Metropolitan area classification denied GST affordable housing benefit for residential units under the Chennai planning regime.

A residential project was held to fall within the Chennai metropolitan area because the planning permissions and development charges showed regulation under the CMDA-led metropolitan planning regime. The fact that the local revenue district was different was not determinative. As the GST concession for affordable residential apartments depends on the project being in a city or town other than a metropolitan city, the units did not qualify on that basis.

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Issues: Whether the impugned project falls within the category of a city or town other than a metropolitan city for the purpose of classifying the units as affordable residential apartments under the GST rate notification.

Analysis: The applicable notification grants concessional tax treatment to affordable residential apartments only where the carpet area and gross amount conditions are satisfied and, in metropolitan cities, the lower carpet-area limit applies. The decisive question was whether the project site lay outside the Chennai metropolitan area. On the materials produced, the planning permissions and related development permissions were issued in a manner showing CMDA involvement, and development charges were collected by the Chennai Metropolitan Development Authority. Under the Tamil Nadu Town and Country Planning Act, development permissions and charges are linked to the planning authority, and the evidence indicated that the project was regulated as part of the Chennai metropolitan planning regime. The mere fact that the local revenue district was different was not determinative.

Conclusion: The project falls within the Chennai metropolitan area and does not qualify as being in a city or town other than a metropolitan city; therefore, the units cannot be treated as affordable residential apartments on the stated basis.

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