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TMI Blog2024 (10) TMI 1376X X X X Extracts X X X X X X X X Extracts X X X X ..... e to the said services supplied by the applicant. Accordingly, the applicant is liable to pay GST at the rate of 1.5% in respect of the services of construction of affordable residential apartments as per entry at item No. (ic), at the rate of 7.5% in respect of the services of construction of residential apartments other than affordable residential apartments as per entry at item No. (id) and at the rate Of 18% in respect of the services of construction of complex, building, civil structure or a part including commercial apartments (shops, offices, godowns etc,) as per entry at item No. (if) of Notification No. 3/2019-CentraI Tax (Rate), dated 29-3-2019 subject to the conditions prescribed under the respective entries. Whether taxpayer can supply of Affordable residential apartments and residential apartments under REP conjointly? - HELD THAT:- The services provided by taxpayer is clearly fall under notification No. 03/2019-CT (rate) dated 29th March, 2019 - the notification bifurcates affordable and non-affordable apartments by area and gross amount charge for the apartment. There appears no bar for a promoter to supply affordable residential apartments and residential apartments ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act are the same except for certain provisions. Therefore, unless a mention is specifically made to such dissimilar provisions, a reference to the CGST Act would also mean a reference to the same provision under the RGST Act. Further to the earlier, henceforth for the purposes of this Advance Ruling, a reference to such a similar provision under the CGST Act / RGST Act would be mentioned as being under the GST Act The issue raised by M/S CASTLE REALTORS, Shop No 1,6, Parwani Properties, Ajay Nagar, AJMER-305003, Rajasthan (hereinafter the applicant ) is fit to pronounce advance ruling as they have deposited prescribed fee under GST Act and it falls under the ambit of the Section 97 (2) (a) given as under: (b) Applicability of a notification issued under the provisions of the Act (d) Admissibility of input tax credit paid or deemed to have been paid A. SUBMISSION OF THE APPLICANT (in brief):- The M/s. CASTLE REALTORS, SHOP NO 1,6, M/s. CASTLE REALTORS, PARWANI PROPERTIES, Ajay Nagan Ajmer, Rajasthan, 305003 (hereinafter referred to as the Applicant or CASTLE REALTORS ) is engaged in supplying services of construction, erection, commissioning, installation, completion, fitting out, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on or after 1st April, 2019, which shall be calculated in the manner as prescribed in the Annexure I in the case of REP other than RREP and in Annexure II in the case of RREP; Provided also that where a registered person (landowner-promoter) who transfers development right or FSI (including additional FSI) to a promoter (developer promoter) against consideration, wholly or partly, in the form of construction of apartments, - (i) the developer-promoter shall pay tax on supply of construction of apartments to the landowner promoter, and (ii) such landowner - promoter shall be eligible for credit of taxes charged from him by the developer promoter towards the supply of construction of apartments by developer-promoter to him, provided the landowner promoter further supplies such apartments to his buyers before issuance of completion certificate or first occupation, whichever is earlier, and pays tax on the same which is not less than the amount of tax charged from him on construction of such apartments by the developer promoter. Explanation . (i) developer-promoter is a promoter who constructs or converts a building into apartments or develops a plot for sale, (ii) landowner-promoter i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to his output tax liability in the month not later than the month of June following the end of the financial year. 2. Notwithstanding anything contained in Explanation 1 above, tax on cement received from unregistered person shall be paid in the month in which cement is received. 3. Input Tax Credit not availed shall be reported every month by reporting the same as ineligible credit in GSTR-3B [Row No. 4(D)(2)]. (id) Construction of residential apartments other than affordable residential apartments by a promoter in a REP Other than a RREP which commences on or after 1st April, 2019 or in an ongoing REP other than RREP in respect of which the promoter has not exercised option to pay central tax on construction of apartments at the rates as specified for item (ie) or (if) below, as the case may be, in the manner prescribed therein, 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) 3.75 (if) Construction o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nstructs 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 b. A person who develops the land into a project whether or not the person also constructs structures on any of the plots, for the purpose of selling to other persons all or some of the plots in the said project, whether with or without structures thereon; or c. any development authority or any other public body in respect of allottees of Buildings or apartments, as the case may be, constructed by such authority or body on lands owned by them or placed at their disposal by the Government; or Plots owned by such authority or body or placed at their disposal by the Government, for the purpose of selling al/ or some of the apartments or plots; or d. An apex State level co-operative housing finance society and a primary co-operative housing society which constructs apartments or buildings for its Members or in respect of the allottees of such apartments or buildings; or e. Any other person who acts himself as a build ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce which is appurtenant to the net usable floor area of an apartment, meant for the exclusive use of the allottee; SCOPE The Applicant falls under the definition of Real Estate Project (REP) because it has carpet area for commercial apartments more than 15 percent out of total carpet area of project. That to suffice our explanation that commercial apartments areas are more than 15 percent of total carpet area we hereby attaching Approved map from Ajmer Development Authority which is also available to verify on https://rera.raiasthan.gov.in/.(Project Name-ATLANTIS) Applicant views on the Questions raised 1. GST Rate on supply of affordable and non-affordable apartments under REP. Ans-For Affordable residential apartments- The applicant falls under the heading serial no. (ic) of Notification No. 03/2019-Central tax (Rate) which states that construction of affordable residential apartments by a promoter in REP other than RREP is GST @ 1.5 percent less 1/3 rd value of land as per Notification No. 11/2017-CT (rate) dated 28th June 2017 which is equivalent to GST @ 1% on the transaction value. For Non-affordable residential apartments- The applicant falls under the heading serial no. (id ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arth by foundation or structural support that are used for making outward supply of goods or services or both and includes such foundation and structural supports but excludes- (i) land, building or any other civil structures; (ii) telecommunication towers; and (iii) pipelines laid outside the factory premises. A summary of the eligibility of ITC as per the provisions of section 17 (5) (c) and (d) is given in the following Table; Type of property Construction of Treatment in books ITC eligibility Immovable Other than plant and machinery Capitalized Not eligible Movable P M or otherwise Capital or Revenue Eligible Movable or immovable Plant and machinery Capital or Revenue Eligible Movable or Immovable P M or otherwise Revenue Eligible ITC FOR ACTIVITIES OF REPAIR, RE-CONSTRUCTION, RENOVATION, ALTERATION, ETC. The concept of construction has been widened to include the activities of reconstruction, renovation, additions or alterations or repairs. The term construction generally refers to the act of making or creating the immovable property for the first time. On the other hand, the activities of repair, renovation, alteration, etc. would involve carrying out the works on an existing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... GST, dated 18-11-2019 as follows: It has been represented that on certain occasions, departmental officers do not consider ITC on stores and spares, packing materials, materials purchased for machinery repairs, printing and stationery items, as part of Net ITC on the grounds that these are not directly consumed in the manufacturing process and therefore, do not qualify as input. There are also instances where stores and spares charged to revenue are considered as capital goods and therefore the ITC availed on them is not included in Net ITC, even though the value of these goods has not been capitalized in his books of account by the applicant. It is clarified that the ITC of the GST paid on inputs, including inward supplies of stores and spares, packing materials etc., shall be available as ITC as long as these inputs are used for the purpose of the business and/or for effecting taxable supplies, including zero-rated supplies, and the ITC for such inputs is not restricted under section 17 (5) of the CGST Act. Further, capital goods have been clearly defined in section 2 (19) of the CGST Act as goods whose value has been capitalized in the books of account and which are used or inte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... own account in this case Warehouse construction involved cement, marble, paver block etc, and, hence, warehouse could not be moved after construction Without damage - ITC of GST charged on inward supply of goods and services related to construction of warehouse which was capitalized in books of account was not available - ITC would be available if such expenses were not capitalized [Section 17 of central Goods and Services Tax Act, 2017/West Bengal Goods and Services Tax Act, 2017]. [paras 4.10 and 4.11] The above judgment of Hon ble High Court clearly specify that ITC is available for construction if expenses are not capitalized in books of accounts. That we also hereby declare that all the expenses which we will incur for construction of commercial apartments will be treated as revenue expenditure in Financial Statements. The applicant should be eligible for Input Tax Credit of Input, Input Service and Capital goods which will be used in supply of Commercial Apartments in REP other than RREP for in the course of business and for furtherance of business. The GST rate of Supply of Construction of Commercial apartments is 12 percent without any condition for eligibility of ITC for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ूचना संख्या 03/2019 Central Tax Rate 29.03.2019 (तदनुरूप State Tax Notification) Serial No 3 के कॉलम संख्या 3 की प्रविष्टि (ic) के अनुरूप Affordable Residential Apartment 0.75 Central Tax @ 0.75 State Tax टैक्स रेट अधिसूचित है, तथा Non-Affordable apartments पर कॉलम संख्या 3 की प्रविष्टि (id) के अनुरूप @ 3.75 Central Tax @ 3.75 State Tax टैक्स रेट अधिसूचित है │जो की उक्त अधिसूचना क& ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... धिसूचित है │जो की उक्त अधिसूचना के कॉलम 5 की शर्तों के अध्यधीन होगी │ बिन्दू संख्या 4 में Eligibility of Input Tax Credit which will be used in the course of business or for furtherance of business for Construction of Commercial apartments in a Real Estate Project (REP) इस पर निर्भर होगा की अधिसूचना क्रमांक 03/2019 Central Tax Rate 29.03.2019 के Annexure-IV में करदाता द्वारा उक्त अधिसूचना के Serial No. 3 क ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... structure for real estate sector was introduced with effect from 1-4-2019 onwards by amendment of Notification No. 11/2017-CentraI Tax (Rate) dated 28-6-2017 by Notification No. 3/2019-Central Tax (Rate) dated 29-3-2019, The Notification 03/2019-CT (Rate) states that- (ii) in the Table, -(a) against serial number 3, for item (i), and the entries relating thereto in column (3), (4) and (5), the following items and entries shall be substituted, namely,- (3) (4) (5) (ic) Construction of affordable residential apartments by a promoter in a Real Estate Project (herein after referred to as REP) other than RREP, which commences on or after 1st April, 2019 or in an ongoing REP other than RREP in respect of which the promoter has not exercised option to pay central tax on construction of apartments at the rates as specified for item (ie) or (if) below, as the case may be, in the manner prescribed therein, 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h speed diesel, motor spirit, natural gas], used in supplying the service shall be received from registered supplier only; Provided also that inputs and input services on which tax is paid on reverse charge basis shall be deemed to have been purchased from registered person; Provided also that where value of input and input services received from registered suppliers during the financial year (or part of the financial year till the date of issuance of completion certificate or first occupation of the project, whichever is earlier) falls short of the said threshold of 80 per cento tax shall be paid by the promoter on value of input and input services comprising such shortfall at the rate of eighteen percent on reverse charge basis and all the provisions of the Central Goods and services Tax Act, 2017 (12 of 2017) shall apply to him as if he is the person liable for paying the tax in relation to the supply of such goods or services or both; Provided also that notwithstanding anything contained herein above, where cement is received from an unregistered person, the promoter shall pay tax on supply of such cement at the applicable rates on reverse charge basis and all the provisions of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. (Provisions of paragraph 2 of this notification shall apply for valuation of this service. 9 F.4 The relevant entries at Items (ic), (id) and (if) of Sl. No. 3 of Notification No. 11/2017-Central Tax (Rate), dated 28-62017 as amended by Notification No. 3/2019-Central Tax (Rate), dated 29-3-2019 reads as follows; Heading 9954 - Construction services - (ic) Construction of affordable residential apartments by a promoter in a Real Estate Project (herein after referred to as RFP) other than RREP, which commences on or after 1st April, 2019 or in on ongoing REP other than RREP in respect of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... therein, The conditions that are common for the entry at item (ic) and (id) are as extracted below; Condition : Provided that the central tax at the rate specified in column (4) shall be paid in cash, that is, by debiting the electronic cash ledger only : Provided also that credit of input tax charged on goods and services used in supplying the service has not been token except to the extent as prescribed in Annexure I in the case of REP other than RREP and in Annexure Il in the case of RREP : Provided also that the registered person shall pay, by debit in the electronic credit ledger or electronic cash ledger, an amount equivalent to the input tax credit attributable to construction in a project, time of supply of which is on or after 1st April, 2019, which shall be calculated in the manner as prescribed in the Annexure I in the case of REP other thon RREP and in Annexure Il in the case of RREP : Provided also that where a registered person (landowner-promoter) who transfers development right or FSI (including additional FSI) to a promoter (developer-promoter) against consideration, wholly or partly, in the form of construction of apartments, - (i) the developer-promoter shall pay ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ble rates on reverse charge basis and al/ the provisions of the Central Goods and Services Tax Act, 2017 shall apply to him as if he is the person liable for paying the tax in relation to such supply of cement; Explanation. - 1. The promoter shall maintain project wise account of inward supplies from registered and unregistered supplier and calculate tax payments on the shortfall at the end of the financial year and shall submit the same in the prescribed form electronically on the common portal by end of the quarter following the financial year. The tax liability on the shortfall of inward supplies from unregistered person so determined shall be added to his output tax liability in the month not later than the month of June following the end of the financial year. 2. Notwithstanding anything contained in Explanation I above, tax on cement received from unregistered person shall be paid in the month in which cement is received. 3 Input Tax Credit not availed shall be reported every month by reporting the same as ineligible credit in GSTR-3B [Row No. 4(D)(2)]. And conditions for both the entries entry at item (if) are as extracted below; Condition : Provided that in case of ongoing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ged for the transfer of land or undivided share of land, as the case may be including by way of lease or sub lease; and C. Any other amount charged by the promoter from the buyer of the apartment including preferential location charges, development charges, parking charges, common facility charges etc. (b) an apartment being constructed in an ongoing project under any of the schemes specified in sub-item (b), sub-item (c), sub-item (d), sub-item (da) and sub-item (db) of item (iv); sub-item (b), sub-item (c), sub-item (d) and sub-item (da) of item (v); and sub-item (c) of item (vi), against serial number 3 of the Table above, in respect of which the promoter has not exercised option to pay central tax on construction of apartments at the rates as specified for item (ie) or (if) against serial number 3, as the case may be. (xvii) the term promoter shall have the same meaning as assigned to it in in clause (zk) of section 2 of the Real Estate (Regulation and Development) Act, 2016 (16 of 2016); (xviii) the term Real Estate Project (REP) shall have the same meaning as assigned to it in in clause (zn) of section 2 of the Real Estate (Regulation and Development) Act, 2016 (16 of 2016); ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or buildings; or (v) any other person who acts himself as a builder, coloniser; contractor, developer, estate developer or by any other name or claims to be acting as the holder of a power of attorney from the owner of the land on which the building or apartment is constructed or plot is developed for sale; or (vi) such other person who constructs any building or apartment for sale to the general public. (zn) reaf estate project means the development of a building or a building consisting of apartments, or converting an existing building or o part thereof into apartments, or the development of land into plots or apartment, 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. F.8. On a plain reading of the entries at item (ic), (id) and (if) of Sl. No. 3 of the Notification No. 11/2017-CentraI Tax (Rate), dated 28-6-2017 as amended by Notification No. CT(Rate) 03/2019 dated 29th March 2019 as extracted above, it is evident that the rate of GST has been prescr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ordable residential apartment shall mean, (a) a residential apartment in a project Which commences on or after 1st April, 2019, or in an ongoing project in respect of which the promoter has not exercised option in the prescribed form to pay integrated tax on construction of apartments at the rates as specified for item (ie) or (if) against serial number 3, as the case may be, having carpet area not exceeding 60 square meter in metropolitan cities or 90 square meter in cities or towns other than metropolitan cities and for which the gross amount charged is not more thon forty five lakhs rupees. For the purpose of this clause, - (i) Metropolitan cities are Bengaluru, Chennai, Delhi NCR (limited to Delhi, Noida, Greater Noida, Ghaziabad, Gurgaon, Faridabad), Hyderabad, Kolkata and Mumbai (whole of MMR) with their respective geographical limits prescribed by on order issued by the Central or State Government in this regard; From the above, it is clear that the notification bifurcates affordable and non-affordable apartments by area and gross amount charge for the apartment. There appears no bar for a promoter to supply affordable residential apartments and residential apartments conjoi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lies on which tax is payable on reverse charge basis, the amount towards the value of supply along with tax payable thereon within a period of one hundred and eighty days from the date of issue of invoice by the supplier, an amount equal to the input tax credit availed by the recipient shall be added to his output tax liability, along with interest thereon, in such manner as may be prescribed: Provided also that the recipient shall be entitled to avail of the credit of input tax on payment mode by him of the amount towards the value of supply of goods or services or both along with tax payable thereon. (3) Where the registered person has claimed depreciation on the tax component of the cost of capital goods and plant and machinery under the provisions of the Income-tax Act, 1961, the input tax credit on the said tax component shall not be allowed. (4) A registered person shall not be entitled to take input tox credit in respect of any invoice or debit note for supply of goods or services or both after the due date of furnishing of the return under section 39 for the month of September following the end of financial year to which such invoice or invoice relating to such debit note p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unt. Thus, if a person purchases construction material and engages a labour contractor to provide the construction services using the purchased material, ITC shall not be available of both the goods purchase and the services of the labour contractor procured. As per Section 17 (5) (d) of the Central Goods and Services Tax Act, 2017 ( the CGST Act ) no input tax credit ( ITC ) is available in respect of any goods or services received by the taxpayer for construction of immovable property on its own account even if inputs and input services are used in course or furtherance of business. Further, Section 17 of the CGST Act talks about Apportionment of credit and blocked credit . According to Section 17 (5) (d) of the CGST Act, ITC shall not be available in respect of goods or services or both received by a taxable person for construction of an immovable property (other than plant or machinery) on his own account including when such goods or services or both are used in the course or furtherance of business. Further, the explanation stated in Section 17 (5) of the CGST Act, the credit is also blocked with respect to reconstruction, renovation, addition, alterations or repairs which are ..... X X X X Extracts X X X X X X X X Extracts X X X X
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