construction agreement. The tax payment appears to be correct. The Jurisdictional Officer has further stated that no proceedings in the questions raised in the case of the applicant are decided or pending. 6. Personal Hearing: 6.1. The applicant was granted an opportunity for a personal hearing on 05.11.2021. Shri Thomas John and Shri Hamsa Mohammed represented the applicant in the personal hearing. They submitted additional documents and reiterated the contentions made in the application and requested to issue a ruling based on the submissions in the application. 7. Discussion and Findings: 7.1. We have gone through the application and the submissions of the applicant during the personal hearing. The questions to be answered are regarding the rate of tax and taxable value in respect of the construction services of the apartments rendered by them from 01.07.2017; the date of introduction of GST onwards. The practice followed by the applicant is that they purchase the land in their name and obtain a building permit in their name and enter into two agreements w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rvice) (if) Construction of a complex, building, civil structure or a part thereof including, - (i) commercial apartments (shops, offices, godowns etc) by a promoter in a REP other than RREP, (ii) residential apartments in an ongoing project, other than affordable residential apartments, in respect of which the promoter has exercised option to pay central tax on construction of apartments at the rates as specified for this item in the manner prescribed herein, but excluding supply by way of services specified at items (i), (ia), (ib), (ic), (id) and(ie) above 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 removal of doubt, it is hereby clarified that, supply by way of services specified at items (i), (ia), (ib),(ic),(id) and (ie) in column (3) shall attract central tax prescribed against them in column (4) subject to conditions specified against them in column (5) and shall not be levied at the rate as specified under this entry. (Provision ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Middle Income Group - 2 (MIG-2) under the Housing for All (Urban) Mission / Pradhan Mantri Awas Yojana (Urban); (f) Sl. No. 3 (v) (c) - Low-cost houses up to a carpet area of 60 square metres per house in a housing project approved by competent authority empowered under the 'Scheme of Affordable Housing in Partnership' framed by the Ministry of Housing and Urban Poverty Alleviation, Government of India; (g) SI. No. 3 (v) (d) - Low-cost houses up to a carpet area of 60 square metres per house in a housing project approved by the competent authority under-1) The Affordable Housing in Partnership component of the Housing for All (Urban) Mission / Pradhan Mantri Awas Yojana; 2) Any housing scheme of a State Government. (h) SI. No. 3 (v) (da) - Low-cost houses up to a carpet area of 60 square metres 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. (i) Si. No; 3(vi) (c) a residential complex predominantly meant for self-use or the use of their employees or other persons s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uses of Section 2 of the Real Estate (Regulation and Development) Act, 2016 which contains the definition of the tee ins 'apartment', `promoter' and 'real estate project' are reproduced below; (e) apartment whether called block, chamber, dwelling unit, flat, office, showroom, 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; (zk) 'promoter means,- (i) a person who constructs or causes to be constructed an independent building or a building consisting of apartments, or converts an existing building or a part thereof into apartments, for the purpose of selling all or some of the apartments to other persons and includes his assignees; or (ii) a person who develops land into a p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uing with the payment of tax at the old rates in respect of ongoing projects was that the registered person shall exercise within the prescribed time an option in the prescribed form to pay tax on the construction of apartments in the project at the rates as specified for Item (ie) or (if) of Si No. 3 of the said notification. 7.10. From the facts as disclosed in the application and from the remarks of the jurisdictional officer, it is evident the project of the applicant satisfies all the conditions of the definition of ongoing project in clause (xx) of Para 4 of the said notification and accordingly the applicant is eligible for filing option for continuing with the payment of tax at the old rates in respect of ongoing projects. It is also confirmed by the jurisdictional officer that the applicant has exercised the option to continue payment of tax at the old rate in respect of the project within the prescribed time and the manner prescribed in Item (ie) and (if) of Si No. 3 of the said notification. Given the above option exercised by the applicant, the services of construction of residential apartments rendered by the applicant are liable to GST at the rates prescribed und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , if charged separately by the supplier; (b) any amount that the supplier is liable to pay in relation to such supply but which has been incurred by the recipient of the supply and not included in the price actually paid or payable for the goods or services or both; (c) incidental expenses, including commission and packing, charged by the supplier to the recipient of a supply and any amount charged for anything done by the supplier in respect of the supply of goods or services or both at the time of, or before delivery of goods or supply of services; (d) interest or late fee or penalty for delayed payment of any consideration for any supply; and (e) subsidies directly linked to the price excluding subsidies provided by the Central Government and State Governments. Explanation :-For the purposes of this sub-section, the amount of subsidy shall be included in the value of supply of the supplier who receives the subsidy. (3) The value of the supply shall not include any discount which is given, (a) before or at the time of the supply if such discount has been duly recorded in the invoice issued in respect of such supply; and (b) after the sup ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ective of the actual value of land and accordingly the applicant is eligible to avail deduction of one-third of the total amount charged for the supply in arriving at the taxable value of the supply. 7.12. The next question raised by the applicant before the authority is regarding the time of supply of service. The time of supply of services is governed by the provisions of Section 13 of the CGST which reads as follows; Time of supply of services. - (1) The liability to pay tax on services shall arise at the time of supply, as determined in accordance with the provisions of this section. (2) The time of supply of services shall be the earliest of the following dates, namely: (a) the date of issue of invoice by the supplier, if the invoice is issued within the period prescribed under sub-section (2) of section 31 or the date of receipt of payment, whichever is earlier; or (b) the date of provision of service, if the invoice is not issued within the period prescribed under sub- section (2) of section 31 or the date of receipt of payment, whichever is earlier; or (c) the date on which the recipient shows the receipt of services in his books of account, in a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me of supply to the extent it relates to an addition in the value of supply by way of interest, late fee or penalty for delayed payment of any consideration shall be the date on which the supplier receives such addition in value. 7.12.1. Further Notification No.06/2019 Central Tax (Rate) dated 29.03.2019 prescribes that in respect of the following categories of registered persons, namely; (i) a promoter who receives development rights or Floor Space Index (FSI) (including additional FSI) on or after 1st April, 2019 for construction of a project against consideration payable or paid by him, wholly or partly, in the form of construction service of commercial or residential apartments in the project or in any other form including in cash; (ii) a promoter, who receives long term lease of land on or after 1st April, 2019 for construction of residential apartments in a project against consideration payable or paid by him, in the form of upfront amount (called as premium, salami, cost, price, development charges or by any other name), the liability to pay central tax on, - (a) the consideration paid by him in the form of construction service of commercial or residential ..... X X X X Extracts X X X X X X X X Extracts X X X X
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