FIRST OCCUPATION OF PROJECT

[PANKAJ CHUGH]

Hello,

Kindly guide on the following:

As per clause 5(b) of Schedule II of GST which read as under:

The following shall be treated as supply of services, namely :-

(b) construction of a complex, building, civil structure or a part thereof, including a complex or building intended for sale to a buyer, wholly or partly, except where the entire consideration has been received after issuance of completion certificate, where required, by the competent authority or after its first occupation, whichever is earlier.”

Brief Facts:

During the construction of the commercial project, in the state of haryana, for which Completion Certificate is not yet obtained, the builder let out two units for office purposes to his subsidiary companies.

Query:

In the context of rule 42 of the CGST Rules, Whether the activity of letting out of units in under construction project may be treated as first occupation of the project ? and the ITC should be reversed.

AI Summary

Letting Out Units in Under-Construction Projects Without Completion Certificate Not 'First Occupation' Under GST Rules, ITC Reversal Unnecessary. A query was raised regarding whether the letting out of units in an under-construction commercial project in Haryana, without a completion certificate, constitutes the 'first occupation' under GST rules, necessitating the reversal of Input Tax Credit (ITC). The consensus among respondents was that letting out does not equate to first occupation, as ownership remains with the lessor. References were made to a decision by the Authority for Advance Rulings in Karnataka, supporting the view that 'first occupation' involves ownership transfer, not mere usage. One respondent cautioned against using letting out to evade tax obligations.