AAR rules residential unit sales in Saviour Park Phase IV remain GST taxable without completion certificate

The AAR UP ruled that selling residential units in Phase IV of Saviour Park project remains taxable under GST. The GDA denied completion certificate on 27.04.2023, preventing deemed completion status for 113 units. The Authority held that possession letters cannot substitute occupancy certificates, and without proper completion certificate or first occupation, the sale constitutes provision of services rather than immovable property transfer. Consequently, GST liability continues to apply on these residential unit sales, as the project cannot claim exemption based on completion or first occupation criteria.

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Issues Involved:
1. Taxability of selling residential units after 'deemed completion' or 'first occupation' in Phase IV of the project.
2. Date from which the units sold shall be treated as exempt from GST.

Summary:

Issue 1: Taxability of selling residential units after 'deemed completion' or 'first occupation' in Phase IV of the project

The applicant, M/s Savfab Buildtech Private Limited, sought an advance ruling on whether the sale of residential units in Phase IV of the project 'Saviour Park' after 'deemed completion' or 'first occupation' is taxable or exempt from GST. The applicant argued that GST is not leviable on the sale of immovable property, as per Section 9 of the CGST Act, 2017, and Schedule III of the CGST Act, 2017, which states that the sale of land and building is neither a supply of goods nor services. They contended that once a completion certificate is received or first occupation is given, GST should not be levied.

However, the Authority for Advance Ruling (AAR) found that the completion certificate was not granted by the Ghaziabad Development Authority (GDA) due to pending dues, and thus, the project cannot be considered as 'deemed completed.' The AAR noted that the applicant did not face issues obtaining completion certificates for the first three phases and Part I of Phase IV, but faced issues with Part II of Phase IV. The AAR emphasized that as per Para 5(b) of Schedule II of the CGST Act, 2017, the construction of a building intended for sale to a buyer is treated as a supply of services unless the entire consideration is received after the issuance of a completion certificate or after its first occupation.

The AAR concluded that the sale of residential units in Phase IV of the project by the applicant is not the sale of immovable property but a sale of services, and thus, GST is leviable.

Issue 2: Date from which the units sold shall be treated as exempt from GST

The AAR ruled that the units sold shall be treated as exempt from GST from the date on which the completion/occupancy certificate is obtained from the Ghaziabad Development Authority for Phase IV of the project.

Ruling:

1. The sale of residential units in Phase IV of the project by the applicant is not the sale of immovable property but a sale of services, and thus, GST is leviable.
2. The units sold shall be treated as exempt from GST from the date on which the completion/occupancy certificate is obtained from the Ghaziabad Development Authority for Phase IV of the project.

This ruling is valid only within the jurisdiction of the Authority for Advance Ruling, Uttar Pradesh, and subject to the provisions u/s 103(2) of the CGST Act, 2017, until declared void u/s 104(1) of the Act.

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