Occupancy Certificate Decides Property Completion Date for GST Liability

The case involved determining the date of completion of a property for GST liability purposes. The ruling stated that the date of the occupancy certificate issued by the competent authority, in this case, the Bruhat Bengaluru Mahanagara Palike, should be considered the date of completion. If any part of the consideration was received before this date, GST would be applicable as it is considered a supply of service. However, if the entire consideration was received after the date of completion, the transaction would not be liable for GST.

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Issues Involved:
1. Determination of the date of completion of the property.
2. GST liability on consideration received towards the sale of completed offices when part of the consideration was received before the date of completion.
3. GST liability on consideration received towards the sale of completed offices when the entire consideration was received after the date of completion.

Detailed Analysis:

1. Determination of the Date of Completion of the Property:
The applicant sought clarification on which date should be considered as the date of completion of the property: the date of receipt of necessary approvals from BBMP/Karnataka Pollution Control Board/Karnataka Electricity Board or the date of receipt of the completion certificate from a registered Chartered Engineer.

The Authority referred to entry No.5 of Schedule II of the CGST Act, 2017, which states that the construction of a complex or building intended for sale is treated as a supply of service, except where the entire consideration has been received after the issuance of a completion certificate by the competent authority or after its first occupation, whichever is earlier. The competent authority is defined as the Government or any authority authorized to issue completion certificates under any law in force. In Karnataka, the Bruhat Bengaluru Mahanagara Palike (BBMP) is the competent authority.

The BBMP Building Bye-Laws 2003 mandate that an occupancy certificate is required to certify the completion of construction. The submission of a certificate from a registered architect/engineer is only a supportive document and not sufficient by itself. The final authority rests with the BBMP, which must inspect the building and issue an occupancy certificate. Therefore, the date of the occupancy certificate issued by BBMP is considered the date of completion of the property.

2. GST Liability on Consideration Received Before the Date of Completion:
The applicant queried whether GST is applicable on any amount received as consideration towards the sale of completed offices if part of the consideration was received before the date of completion.

The Authority ruled that if any part of the consideration is received before the date of completion (i.e., the date of the occupancy certificate), the transaction is treated as a supply of service under entry 5 of Schedule II to the GST Acts and is liable for GST. This is because the construction is considered a supply of service until the issuance of the completion certificate or first occupation, whichever is earlier.

3. GST Liability on Consideration Received After the Date of Completion:
The applicant also sought clarity on whether GST is applicable if the entire consideration is received after the date of completion of construction.

The Authority concluded that if the entire consideration is received after the date of completion (i.e., the date of the occupancy certificate), the transaction is not liable for GST. This is because the sale of the property after the issuance of the completion certificate is not considered a supply of service under the GST law.

Ruling:
1. The date of the occupancy certificate issued by the competent authority, i.e., Bruhat Bengaluru Mahanagara Palike, should be treated as the date of completion of the construction.
2. If any part of the consideration is received before such date of completion, the transaction would be considered a supply of services and liable for GST.
3. If the entire consideration is received after the date of completion, the transaction would not be liable for GST.

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