GST classification turns on sanctioned use: service apartments treated as commercial buildings, not residential apartments.

GST classification of a service apartment project depends on whether the apartments are intended for residential use under the sanctioned plan and competent authority approval. Here, the land restriction limited the project to hotel-cum-convention and other commercial uses, excluding residential units, and the municipal authority sanctioned the plan for a service apartment building. Although the project was registered with WBRERA as residential, that registration did not change the project's underlying character for GST purposes. The apartments were therefore treated as commercial apartments, and the construction was classified as construction services of commercial buildings.

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Issues: Whether the proposed service apartment project was to be treated as construction services of multi-storey residential buildings or construction services of commercial buildings for GST classification.

Analysis: The classification under the GST notifications turned on whether the apartments were intended for residential use as declared to the RERA or to the competent authority. The project land was subject to a restriction that it be used for hotel-cum-convention centre and other commercial ventures excluding residential units. Kolkata Municipal Corporation, which was treated as a competent authority, sanctioned the plan specifically for a service apartment building. The notifications define a residential apartment as one intended for residential use, while a commercial apartment means any apartment other than a residential apartment. The fact that WBRERA registered the project as residential did not alter the underlying nature of the project in view of the land restriction and the sanctioned building use.

Conclusion: The service apartments were held to be commercial apartments, and the construction was classified as construction services of commercial buildings.

Ratio Decidendi: Where the competent authority sanctions a project for commercial use and the project is not intended for residential use, it falls within the scope of a commercial apartment rather than a residential apartment for GST classification.

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