Liability for GST on Sale of Commercial Property: Key Rulings and Implications

The applicant was held liable to pay GST on the sale of commercial super built-up area as they were considered an "agent," "supplier," and "taxable person" under the CGST Act, 2017. MoHUA was not exempt from paying GST on the sale of commercial built-up space as it did not align with functions entrusted to a municipality. GST was applicable on services supplied post-01.07.2017, even if part of the consideration was received earlier. Additionally, GST was imposed on the sale of commercial built-up area under construction as it constituted a "supply of service" under the CGST Act, 2017.

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Issues Involved:
1. Liability of the applicant to pay GST on the sale of commercial super built-up area on behalf of MoHUA.
2. Liability of MoHUA to pay GST on the sale of commercial built-up space.
3. GST applicability on the sale of built-up space where part of the consideration was received before 01.07.2017.
4. GST applicability on consideration received under an agreement to sell constructed units in a building under construction.

Issue-wise Analysis:

1. Liability of the applicant to pay GST on the sale of commercial super built-up area on behalf of MoHUA:

The applicant argued that they are not liable to pay GST as they act merely as an agent of MoHUA and do not qualify as a "taxable person." However, the judgment clarified that the applicant is indeed an "agent" under Section 2(5) of the CGST Act, 2017, as they carry out the business of supply on behalf of MoHUA. Consequently, the applicant is also a "supplier" under Section 2(105) and a "taxable person" under Section 2(107) of the CGST Act, 2017. Therefore, the applicant is liable to pay GST under Section 9(1) of the CGST Act, 2017, on the sale of commercial built-up area.

2. Liability of MoHUA to pay GST on the sale of commercial built-up space:

The judgment examined whether MoHUA's activities fall under functions entrusted to a municipality under Article 243W of the Constitution, which would exempt it from GST. It was determined that MoHUA does not qualify as a "governmental authority" as defined in the CGST Act and its activities do not align with the functions listed in the Twelfth Schedule of the Constitution. Hence, MoHUA is not exempt from paying GST on the sale of commercial built-up space under S. No. 4 of Notification No. 12/2017 - Central Tax (Rate) dated 28.06.2017, as amended by Notification No. 14/2018-Central Tax (Rate) dated 26.07.2018.

3. GST applicability on the sale of built-up space where part of the consideration was received before 01.07.2017:

The judgment clarified that GST is applicable on the amount received on or after 01.07.2017, even if part of the consideration was received before this date. This is in line with Section 142(10) and Section 142(11)(b) of the CGST Act, 2017, which state that services supplied on or after the appointed day in pursuance of a contract entered into prior to the appointed day shall be liable to tax under the provisions of the CGST Act.

4. GST applicability on consideration received under an agreement to sell constructed units in a building under construction:

The judgment held that the sale of constructed units in a building under construction is treated as a "supply of service" under Clause 5(b) of Schedule II of the CGST Act, 2017. Therefore, the applicant is liable to pay GST on the sale of commercial built-up area under construction.

Ruling:

1. The applicant is liable to pay GST under Section 9(1) of the CGST Act, 2017, as they are considered an "agent," "supplier," and "taxable person" in respect of the project while providing services on behalf of MoHUA.
2. MoHUA is not exempt from paying GST on the sale of commercial built-up space as it does not relate to any function entrusted to a municipality under Article 243W of the Constitution.
3. The applicant is liable to pay GST on services supplied under the GST regime from 01.07.2017, even if part of the consideration was received before 01.07.2017.
4. The applicant is liable to pay GST on the sale of commercial built-up area under construction as it is considered a "supply of service" under Clause 5(b) of Schedule II of the CGST Act, 2017.

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