Appellant liable for GST on commercial space sales as agent, municipal function exemption denied

AAAR Delhi dismissed appeal regarding GST liability on commercial built-up space sales. Appellant acting as agent for MoHUA was held liable to pay GST as a taxable person under CGST Act provisions. Court ruled that selling commercial space to private entities cannot be considered municipal function under Article 243W, thus exemption under Notification 12/2017 was not applicable. GST liability applied from 01.07.2017 onwards regardless of part consideration received prior to GST implementation date.

---

---

Issues Involved:
1. Liability to pay GST on the sale of commercial super built-up area on behalf of MoHUA.
2. Liability of MoHUA, Government of India, to pay GST on the sale of commercial built-up space.
3. Applicability of GST on services supplied under GST regime when part of the consideration was received prior to 01.07.2017.
4. Liability to pay GST on consideration received under an agreement to sell constructed units in a building which is under construction.

Issue-wise
Detailed Analysis:

1. Liability to Pay GST on Sale of Commercial Super Built-Up Area on Behalf of MoHUA:
The appellant contended that they are not liable to pay GST on the sale of built-up space by MoHUA because they are not suppliers of any goods or services in the transaction between MoHUA and the purchaser. The Delhi Authority for Advance Ruling (DAAR) held that the appellant is liable to pay GST under Section 9(1) of the CGST Act, 2017, as they are covered under the definitions of "Agent" under Section 2(5), "Supplier" under Section 2(105), and "Taxable Person" under Section 2(107) of the CGST Act, 2017. The appellant's activities were examined, and it was found that they are engaged in selling the commercial built-up area through e-auction on behalf of MoHUA. The sale deed with the successful bidder is signed by the nominated officer of MoHUA, and the appellant acts as a facilitator of the execution of the sale deed. Therefore, the appellant is considered an agent of MoHUA and is liable to pay GST as a taxable person.

2. Liability of MoHUA, Government of India, to Pay GST on Sale of Commercial Built-Up Space:
The appellant argued that the construction activities and sale thereof are exempted from tax under Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017, being in relation to a function entrusted to a municipality under Article 243W of the Constitution. However, the exemption was amended vide Notification No. 14/2018-Central Tax(Rate) dated 26.07.2018, and the words "Central Government, State Government, Union territory, local authority or" were omitted. The exemption is now admissible only if such services are provided by a "governmental authority." The appellant's activities of selling commercial built-up space to private entities do not qualify as a function of a municipality under Article 243W of the Constitution, which relates to welfare activities without commercial consideration.

3. Applicability of GST on Services Supplied Under GST Regime When Part of the Consideration Was Received Prior to 01.07.2017:
The appellant contended that they are not liable to pay GST on the sale of built-up space prior to 01.07.2017. However, as per statutory provisions, they are liable to pay GST on the services supplied under the GST regime from 01.07.2017, even if part of the consideration was received prior to this date. The FAQ issued by the department merely serves as a clarification and does not alter the statutory provisions.

4. Liability to Pay GST on Consideration Received Under an Agreement to Sell Constructed Units in a Building Which Is Under Construction:
The appellant reiterated their plea that they are not liable to pay GST on consideration received under an agreement to sell constructed units in a building under construction. This issue was sufficiently addressed by DAAR, which held that the appellant is liable to pay GST on the sale of commercial built-up area under construction, as it is considered a 'supply of service' under clause 5(b) of Schedule II of the CGST Act, 2017.

Conclusion:
The Appellate Authority upheld the Order dated 05.10.2018 of the Delhi Authority for Advance Ruling, finding no merit in the appeal filed by the appellant. The appeal was dismissed as devoid of merit, affirming the appellant's liability to pay GST on the sale of commercial built-up area on behalf of MoHUA, the non-applicability of exemption for MoHUA's activities, and the applicability of GST on services supplied under the GST regime and on the sale of constructed units in a building under construction.

---