GST rate for Preferential Location Charges remains at 18% pre and post 01.04.2019 The Appellate Authority for Advance Ruling, Haryana, has ruled that Preferential Location Charges (PLC) attract a GST rate of 18% both before and after ...
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GST rate for Preferential Location Charges remains at 18% pre and post 01.04.2019
The Appellate Authority for Advance Ruling, Haryana, has ruled that Preferential Location Charges (PLC) attract a GST rate of 18% both before and after 01.04.2019, regardless of the issuance of completion/occupation certificate (CC/OC). PLC is not considered outside the scope of supply even after the issuance of CC/OC, and no adjustment or refund of excess GST paid is allowed. Differential pricing for different units within a real estate project does not impact the GST rate for PLC, which remains at 18%.
Issues Involved: 1. GST rate applicability on Preferential Location Charges (PLC) collected before issuance of completion/occupation certificate (CC/OC). 2. GST rate applicability on PLC collected in new projects commencing on or after 01.04.2019. 3. Scope of supply for PLC collected after issuance of CC/OC. 4. Eligibility for adjustment/refund of excess GST paid on PLC. 5. GST rate applicability on differential prices for different properties/units within a real estate project.
Detailed Analysis:
1. GST Rate Applicability on PLC Collected Before Issuance of CC/OC Issue: Whether PLC collected along with consideration for the sale of properties attracts a GST rate of 12% or 18% when the sale/transfer occurs before the issuance of CC/OC.
Ruling: PLC collected along with the consideration for the sale of properties attracts a GST rate of 18% where the sale/transfer of the constructed property has taken place before the issuance of the completion/occupation certificate (CC/OC).
2. GST Rate Applicability on PLC Collected in New Projects Commencing on or After 01.04.2019 Issue: Whether PLC collected along with consideration for the sale of properties attracts a GST rate of 5% or 18% in new projects commencing on or after 01.04.2019.
Ruling: PLC collected along with the consideration for the sale of properties attracts a GST rate of 18% where the sale/transfer of the constructed property has taken place before the issuance of the completion/occupation certificate (CC/OC) under new projects which commence on or after 01.04.2019.
3. Scope of Supply for PLC Collected After Issuance of CC/OC Issue: Whether PLC collected along with consideration for the sale of properties is outside the scope of supply when the sale/transfer occurs after the issuance of CC/OC.
Ruling: PLC collected along with the consideration for the sale of properties, where the sale/transfer of the constructed property is entered into by the applicant after the issuance of CC/OC, is not outside the scope of supply.
4. Eligibility for Adjustment/Refund of Excess GST Paid on PLC Issue: Whether the applicant or customers can claim adjustment/refund of the excess GST amount paid on PLC if it attracts a concessional rate of tax/exemption.
Ruling: No, the applicant or customers cannot claim adjustment/refund of the GST amount paid as there cannot be any excess GST paid in respect of the SAC 99799, which attracts the GST rate of 18% (CGST 9% + SGST 9%).
5. GST Rate Applicability on Differential Prices for Different Properties/Units Within a Real Estate Project Issue: Whether GST can be charged on the whole price at a similar rate when differential prices are charged for different properties/units within a real estate project due to various commercial factors such as the location of the apartment.
Ruling: No, the Preferential Location Service is a separate service from Construction Service. Therefore, for determining the value of the same, Paragraph-2 ibid to the Notification 11/2017-CT(R) dated 28.06.2017, which is applicable exclusively to the Construction Service, shall not be applicable.
Conclusion: The Appellate Authority for Advance Ruling, Haryana, has ruled that PLC attracts a GST rate of 18% both before and after 01.04.2019, irrespective of the issuance of CC/OC. PLC is not outside the scope of supply even after the issuance of CC/OC, and no adjustment/refund of excess GST paid is permissible. The differential pricing for different units due to location factors should not affect the GST rate, which remains at 18% for PLC.
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