Works-contract valuation under GST: MHADA flats supplied for additional FSI are taxable and valued at open market value.

A builder's supply of MHADA-reserved flats to identified allottees after the occupancy certificate remained a taxable works-contract supply under GST because the construction and transfer obligation arose at the plan-sanction and commencement-certificate stage, and additional FSI formed non-monetary consideration. The transaction was not outside GST as a sale of immovable property, as the completion-based exclusion did not apply where consideration was not received only after completion. For valuation, section 15(1) did not apply because price was not the sole consideration; the supply had to be valued under Rule 27 on open market value, using comparable flats in the same project, and not at the MHADA-prescribed regulated price.

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Issues: (i) whether the supply of 19 MHADA-reserved flats to MHADA-identified allottees after issuance of the Occupancy Certificate was a taxable works-contract service or a sale of immovable property outside GST; (ii) if taxable, whether the value of supply was the MHADA-prescribed price or the open market value.

Issue (i): whether the supply of 19 MHADA-reserved flats to MHADA-identified allottees after issuance of the Occupancy Certificate was a taxable works-contract service or a sale of immovable property outside GST.

Analysis: The construction and transfer obligation arose at the stage of plan sanction and Commencement Certificate, not only after the Occupancy Certificate. The applicant received additional FSI as non-monetary consideration for undertaking the inclusive-housing obligation, and the identified flats were earmarked in the sanctioned plan itself. Since the entire consideration was not received only after completion, the exception in Paragraph 5(b) of Schedule II did not apply. Paragraph 5 of Schedule III, being subject to Paragraph 5(b) of Schedule II, did not exclude the transaction. The supply was in the course of business and answered the statutory description of supply and works contract.

Conclusion: The supply was taxable as a works-contract service and was not outside GST as a sale of immovable property.

Issue (ii): if taxable, whether the value of supply was the MHADA-prescribed price or the open market value.

Analysis: Section 15(1) was inapplicable because price was not the sole consideration; additional FSI was also received as consideration. The supply was therefore valued under Rule 27. The MHADA-administered price was not open market value because it was a regulated price linked to the inclusive-housing arrangement, whereas comparable flats sold to non-MHADA buyers in the same project on arm's-length terms provided the proper benchmark. The subsidy exclusion under Section 15(2)(e) was not attracted.

Conclusion: The value of supply had to be determined under Rule 27(a) as open market value based on comparable flats in the same project, and not at the MHADA-prescribed price.

Final Conclusion: The application failed on the taxability issue, and the ruling proceeded in the Revenue's favour by holding the MHADA flats taxable and directing valuation on an open-market basis.

Ratio Decidendi: Where a builder undertakes a statutorily mandated construction obligation in exchange for non-monetary consideration such as additional development rights or FSI, the transaction remains a taxable works-contract supply under Schedule II, and valuation must proceed on open market value under Rule 27 when consideration is not wholly in money.

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