GST on ongoing real-estate projects follows the 18% residential rate, one-third land valuation rule, and refund date test for cancellations.

In an ongoing real-estate project covered by the amended GST notification regime, construction of residential apartments fell under the residuary 18% rate for both the pre-01.04.2019 and post-01.04.2019 opted periods because the project did not qualify for the concessional entries. For valuation, paragraph 2 of Notification No. 11/2017-Central Tax (Rate) mandated that land or undivided share of land be deemed at one-third of the total amount charged, and the actual pre-GST land value did not displace that fiction. For refund claims on cancellation of flats, the relevant date under Section 54 was the date of payment of tax.

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Issues: (i) Whether construction services for the residential apartments in the ongoing project were taxable at 18% for the period 01.07.2017 to 31.03.2019. (ii) Whether, for supplies made from 01.07.2017 onwards, the value of land or undivided share of land had to be deemed at one-third of the total amount charged, even if the actual land value already appropriated in the pre-GST period was lower. (iii) Whether, after 01.04.2019 and after exercise of the prescribed option for an ongoing project, the same apartments were taxable at 18% and whether paragraph 2 applied for valuation. (iv) Whether, on cancellation of flats, the relevant date for refund of tax paid on advances was the date of payment of tax.

Issue (i): Whether construction services for the residential apartments in the ongoing project were taxable at 18% for the period 01.07.2017 to 31.03.2019.

Analysis: The project was found to be an ongoing project within the amended real estate notification regime, but it did not fall within any of the concessional categories that attracted the lower rate. The rate structure under Notification No. 11/2017-Central Tax (Rate) therefore placed such construction of residential apartments under the residuary 18% entry for the relevant period.

Conclusion: The services were liable to GST at 18%, against the assessee on this issue.

Issue (ii): Whether, for supplies made from 01.07.2017 onwards, the value of land or undivided share of land had to be deemed at one-third of the total amount charged, even if the actual land value already appropriated in the pre-GST period was lower.

Analysis: Paragraph 2 of Notification No. 11/2017-Central Tax (Rate) prescribes a mandatory valuation mechanism for supplies involving transfer of land or undivided share of land, deeming such value to be one-third of the total amount charged. The actual value previously appropriated does not override the statutory deeming fiction for valuation under the notification.

Conclusion: One-third of the total amount charged is to be treated as the value of land or undivided share of land, in favour of the assessee on this issue.

Issue (iii): Whether, after 01.04.2019 and after exercise of the prescribed option for an ongoing project, the same apartments were taxable at 18% and whether paragraph 2 applied for valuation.

Analysis: The amended notification introduced the new real estate tax structure from 01.04.2019 and permitted continuation of the old rate for ongoing projects where the promoter exercised the prescribed option. The project satisfied the definition of an ongoing project, and since it did not qualify for the concessional scheme entries, the applicable rate under the opted regime remained 18%. The valuation rule in paragraph 2 continued to apply to such supplies.

Conclusion: The services were taxable at 18% from 01.04.2019 onwards and paragraph 2 applied for valuation, against the assessee on the rate and in favour of the assessee on valuation.

Issue (iv): Whether, on cancellation of flats, the relevant date for refund of tax paid on advances was the date of payment of tax.

Analysis: Refund of tax is governed by Section 54 of the Central Goods and Services Tax Act, 2017, and Explanation 2 specifies the relevant date for different situations. For the cancellation scenario described, the relevant date was held to be the date of payment of tax under clause (h) of Explanation 2.

Conclusion: The relevant date for refund application is the date of payment of tax, in favour of the assessee on this issue.

Final Conclusion: The ruling sustains the prescribed 18% GST rate for the construction services in the project for both periods, applies the statutory one-third land deduction for valuation, and identifies the tax payment date as the relevant date for refund claims arising from cancellation.

Ratio Decidendi: In ongoing real-estate projects covered by the amended notification regime, the applicable GST rate follows the notification entry for the project category, while valuation where land or undivided share of land is involved must be determined by the notification's deeming provision; refund limitation is governed by the specific relevant-date rule in Section 54.

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