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Issues: (i) Whether the first housing project, commenced before 31 March 2019, qualified as an ongoing project under the GST rate notifications; (ii) Whether the second housing project, for which the construction and registration-related events occurred after 31 March 2019, fell outside the category of an ongoing project and attracted the reduced rate without input tax credit.
Issue (i): Whether the first housing project, commenced before 31 March 2019, qualified as an ongoing project under the GST rate notifications.
Analysis: The applicable rate under Notification No. 03/2019-Central Tax (Rate) depended on whether the project satisfied the conditions for an ongoing project, including commencement certificate where required, commencement of construction on or before 31 March 2019, absence of completion certificate or first occupation by that date, and booking of apartments on or before that date. The facts showed that the first license was granted in 2014, the building plan was approved in 2015, and construction on the first parcel had started before 31 March 2019. The project therefore satisfied the conditions for an ongoing project. The authority also noted that the applicant had opted for the earlier effective rate structure with input tax credit and land abatement.
Conclusion: The first project was held to be an ongoing project and the applicable tax rate was 12% with input tax credit and land abatement.
Issue (ii): Whether the second housing project, for which the construction and registration-related events occurred after 31 March 2019, fell outside the category of an ongoing project and attracted the reduced rate without input tax credit.
Analysis: The second project was supported by a separate licence and RERA registration, but the self-declaration before the regulatory authority showed that the sanction of the project, the likely date of commencement, and the registration formalities occurred after 31 March 2019. The declaration also indicated nil expenditure and no commencement of construction before that date, and the project had not yet received environmental clearance. On these facts, the project did not satisfy the definition of an ongoing project under Notification No. 03/2019-Central Tax (Rate). As a result, it fell within the category of projects other than ongoing projects, for which the lower concessional rate without input tax credit applied.
Conclusion: The second project was held not to be an ongoing project and the applicable tax rate was 0.5% without input tax credit.
Final Conclusion: The ruling determined different GST rates for the two parts of the housing development, treating the earlier project as ongoing and the later project as a non-ongoing project under the post-2019 rate regime.
Ratio Decidendi: For GST on real estate projects, the applicable concessional rate turns on whether the project satisfies the notification-defined conditions of an ongoing project as on 31 March 2019; projects commenced after that date fall under the later concessional regime without input tax credit.
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