9911796707
TMI Blog2024 (7) TMI 354X X X X Extracts X X X X X X X X Extracts X X X X ..... (Rate) dated 28.06.2017 as amended, is applicable to the applicant as the applicant's case falls under the scheme specified at sub-item (da) of item (v) in case of construction of residential units of less than 60sq mts and not for commercial units. The sub item 'da' of item V mentioned in item 'ie' of SL No 3 of Notification No. 11/2017-Central Tax (Rate) dated 28.06.2017 as amended is applicable to the applicant and the rates as mentioned against the said item 'ie' which is 12% shall be applicable to the applicant. Further in case of supply of services involving transfer of land or undivided share of land the value of supply shall be reduced by one third making the effective rate 8%. - SMT. D. JAYAPRIYA, AND SMT. A. VALLI, MEMBER 1. Any appeal against this Advance Ruling order shall lie before the Tamilnadu State Appellate Authority for Advance Ruling, Chennai under Sub-Section (1) of Section 100 of CGST Act 2017/ TN GST Act 2017, within 30 days from the date on the ruling sought to be appealed, is communicated. 2. In terms of Section 103 (1) of the Act, Advance Ruling pronounced by the Authority under Chapter XVII of the Act shall be binding only- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... plication has been made under the GSTIN 33AANCP1700C1Z0 (Private Limited Company). 3.2. The applicant had started the construction of Tower 'Block A7' in tire year February 2019. The said project included residential units measuring approximately 42 Sq. meter per unit. The said project includes residential units as well as commercial units. The area of Commercial unit is less than 15% of the total area of the project and accordingly the project is an RREP Project 3.3. With effect from April 2019, vide Notification no. 11/2017-Central Tax (Rate) dated 28.06.2017, as amended by Notification 03/2019-Central Tax (Rate) dated 29.03.2019, the applicant had an option to opt for the new rate of 1%/5% without claim of input tax credit or continue with the old rate of 8%/12% with claim of input tax credit. The Applicants have opted to continue with the old rate of paying output tax with the claim of input tax credit. 3.4 The applicant believes that as their project is an RREP project, the rate applicable to them is 8% and accordingly, the output liability should be determined at the rate of 8% by virtue of Notification No. 11/2017-Central tax (Rate) dated 28.06.2017 as amended by Not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 certified by any of the following that construction of the project has started on or before 31st March, 2019:- (i) an architect registered with the Council of Architecture constituted under the Architects Act, 1972 (20 of 1972); or (ii) a chartered engineer registered with the Institution of Engineers (India); or (iii) a licensed surveyor of the respective local body of the city or town or village or development or planning authority. (b) where commencement certificate in respect of the project, is not required to be issued by the competent authority, it is certified by any of the authorities specified in sub-clause (a) above that construction of the project has started on or before the 31st March, 2019; (c) completion certificate has not been issued or first occupation of the project has not taken place on or before the 31st March, 2019; (d) apartments being constructed under the project have been, partly or wholly, booked on or before the 31st March, 2019. Explanation .- For the purpo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Credit Linked Subsidy Scheme for Economically Weaker Section (EWS)/ Lower Income Group (LIG)/ Middle Income Group-1 (MIG-1)/ Middle Income Group-2 (MIG-2) under the Housing for All (Urban) Mission/ Pradhan Mantri Awas Yojana (Urban) Not applicable Sub-item (b) of item (v) (b) a single residential unit otherwise than as a part of a residential complex; Not applicable Sub-item (c) of item (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 Not applicable Sub-item (d) of item (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 Not applicable Sub-item (da) of item (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 st ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... velopment or planning authority. (b) where commencement certificate in respect of the project, is not required to be issued by the competent authority, it is certified by any of the authorities specified in sub-clause (a) above that construction of the project has started on or before the 31st March, 2019; (c) completion certificate has not been issued or first occupation of the project has not taken place on or before the 31st March, 2019; (d) apartments being constructed under the project have been, partly or wholly, booked on or before the 31st March, 2019. Explanation . For the purpose of sub-clauses (a) and (b) above, construction of a project shall be considered to have started on or before the 31st March, 2019, if the earthwork for site preparation for the project has been completed and excavation for foundation has started on or before the 31st March, 2019. 3.11. The applicant submitted, that the commencement certificate of the project is attached and marked as Annexure A-4 which demonstrates that the project commenced before 31.03.2019 and the Chartered engineers' certificate dated 15.04.2019 attached and marked as Annexure A-5 J also certifies that the work has alread ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d 29.03.2019, reproduced below, they stated that thus, the rate applicable in their case should be 8% (4% CGST and 4% SGST).: - 2. In case of supply of service specified in column (3), in items (i), 96 [(ia), (ib), (ic), (id), (ie) and (if)] against serial number 3 of the Table above, involving transfer of land or undivided share of land, as the case may be, the value of such supply shall be equivalent to the total amount charged for such supply less the value of transfer of land or undivided share of land, as the case may be, and the value of such transfer 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. 3.16. The applicant further submitted that they would also like to draw attention to the FAQs on real estate sector issued by CBIC vide circular F. No. 354/32/2019-TRU dated 07.05.2019 the relevant FAQs of which are reproduced as under: Sr.No. Question Answer 1. What are the rates of GST applicable on construction of residential apartments? With effect from 01-04-2019, effective rate of GST applicable on construction of residential apartments by promoters in a real estate project are ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vide letter GEXCOM/TECH/MISC/ 2525/2023-TECH dated 06-02-2024 informed that the pending proceedings on the issue raised in the Advance Ruling is NiL as per the records available and with regard to the comments on the issue raised the Central Authority submitted that the relevant clause does not say reducing the tax rate to one-third of 12%: rather, it states that the value of land in such a supply shall be one-third of the entire amount paid for such a supply. 4.3 The State jurisdictional officer, did not submit any remarks and hence it is presumed that there are no proceedings pending or decided on the issue raised in the application by the Applicant. PERSONAL HEARING 5. The applicant, was given an opportunity to be heard on 08.01.2024. Ms Kushboo Vora, Chartered Accountant and Mr R Subramanian, Chartered Accountant appeared for the personal hearing as the Authorised Representatives (AR) of the Applicant. They reiterated the submissions made in their application and submitted additional submissions before the Authority and reiterated the points made in their submissions. The members enquired as to whether they have complied with tire conditions in the Notification, for which they ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es we find that construction services under Heading 9954 were initially taxable @ 18% [CGST @ 9% + SGST @ 9%] vide entry serial number 3 of the Notification No. 11/2017-Central Tax (Rate) dated 28.06.2017. The relevant extract of Notification pertaining to construction services is reproduced below; SI. No. Chapter, Section or Heading Description of Service Rate (percent) 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 valuation of this service) 9 - (ii) composite supply of works contract as defined in clause 119 of section 2 of Central Goods and Services Tax Act, 2017. 9 - (iii) construction services other than (i) and (ii) above. 9 - 2. In case of supply of service specified in column (3) of the entry at item (i) against serial no. 3 of the Table above, involving transfer of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... construction of Tower 'Block A7' in the year February 2019 and tire said project included residential units (measuring approximately 42 Sq. meter per unit) as well as commercial units. They also submit that the area of Commercial unit is less than 15% of the total area of the project and accordingly the project is an RREP Project. Hence we find that the said supply is construction services of RREP Project. 6.8 We find that the term ongoing project is defined in Notification 11/2017 and 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 certified by any of the following that construction of the project has started on or before 31st March, 2019: - (i) an architect registered with the Council of Architecture constituted under the Architects Act, 1972 (20 of 1972); or (ii) a chartered engineer registered with the Institution of Engineers (India); or (iii) a licensed surveyor of the respective local body of the city or town or village or development or planning authority. (b) where commencement ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the applicant we find that the project qualifies to be an ongoing project as it meets all the conditions stipulated in the Notification No. 11/2017-Central Tax (Rate) dated 28.06.2017 as amended. 6.10 We find that under in the item 'ie' of SI No 3 of Notification No. 11/2017-Central Tax (Rate) dated 28.06.2017, as amended, it is mentioned that tire promoter has exercised option to pay central tax on construction of apartments at the rates as specified for this item '. Further under the conditions against item ie the following conditions are mentioned; Provided that in case of ongoing project, the registered person shall exercise one time option in the Form at Annexure IV to pay central tax on construction of apartments in a project at the rates as specified for item (ie) or (if), as the case may be, by the [20th] of May, 2019 Provided also that where the option is not exercised in Form at Annexure TV by the [20 th ] of May, 2019, option to pay tax at the rates as applicable to item (i) or (ia) or (ib) or (ic) or (id) above, as the case may be, shall be deemed to have been exercised; We find that only if a promoter has exercised option to pay central tax on construct ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tems (iii), (iv), (v), (va), (vi) and (ix) and the corresponding entries relating thereto in columns (4) and (5) of si no 3 of Notification No. 11/2017-Central Tax (Rate) dated 28.06.2017 were omitted and did not exist as on the date of filing of the advance ruling application by the applicant the above said explanation inserted vide Notification 6/2023-C.T. (Rate) dated 26-JuIy-2023 provides clarity that in the item 'ie' of si no 3 of Notification No. 11/2017-Central Tax (Rate) dated 28.06.2017 refers to sub-items of the item (iv), (v) and (vi), against serial number 3 of the Table as they existed in the Notification prior to their omission. 6.12 We also find that that one of the issues raised by the builders association namely, CREDAI vide their letter no. CREDAI/MoF/2018/14 dated 19th March, 2018 was regarding Requirement of specific approval/ certificate for residential projects to qualify as 'Infrastructure status'. In response, the Government vide F.No. 354/52/2018-TRU, Government of India Ministry of Finance Department of Revenue (TRU) dated 7th May, 2018 has clarified that Low cost houses up to a carpet area of 60 square metres per house in an affordable hou ..... X X X X Extracts X X X X X X X X Extracts X X X X
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