TaxTMI 
TaxTMI 
2018 (10) TMI 1054
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....n of GPRA (i.e. dwelling units), GPOA (i.e. office spaces), commercial space and supporting infrastructure, such as local convenience shopping centre, banquet hall/ community centre, creche, schools, hospital/dispensary, ATM/Banks, parking facilities, parks and play grounds etc. at the specified locations in place of old existing buildings. The applicant is also required to maintain the constructed buildings for thirty years after construction. The transaction between the applicant and MoHUA under the said MOU is not a subject matter before this authority. 2. As per the MOU dated 25.10.2016, the estimated cost of abovementioned redevelopment work and maintenance thereof for thirty years is Rs. 24,682 crores which shall be met from free-hold sale of specified commercial built-up area. The sale proceeds of commercial built-up area shall be deposited in an escrow account which shall be managed by Capital Management Committee constituted by MoHUA. Capital Management Committee shall review the status of the escrow account on yearly basis, determine the amount, accrued in excess of 20% of the total cost of the said redevelopment work which is required to be deposited in Consolidated Fun....
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....r redevelopment. 8. A person is liable to pay GST on its transactions which are falling within the "scope of supply" as prescribed in section 7 of CGST Act as reproduced below: (1) For the purposes of this Act, the expression "supply" includes- (a) all farms of supply of goods or services or bath such as sale, transfer, barter, exchange, licence, rental, lease or dispasal made or agreed to be made far a consideration by a person in the course are furtherance of business; (b) impart of services for a consideration whether or not in the course are furtherance of business; (c) the activities specified in Schedule l, made or agreed to be made without a consideration; and (d) the activities to be treated as supply of goads or supply of services as referred to in Schedule II. (2) Notwithstanding anything contained in sub-section (1), - (a) activities or transactions specified in Schedule III; or (b) such activities or transactions undertaken by the Central Government, a State Government or any local authority in which they are engaged as public authorities, as may be notified by the Government on the recommendations of the Council, shall be treated neither as a supply of ....
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....ppreciated that a supplier of goods or services is a taxable person. Hence, ordinarily, supplier of goods or services is liable to pay tax on the consideration received by him. Therefore, it is necessary to examine the documents describing the transaction to understand who are the supplier and the receiver. The applicant has to perform its activities as per the MOU signed on 25.10.2016 with MoHUA. In terms of the MOU, the applicant is responsible for development of the area for MoHUA by constructing of dwelling units, commercial space and supporting infrastructure and maintaining thereof for thirty years. The applicant has no interest in the area constructed by it except receiving its remuneration prescribed in MOU. For the work assigned to the applicant, the applicant is entitled to receive cost plus 8% of such cost from MoHUA. The total cost of the development has been estimated Rs. 24,682 crores and, MoHUA has decided to recover such cost by selling built-up area in commercial building. The MOU states that applicant shall invest up to Rs. 1500 crore into the project from own funds and, for this, it would get interest @ 12% p.a. till it is returned. In addition, the applicant wou....
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....omotor of the said project. The applicant has received a letter dated 14.09.2017 from MoHUA, in which the Ministry has asked it to apply for registration under RERA as promotor. It has taken registration under RERA being a representative of MoHUA. In fact, the applicant cannot be construed as promotor under RERA. The provision of section 2(zk) of the Act is reproduced below: (zk) "promoter" means,- (i) a person who constructs or causes to be constructed an independent building or a building consisting of apartments, or converts an existing building or a part thereof into apartments, for the purpose of selling all or some of the apartments to other persons and includes his assignees; or (ii) a person who develops land into a project, whether or not the person also constructs structures on any of the plots, for the purpose of selling to other persons all or some of the plots in the said project, whether with or without structures thereon; or (iii) any development authority or any other public body in respect of allottees of- (a) buildings or apartments, as the case may be, constructed by such authority or body on lands owned by them or placed at their disposal by the Governm....
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....vices Tax Act, 2017 (12 of 2017), the Central Government, on being satisfied that it is necessary in the public interest so to do, on the recommendations of the Council, hereby exempts the intra-State supply of services of description as specified in column (3) of the Table below from so much of the central tax leviable thereon under sub-section (1) of section 9 of the said Act, as is in excess of the said tax calculated at the rate as specified in the corresponding entry in column (4) of the said Table, unless specified otherwise, subject to the relevant conditions as specified in the corresponding entry in column (5) of the said Table, namely:- Sl.No. Chapter, Section, Heading, Group or Service Code (Tariff) Description of Services Rate (per cent) Condition (1) (2) (3) (4) (5) 4 Chapter 99 Services by Central Government, State Government, Union territory, local authority or governmental authority by way of any activity in relation to any function entrusted to a municipality under article 243 W of the Constitution. Nil Nil 6 Chapter 99 Services by the Central Government, State Government, Union territory or local authority excluding the following services- a) se....
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....b) Regulation of land-use and construction of buildings. (c) Planning for economic and social development. (d) Roads and bridges. (e) Water supply for domestic, industrial and commercial purposes. (f) Public health, sanitation conservancy and solid waste management. (g) Fire services. (h) Urban forestry, protection of the environment and promotion of ecological aspects. (i) Safeguarding the interests of weaker sections of society, including the handicapped & mentally retarded. (j) Slum improvement and upgradation. (k) Urban poverty alleviation. (l) Provision of urban amenities and facilities such as parks, gardens, playgrounds. (m) Promotion of cultural, educational and aesthetic aspects. (n) Burials and burial grounds; cremations, cremation grounds; and electric crematoriums. (o) Cattle pounds; prevention of cruelty to animals. (p) Vital statistics including registration of births and deaths. (q) Public amenities including street lighting, parking lots, bus stops and public conveniences. (r) Regulation of slaughter houses and tanneries 19. The activities given in Twelfth Schedule quoted above, relevant to the present context, are urban planning....
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....or the development of an area or areas which in the opinion of the Planning Authority should be developed or re-developed as a whale (hereinafter referred to as "the area or areas of Comprehensive development"); and in particular such plans shall provide far:- (a) detailed development of specific areas for urban renewal, housing shopping centres, industrial areas, civic centres, educational and cultural institutions; (b) central of architectural features, elevation and front age of buildings and structures; (c) dealing satisfactorily with areas of bad layouts, obsolete development and slum areas and re-location of population; (d) open spaces, gardens, playgrounds and recreation areas. (2) When the plans for an area or areas of Comprehensive development are prepared, whether or not separately, the Planning Authority shall fallow the same procedure before submission of these plans to the State Government for sanction as is provided by sections 25, 26, 27, 28, 29, 30 and 31 as respects a draft Development plan and submit such plan or plans from time to time to the State Government for sanction, alongwith a report - (a) explaining the proposals and the stages of development ....
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....e to sell his share of the space and the allottees (buyers) were to be given occupancy right for a period of 50 year under section 272 (1) of Maharashtra Municipalities Act, 1965. They were expected to pay rents to the Municipal Council for a period of 50 years at the rate prescribed in the scheme. The project was awarded to a real estate developer by the Municipality through competitive bidding. However, this was challenged by the appellants in the Bombay High Court on the following grounds: (a) That the scheme of financing of the project was unconventional and was not one that was, as a matter of policy, open and permissible to a governmental authority. The municipal authority could either have put up the construction itself departmentally or awarded the execution of the whole project to a building contractor. The method of financing and execution of the project are ultra vires the powers of the Municipal authority under the Act. (b) That the terms of the agreement with the developer that the latter be at liberty to dispose of the occupancy rights in the commercial complex in such manner and on such terms as it may choose would amount to an impermissible delegation of the Statu....
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....rban life and the emerging stresses and strains of planning, wide range of policy options not inconsistent with the objectives of the statute should be held permissible. Therefore, in the context of expanding exigencies of urban planning it will be difficult for the court to say that a particular policy option was better than another. The contention that the project is ultra vires the powers of the Municipal Council is not acceptable. 23. Therefore, MoHUA is also not liable to pay GST on sale of commercial built-up space, as this relates to function entrusted to a municipality under Article 243W of the Constitution. The applicant is not liable to pay GST on sale of built-up space prior to 01.07.2017. 24. The applicant submits that some built-up space has already been sold through e-action on 30.05.2017 and, instalment of sale price has been received prior to 01.07.2017, i.e. prior to notification of GST laws. Section 173 of the GST Act, 2017 states that Chapter V of the Finance Act, 1994, which provides for levy of service tax on the services provided or to be provided, shall be omitted. However, section 174(2) saves the liability accrued under the said Chapter V of Finance Act,....
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....tion notification under the GST Law. Under Service Tax Law, exemption was granted to governmental authority, a subset of Government, but not to the Government. There was an obvious anomaly. This anomaly has been removed in the subsequent GST legislations. In Gem Granites v. Commr of I.-T., Tamil Nadu" AIR 2005 SC 1455 = 2004 (11) TMI 13 - SUPREME COURT, relying upon its decision in Municipal Committee v. Manilal 1967(2) SCR 100 = 1966 (11) TMI 87 - SUPREME COURT OF INDIA and Pappu Sweets and Biscuits v. Commissioner of Trade Tax, U.P. 1998 (7) SCC 228 = 1998 (10) TMI 452 - SUPREME COURT OF INDIA, the Supreme court has held that subsequent legislation may be looked into to fix the proper interpretation to be put on the statutory provisions as stood earlier. Therefore, it can be inferred that the sale/leasing services provided by MoHUA prior to 01.07.2017, i.e. during service tax regime, are exempt, being in the nature of a function entrusted to municipality under Article 243W of the Constitution. 26. Even otherwise, GST cannot be levied on a part of consideration received for a continuing transaction which was not taxable earlier. It may be noticed that sale of flat is a single sup....
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....cannot apply at all, it is evident that such a case was not intended to fall within the charging section by observing as follows: Section 45 is a charging section. For the purpose of imposing the charge, Parliament has enacted detailed provisions in order to compute the profits or gains under that head. No existing principle or provision at variance with them can be applied for determining the chargeable profits and gains. All transactions encompassed by s. 45 must fall under the governance of its computation provisions. A transaction to which those provisions cannot be applied must be regarded as never intended by s. 45 to be the subject of the charge. This inference flows from the general arrangement of the provisions in the I.T. Act, where under each head of income the charging provision is accompanied by a set of provisions for computing the income subject to that charge. The character of the computation provisions in each case bears a relationship to the nature of the charge. Thus, the charging section and the computation provisions together constitute an integrated code. When there is a case to which the computation provisions cannot apply at all, it is evident that such a c....
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.... Schedule III of the Act. 31. It is relevant to mention that the transaction in the present case is not covered in clause (b) of paragraph (5) of schedule Il of the Act and, therefore, it is not excluded from paragraph 5 of Schedule III. Clause (b) of paragraph (5) of the Schedule II is reproduced below: SCHEDULE Il ACTIVITIES TO BE TREATED AS SUPPLY OF GOODS OR SUPPLY OF SERVICES 5. Supply of services The following shall be treated as supply of services, namely: - (a)****** (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. Explanation. - For the purposes of this clause - (1) the expression "competent authority" means the Government or any authority authorised to issue completion certificate under any law for the time being in force and in case of non-requirement of such certificate from such authority, from any of the following, namely: - (i) an architect registered with t....
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....ious contentions: i. Navi Mumbai Municipal Mazdoor Union vs. The State of Maharashtra [judgement dated 1st October 2014 in Writ Petition No. 2720/2013] = 2014 (10) TMI 986 - BOMBAY HIGH COURT - Under Article 243W, State Legislature may endow municipalities with powers and responsibilities in regard to planning, economic development, social justice, etc. [Para 36, 37] ii. Farzana Khan vs. Municipal Corporation of Greater Mumbai, 2018 SCC Online Bom 314 = 2018 (3) TMI 1654 - BOMBAY HIGH COURT - Under Maharashtra Regional Urban Planning Act, 1966, municipalities are entrusted with duties of town planning for planned development of urban areas. "Development" means inter alia building, engineering and other operations in or over land or redevelopment of any land. [Para 27 to 32] iii. Ram Krishan Mahajan vs. Union Territory of Chandigarh (2007) 6 SCC 634 = 2007 (7) TMI 690 - SUPREME COURT OF INDIA - Municipality fund can be applied for providing residential, commercial and medical facilities. [Para 13 & 15] iv. Nagarpalika Parishad vs. State of U.P., 2010 SCC Online All 1956: (2011) 84 ALR (SUM 19) = 2010 (10) TMI 1184 - ALLAHABAD HIGH COURT- Under the powers, authorities and....
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....Act. 39. As per Para 6(a) of Schedule Il of the CGST Act, 2017, Works Contract Service shall be treated as supply of services. Thus, there is no dispute as to whether or not Works Contract Service is supply of service. As per notification 11/2017-Central Tax (Rate) dated 28.06.2017, services provided to Central Government or State Governments by construction/ repair/ maintenance has been taxed at Nil rate of Central Tax, except for those cases where the construction is meant to be for commerce, industry or any other business or profession. In the instant case, as M/s. NBCC India Limited will construct and sell built-up space for commercial purposes such as shop, schools, etc., the applicant is liable to pay GST on such 40. Applicant is of the view that MoHUA, GOI, are not liable to pay GST on commercial built-up space as this relates to functions entrusted to party under Article 243W of the Constitution of India. 41. Article 243W of the Constitution of India, read with the 12th Schedule, stipulates that the functions relating to planning, land use regulations, roads, bridges, fire services, slum development and improvement, etc. are of the nature which is beneficial to all resid....
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....view of above, the applicant is liable to pay GST on consideration received under an agreement to sale of constructed units in a building which is under construction. RELEVANT NOTIFICATIONS: 48. S. No. 4 and 6 of Notification No. 12/2017 - Central Tax (Rate) dated 28.06.2017 and parallel SGST and IGST notifications: S.No. Chapter, Section, Heading, Group or Service Code (Tariff) Description of Services Rate (%) Condition (1) (2) (3) (4) (5) 4 Chapter 99 Services by Central Government, State Government, Union territory, authority or governmental authority by way of any activity in relation to any function entrusted to a municipality under article 243 W of the Constitution. Nil Nil 6 Chapter 99 Services by the Central Government, State Government, Union territory or local authority excluding the following services- a) services by the Department of Posts by way of speed post, express parcel post, life insurance, and agency services provided to a person other than the Central Government, State Government, Union territory; b) services in relation to an aircraft or a vessel, inside or outside the precincts of a port or an airport; c) transport of goods or passenger....
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....der: 243W Powers, authority and responsibilities of Municipalities etc. Subject to the provisions of this Constitution, the Legislature of a State may, by law, endow- (a) the Municipalities with such powers and authority as may be necessary to enable them to function as institutions of self-government and such law may contain provisions for the devolution of powers and responsibilities upon Municipalities, subject to such conditions as may be specified therein, with respect to- (i) the preparation of plans for economic development and social justice; (ii) the performance of functions and the implementation of schemes as may be entrusted to them including those in relation to the matters listed in the Twelfth Schedule; (b) the Committees with such powers and authority as may be necessary to enable them to carry out the responsibilities conferred upon them including those in relation to the matters listed in the Twelfth Schedule. 55. The "Twelfth Schedule" of the Constitution of India reads as under: 1. Urban planning including town planning. 2. Regulation of land-use and construction of buildings. 3. Planning for economic and social development. 4. Roads and bridges. ....
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....onvenience shopping centre, banquet hall/community centre, creche, schools, hospitals/dispensary, ATM/Banks, parking facilities, parks and playgrounds etc. in place of old existing buildings. The applicant is also required to maintain the constructed buildings for thirty years after construction. However, the present application for Advance Ruling is only regarding GST liability on freehold sale of commercial built-up space to general public. 58. The terms and conditions of Memorandum of Understanding (MOU) dated 25.10.2016 between Ministry of Housing and Urban Affairs (MoHUA), Government of India and NBCC (India) Limited for redevelopment of Nauroji Nagar, Netaji Nagar and Sarojini Nagar GPRA colonies by NBCC, who has been appointed as Executing/lmplementing Agency by and on behalf of MoHUA, are as follows: 58.1 NBCC will execute the construction of approximately 15,510 dwelling units of various categories, i.e. from Type II to Type VI in Netaji Nagar and Sarojini Nagar in accordance with the approved redevelopment scheme. 58.2 NBCC wilt execute construction of approx. 2.42 lakh square meters office space for General Pool Office Accommodation (GPOA) in Netaji Nagar. NBCC will e....
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....pital Management Committee. NBCC is entitled to a fixed interest @ 12% per annum on their investment till it is returned. The investment along with interest shall be returned by MoHUA to NBCC from the amount realised through sale of commercial BIJA. 58.10 The entire proceeds from saleable BIJA shall be deposited in an Escrow account opened by the Ministry in a selected nationalised bank through invitation of an Expression of Interest (Eol)/Request for Proposal (RFP) from various banks. The Escrow Account shall be managed by the Capital Management Committee constituted by MoHUA. CMC will devise a format for operating the Escrow Account and institute a proper mechanism for its operation and audit of this account. 58.11 As the operationalization of Escrow Account will be some time, the immediate fund requirement for undertaking preparatory activities for implementation of the project may be met from an initial investment into the interim Escrow Account, on loan basis, as and when required or as directed by the CMC. The interim Escrow Account shall be merged with the Escrow Account after its operationalisation. 58.12 The Capital Management Committee shall review the status of Escrow....
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....lty at the rate of Rs. 5.00 per sq. feet per month on delayed uncompleted work, subject to overall limit of 10% of the agency charges of NBCC. 58.16 NBCC will incorporate advanced state of art technologies during construction, minimizing the pollution hazard, improving quality and reducing the overall completion timelines. They will award the works on EPC (Turnkey/Design & Build) contract, wherever possible. 59. Role of Ministry of Housing and Urban Affairs (MoHUA): The following actions shall be undertaken by MoHUA: 59.1 MoHUA shall handover all the three Colonies mostly free from all encumbrance and encroachment. The encumbrance free land shall be handed over on "as it is where it is" basis after occupants of GPRA are relocated by Directorate of Estate (DOE), MoHUA. 59.2 DOE shall be responsible for the allotment/handing over of shops to the existing allotees/shop keepers after completion of the project. 59.3 DOE shall be responsible for handing over the schools constructed as a part of redevelopment to the concerned authorities (NDMC/Delhi Govt.) after completion. 59.4 MoHUA will facilitate the change of land use as per MPD 2021 norms to facilitate the construction of GPOA....
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....g market rates, as mutually agreed and decided with the occupants/buyers. 60.9 NBCC shall handover the completed structures and services of GPRA complex & GPOA including Social Infrastructure facilities along with inventory of fixtures to the Ministry or any other nominated agency by the Ministry upon its completion. 60.10 NBCC shall not be liable to pay any property tax or other taxes, rents, charges, claims (past or future) in respect of properties developed for the project on the corresponding land. 60.11 All the required approvals from the local bodies such SEIAA, NDMC, DUAC, Delhi Fire Services, Airport Authority of India (AAI), National Monument Authority (NMA), MOEF, Tree cutting permission etc. will be obtained by NBCC. Assistance of MoHUA may be sought where necessary and the same shall be provided forthwith to NBCC. 61. To finance the re-development scheme, the following saleable built up area is likely to be available to NBCC for commercial exploitation: (i) Approx. 8.07 lakh sqm. commercial Built up Area in Nauroji Nagar and parts of Sarojini Nagar, (ii) Surplus shops to be constructed by NBCC and CPWD as a part of Social Infrastructure in all the seven colonies,....
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....ver, ruling in respect of question no. 1 i.e. whether NBCC (India) Limited is required to pay GST or not, cannot be given unless taxability of the sale of commercial units is also decided. Hence, question no. 2 is also being taken up by this Authority. 71. The issues for decision in this case are: (i) Whether the applicant is liable to pay GST on sale of commercial super built up area on behalf of MoHUA, Government of India, by considering the applicant also as the supplier of service while selling such commercial built-up space as an agent on behalf of the Government of India in the colonies under redevelopment. (ii) Whether the MoHUA, Government of India, is liable to pay GST on sale of commercial built-up space, and whether it relates to any function entrusted to a municipality under Article 243W of the Constitution. (iii) Whether the applicant is liable to pay GST on sale of built-up space for which part of the consideration was received prior to 01.07.2017, and partly on or after 01.07.2017 (iv) Whether the applicant is liable to pay GST on consideration received under an agreement to sale of constructed units in a building which is under construction. Question No.1: 72....
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....ods or services or both on behalf of another; 77. Since, it is admitted by the applicant that they are constructing and selling the commercial built-up space on behalf of the Ministry of Housing and Urban Affairs (MoHUA), it is held that they are covered as "agent" in Section 2(5) of the CGST Act, 2017. 78. Further, it may now be decided whether the applicant can be called "supplier" of services which is defined under Section 2(105) of the CGST Act, 2017. 79. Section 2(105) of the CGST Act, 2017 reads as follows: "supplier" in relation to any goods or services or both, shall mean the person supplying the said goods or services or both and shall include an agent acting as such on behalf of such supplier in relation to the goods or services or both supplied; 80. Since, the above definition of "supplier" includes an agent, who is supplying services on behalf of another, it is held that the applicant can be called "Supplier" under Section 2(105) of the CGST Act, 2017, in relation to the sale of commercial built-up space and contention of the applicant that they cannot be called supplier of such services, is not acceptable. 81. Section 2(107) of the CGST Act, 2017 reads as follows....
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....ion of the applicant that they cannot be construed as "supplier" of service as they are selling the commercial built up space on behalf of the Ministry of Housing and Urban Affairs (MoHUA) is not acceptable. Accordingly, they are liable to pay GST under Section 9(1) of the CGST Act, 2017, being taxable person as per Section 2(107) of the said Act in respect of the said project. The sale of the commercial built-up area by the applicant on behalf of MoHUA cast a responsibility on the applicant to also collect and/or deposit GST on the taxable supply of goods or services, even, if they are acting only as an agent of the MoHUA. The contention of the applicant that they are not having any interest or right in the said project and they are not supplying the said services on their own account are not relevant as they are admittedly acting as an agent of the MoHUA, and agents are covered in the definition of "supplier" and "taxable persons" in the CGST Act, 2017, and are liable to pay GST as per Section 9(1) of the CGST Act, 2017. 89. The contention of the applicant that they are not covered in the definition of promoter under Section 2(zk) of the Real Estate Regulation Act, 2016 does not....
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....appear to be covered in the definition of 'governmental authority' and impugned services rendered by MoHUA are not covered under S. No. 4 of Notification No. 12/2017 - Central Tax (Rate) dated 28.06.2017, as amended. 96. Also, under S. No. 6 of the said Notification, services supplied by the Central Government, State Government, Union Territory or local authority are fully exempted except for certain specified services like postal services, transport services and also except for services which are provided to business entities. 97. Since, sale of commercial built-up units is a service provided to business entities, such services provided by MoHUA are also not covered in S. No. 6 of the said Notification No. 12/2017 - Central Tax (Rate) dated 28.06.2017. 98. The applicant has contended that the construction of commercial built up space in the said project is covered in S. No. 4 of the said Notification. They have claimed that the functions of Municipalities given in Twelfth Schedule of the Constitution i.e. Urban planning including town planning, regulation of land use and construction of buildings and planning for economic and social development covers the construction and sale ....
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....ombay High Court in Civil Writ Petition No. 2720/2013 in the case of Navi Mumbai Municpal Mazdoor Union v/s The State of Maharashtra = 2014 (10) TMI 986 - BOMBAY HIGH COURT. However, the said case which pertains to abolition of octroi and imposition of Local Body Tax by the State of Maharashtra without consent of the Municipalities thereby adversely affecting their autonomy granted to them under Articles 243P and 243W of the Constitution is not relevant in the present case. The said paras 36 and 37 provides that subject to the provisions of the Constitution, it is the legislature of a state which may by law endow the Municipalities with such powers and authority as may be necessary to enable them to function as Institutions of self Government and State Government is the source of their powers. In the present case, there seems to be no State law which has entrusted the applicant or the MoHUA to construct such a huge commercial built-up area for sale to general public. Further, the construction of such commercial built-up area does not enable them to function as Institution of self-Government. 103. Similarly, para 27 to 32 of the Judgment of the Hon'ble High Court of Bombay in Farza....
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....ing in force. 107. Section 43 of the Delhi Municipal Corporation Act, 1957 gives details of discretionary functions of the corporation. 108. Similarly, under Section 200 of the said Act the Corporation can sell any immovable property belonging to the Corporation. 109. It appears that the Delhi Municipal Corporation may be carrying out certain obligatory or discretionary functions which may include construction of municipal markets for public convenience. However, construction of huge commercial built-up area for the purpose of sale cannot be considered to be covered in Article 243W of the Constitution and hence cannot be considered as exempted under S. No. 4 of the Notification. No. 12/2017 - Central Tax (Rate) dated 28.06.2017. 110. On the contrary, it has been observed from the CESTAT Final Order No. A/8905089051/2017-WZB/STB, dated 18.07.2017 (reported in 2017 (9) TMI - 786) in the case of Commissioner of Central Excise, Goa v/s Mormugao Municipal Council (MMC) that MMC, who was engaged in collecting rent contested payment of Service Tax and argued that certain markets were made by them as per their duty under the Constitution of India. They had argued that the renting of im....
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....on or after 01.07.2017 or not. 116. It is observed that construction of commercial built-up space is a continuous supply of service and in many cases, the part of the service may be rendered in pre-GST period i.e. upto 30.06.2017 and remaining part of the service may be supplied in GST period i.e. on or after 01.07.2017. In such cases, Point of Taxation Rules, 2011 issued under Finance Act, 1994 could be referred to for determination of liability to pay Service Tax. 117. Section 142(10) of the CGST Act, 2017 reads as under: Save as otherwise provided in this Chapter, the goods or services or both supplied on or after the appointed day in pursuance of a contract entered into prior to the appointed day shall be liable to tax under the provisions of this Act. 118. Further, to avoid double taxation, Section 142(11)(b) of the CGST Act, 2017 provide as under: notwithstanding anything contained in section 13, no tax shall be payable on services under this Act to the extent the tax was leviable on the said services under Chapter V of the Finance Act, 1994; 119. The applicant has mentioned the order of the Hon'ble High Court of Delhi under W.P. (Civil) No. 2235/2011 in the case of Shr....
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.... is beyond the jurisdiction of this Authority. 122. Similarly, the Judgements of Hon'ble Supreme Court in Gem Granites vs Commissioner of IT, Tamil Nadu reported in AIR 2005 SC 1455 = 2004 (11) TMI 13 - SUPREME COURT, Municipal Committee vs Manilal reported in 1967 (2) SCR 100 = 1966 (11) TMI 87 - SUPREME COURT OF INDIA and Pappu Sweets and Biscuits vs Commissioner of Trade Tax, UP reported in 1998(7) SCC 228 = 1998 (10) TMI 452 - SUPREME COURT OF INDIA mentioned by the applicant to claim that the services rendered by MoHUA prior to 01.07.2017 i.e. during Service Tax regime were also exempted, are not relevant because this Authority has been set up under GST laws to decide matters pertaining to GST and has no mandate to decide taxability under erstwhile Service Tax laws. 123. It has been argued by the applicant that in a continuous supply of service, where part of the supply has taken prior to 01.07.2017 and part of supply has taken on or after 01.07.2017, GST cannot be levied by vivisecting the value of supply into two parts. However, the said argument is not acceptable as per clarification issued as follows: 124. As per FAQ on GST in respect of Construction of Residential Comp....
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....upied), when the milestone for payment was achieved by the builder/developer, who raised an invoice within 30 days from the same(as required by law) prior to 30.06.2017, but the payment is received from the customers in respect of the said invoice on or after 01.07.2017, - Service tax is/was payable on the consideration so received @15% on 1/4th of the consideration; and there would be no GST to that extent. On the balance amount payable or paid w.r.t the subsequent payment milestones falling on or after 01.07.2017, GST is payable, as mentioned at (ii) above. (iv) when the total consideration is received, as per the agreed terms, on or after 01.07.2017 from the customers in respect of a property under construction (for which neither occupancy certificate was received nor it is yet to be occupied) - GST is payable @ 18%, on 2/3rds of the consideration. 124. Hence, for the reasons mentioned above, the judgements of Hon'ble Supreme Court in the case of Govind Saran Ganga Saran vs Commissioner of Sales Tax, reported in 1985 (155) ITR 0144 SC = 1985 (4) TMI 65 - SUPREME COURT and CIT vs BC Srinivasa Setty reported in 1981 (128) ITR 294 SC = 1981 (2) TMI 1 - SUPREME COURT are not relev....
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....in 2012 (34) STT 387] = 2012 (1) TMI 98 - BOMBAY HIGH COURT and levy of Service Tax was upheld on the construction of building intended for sale to the buyers. 130. Since, the issues involved in the present case do not pertains to deemed Sale under Article 366(29A) of the Constitution, the judgement of Hon'ble Supreme Court in Southern Petrochemical Industries Co. Ltd v/s Electricity Inspector & ETIO reported in (2007) 5 SCC 447 = 2007 (5) TMI 591 - SUPREME COURT and in Geo Miller & Co. (P) Limited v/s State of Madhya Pradesh reported in (2004) 5 SCC 209 = 2004 (5) TMI 296 - SUPREME COURT OF INDIA are not relevant in the present case. 131. As per FAQ on GST in respect of Construction of Residential Complex by Builders/Developers: S.No. Question Answer 1. Whether sale of a Flat/House by a builder / developer is a supply of a service or a immovable property under GST law? As per the clause 5(b) of the Schedule II of CGST, Act, 2017, construction of a flat / house/ complex intended for sale is a supply of service. However, the entire consideration towards the Flat/House/complex is received after the receipt of completion/occupancy certificate from the competent authority or af....