Court rules ongoing projects can maintain 8% GST rate on advances after 01.04.2019, not subject to new rates.

The court ruled that the new definition of 'affordable residential apartment' does not apply to the ongoing projects of the applicant where the promoter chose to pay tax at the old GST rates. Therefore, the GST rate for advances received after 01.04.2019 remains at 8% for these projects. The court clarified that there is no option to pay tax at the reduced rates of 1% or 5% for such projects.

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Issues Involved:
1. Applicability of the new definition of 'affordable residential apartment' for ongoing projects.
2. GST rate applicable for advances received after 01.04.2019 for ongoing projects.

Issue-wise Detailed Analysis:

1. Applicability of the New Definition of 'Affordable Residential Apartment':

Applicant's Submission:
- The applicant is engaged in constructing residential flats and has ongoing projects that started before 01.04.2019.
- The definition of 'affordable residential apartment' changed effective 01.04.2019 via Notification No.03/2019-Central Tax (Rate) dated 29.03.2019.
- The applicant queried whether the new definition applies to flats with a carpet area of 60 sqm and value up to Rs. 45 lakhs for ongoing projects, affecting the GST rate on advances received post-01.04.2019.

Revenue's Submission:
- Flats with a carpet area of 60 sqm and value up to Rs. 45 lakhs in metropolitan cities, and 90 sqm in non-metropolitan cities are considered affordable residential apartments.
- For ongoing projects booked on or before 31.03.2019, if the promoter opts to pay tax at old GST rates, the effective GST rate remains 8%.
- For projects where the first booking money is received after 01.04.2019, the new GST rate of 1% applies.

Authority's Observations:
- The definition of 'affordable residential apartment' per Notification No. 03/2019-Central Tax (Rate) includes projects commencing on or after 01.04.2019 or ongoing projects where the promoter hasn't opted for old tax rates.
- The applicant's projects commenced before 01.04.2019 and the promoter opted for old GST rates, thus the new definition does not apply.
- The applicant's reliance on the Maharashtra Authority for Advance Ruling in Prajapati Developers is irrelevant as it predates the new notification.

Conclusion:
- The new definition of 'affordable residential apartment' does not apply to the applicant's ongoing projects where the promoter opted to pay tax at old GST rates.

2. GST Rate Applicable for Advances Received After 01.04.2019:

Applicant's Submission:
- The applicant contends that for projects where the first booking money is received after 01.04.2019, the new definition of affordable housing should apply, and GST should be charged at 1% or 5%.

Revenue's Submission:
- For ongoing projects where the first booking money is received before 01.04.2019, the old GST rate of 8% applies if the promoter opted for it.
- For projects where the first booking money is received after 01.04.2019, the new GST rate of 1% applies.

Authority's Observations:
- The applicant's projects meet the criteria of 'ongoing projects' as defined in Notification No.03/2019-Central Tax (Rate).
- The applicant exercised the option to pay tax at old rates, thus the effective tax rate of 1% or 5% does not apply to these projects.
- The authority reiterated that the liability to pay tax at old GST rates and the new rates introduced from 01.04.2019 are mutually exclusive.

Conclusion:
- For the applicant's ongoing projects where the promoter opted for old GST rates, the GST rate remains at 8% for advances received after 01.04.2019.

Ruling:
- The definition of 'affordable residential apartment' is not applicable to the applicant's ongoing projects where the promoter opted to pay tax at old GST rates.
- There is no scope to pay tax at a reduced rate of 1% or 5% for these projects.

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