2021 (7) TMI 928 - AAR - GST

GST Time of Supply Ruling for Flats - Possession Date Key

The Authority ruled that the time of supply and point of taxation for flats allotted before GST but constructed during GST is determined by the date of ... Levy of GST - time of supply - point of taxation - period involves both pre-GST period as well as post GST regime - flats allotted to land owner by the builder by way of supplementary agreement on 15.05.2017(i.e., before GST regime) - construction will be completed during GST regime - supplementary agreement entered by the developer with a land owner, is allotment letter or not - liability under existing law - exemption under present law. HELD THAT:- From the understanding of the phrase ‘Constructed complex’ it follows that such a complex, building or civil structure should first be in place so that its possession or the rights in it may be transferred by the developer to the person supplying development rights - such transfer of possession or transfer of right in the building shall be accomplished by a conveyance deed or similar instrument such as allotment letter. As per Notification No.4/2018 the time of supply to determine liability to pay tax on development rights by a land owner to a developer is the date on which the building or the rights in an existing building are handed over to the land owner by way of a conveyance deed or an allotment letter - If the applicant has handed over the building after inception of CGST & SGST, then the liability to pay tax will arise under CGST & SGST. What is the Time of supply and point of taxation with respect to flats allotted to land owner by the builder by way of supplementary agreement on 15.05.2017(i.e., before GST regime) where as the construction will be completed during GST regime? - HELD THAT:- As per Notification No.4/2018 Dt:25.01.2018 the date of transfer of possession of the building or the right in it to the person supplying development rights will be the time of supply and the liability to pay tax on the said services shall arise on that day. The time of supply shall not be at any other time. Is this date to be concluded as the date of allotment for payment of service tax in respect of construction services provided to landlord ignoring the fact that the construction was continued subsequently from May, 2017 to November, 2018? - HELD THAT:- No, the applicant has to pay tax as per the time of supply indicated above. Will it be sufficient and adequate compliance, if the appellant complies law and remit entire service tax on the entire area earmarked to landlord? - HELD THAT:- No, the applicant has to pay tax as per the time of supply indicated above. What is the ‘Constructed complex’ referred to in the notification? - HELD THAT:- ‘Constructed complex’ refers to a building or a completed structure. Issues:1. Time of supply and point of taxation regarding flats allotted before GST but constructed during GST.2. Date of allotment for payment of service tax.3. Compliance with service tax payment.4. Impact on future projects.5. Definition of 'Constructed complex' in the notification.Issue 1: Time of supply and point of taxation regarding flats allotted before GST but constructed during GST:The applicant sought clarification on the time of supply and point of taxation for flats allotted before GST but constructed during GST. The Authority analyzed the Notification No.4/2018 and ruled that the date of transfer of possession of the building or the right in it to the person supplying development rights determines the time of supply and liability to pay tax. The liability arises on the day of transfer, as per the notification.Issue 2: Date of allotment for payment of service tax:The applicant inquired if the date of the supplementary agreement should be considered as the date of allotment for service tax payment, despite construction continuing from May 2017 to November 2018. The Authority clarified that tax payment should align with the time of supply indicated in the ruling for Issue 1.Issue 3: Compliance with service tax payment:Regarding sufficient compliance with service tax payment, the Authority reiterated that the applicant must pay tax in accordance with the time of supply determined in Issue 1, dismissing the notion of remitting tax based on the supplementary agreement date.Issue 4: Impact on future projects:The question of the impact on future projects due to the transitional period did not arise in the ruling, as it was not deemed relevant to the current case.Issue 5: Definition of 'Constructed complex' in the notification:The Authority clarified that 'Constructed complex' refers to a building or a completed structure, providing a clear definition for the term used in the notification.Overall, the ruling provided by the Authority addressed the applicant's queries regarding the time of supply, tax liability, compliance with service tax payment, and the definition of 'Constructed complex' in the context of the GST regime. The application by M/s. Vajra Infracorp India Private Limited was disposed of based on the rulings issued by the Authority.