TaxTMI 
TaxTMI 
TaxTMI 
2019 (7) TMI 39
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....similar provisions, a reference to the CGST Act would also mean a reference to the same provision under the MGST Act. Further to the earlier, henceforth for the purposes of this Advance Ruling, a reference to such a similar provision under the CGST Act / MGST Act would be mentioned as being under the "GST Act". 02 FACTS AND CONTENTION - AS PER THE APPLICANT The submissions, as reproduced verbatim, could be seen thus STATEMENT OF FACTS 1.0 M/s Nagpur Integrated Township Private Limited (hereinafter referred to as NITPL), (hereinafter referred to as the "Applicant") registered under GST at Nagpur with Registration number 27AAFCN5825Q1ZS. It is into development of land and construction of flats to be given out on lease as per the Agreement of Lease entered by them with the customers which is enclosed to this application. 2.0 Maharashtra Airport Development Company Ltd.(hereinafter referred to as "MADC"), a Company registered under the Companies Act, 1956 & having its registered office at World Trade Centre, 8th floor, Cuffe Parade, Mumbai-400005, is a special planning authority under the Maharashtra Regional &Town Planning Act, 1966, for the Multi Modal International Hub Airport....
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....followed by instalments as prescribed. The buyer is liable to pay all applicable taxes including GST on the lease Consideration as applicable. The buyer is also liable to pay stamp duty and registration charges as applicable. The lease of property shall be registered in the name of buyer on payment of consideration as scheduled. The deed is registered with right of inheritance of lease for the remaining period of lease as is dependent on the situation. The agreement also contains conditions as the property should be maintained in good condition, should not be used for storing hazardous substances, pay maintenance as prescribed etc. The payments from the buyers are described as lease Consideration. Authenticated copies of certificates showing nature of title of MADC and Developer is made available to the prospective buyer. Copy of sanctioned plan on basis of which construction is undertaken is also made available to the buyer. 7.0 Whether the transaction is outside the purview of GST as a transaction in immovable property? If not, what is the appropriate classification and rate of GST? are the issues on which advance ruling is sought by the applicant. 8.0 Since provisions of CGST....
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....te, where required, by the competent authority or after its first occupation, whichever is earlier. SCHEDULE III [Section 7] ACTIVITIES OR TRANSACTIONS WHICH SHALL BE TREATED NEITHER AS A SUPPLY OF GOODS NOR A SUPPLY OF SERVICES . . . 5. Sale of land and, subject to clause (b) of paragraph 5 of Schedule II, sale of building. TRANSFER OF PROPERTY ACT Section 54 in The Transfer of Property Act, 1882 54. "Sale" defined .-"Sale" is a transfer of ownership in exchange for a price paid or promised or part-paid and part-promised. Sale how made.-Such transfer, in the case of tangible immoveable property of the value of one hundred rupees and upwards, or in the case of a reversion or other intangible thing, can be made only by a registered instrument. In the case of tangible immoveable property of a value less than one hundred rupees, such transfer may be made either by a registered instrument or by delivery of the property. Delivery of tangible immoveable property takes place when the seller places the buyer, or such person as he directs, in possession of the property. Contract for sale.- A contract for the sale of immoveable property is a contract that a sale of such pr....
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....p therefore grants rights in the subject matter to the exclusion of the whole world. The nature of transaction as is evident from the agreement does not involve transfer of ownership and hence there is no sale of land as contemplated with in meaning of either Transfer of Property Act or GST is happening in the present case. 9.4 Clause (b) [Paragraph 5 of Schedule Il provides that 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 shall be treated as service. It is therefore important that the building should be intended for sale to buyer. In the present case, since the terms of agreement is affirming the relationship as builder and lessee, the construction is not intended for sale to buyer and hence transaction will not fall under clause (b). As the transaction is not falling under clause (b), all the related concessions/abatements available in respect of such transaction also is not applicab....
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....dule II to GST Act. Sch. II classifies transactions as either supply of goods or supply of services. SI.No. 2 and 5 of Sch. provides that: "2. Land and Building (q) any lease, tenancy, easement, licence to occupy land is a supply of services; (b) any lease or letting out of the building including a commercial, industrial or residential complex for business or commerce, either wholly or partly, is a supply of services." "5. Supply of services The following shall be treated as supply of service, namely:- (a) renting of immovable property;.. ." 10.2 Clause (a) of SI. No. 2 treats lease, tenancy or easement or license to occupy land as provision of service. The transaction between Applicant and MADC falls under this clause. But the same is not applicable to transaction between Applicant and buyer since the premium collected is not just for lease of land but for land with constructed unit. Clause (b) deals with lease or letting out of building for business or commerce. The list of buildings mentioned includes commercial, industrial or residential complex. The residential complex in present case is not let out or leased for business or commerce since the buyer is not ....
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....on'ble Authority for Advance Ruling and also some other residential projects in the vicinity of the project of the applicant where flats are available for sale. 3.0 Accordingly, the applicant is herewith submitting the details of the lease amount proposed to be charged/recovered from the customers. Also, the sale price per sq. feet of some other residential projects in the vicinity of the project of the applicant is also being submitted for ready reference. TABLE SHOWING LEASE AMOUNT IN THE PROPOSED PROJECT OF RESIDENTIAL APARTMENT FOR LEASE OF THE APPLICANT S.No. Unit No. Type Area in Sq.Ft. Lease value of unit Lease price Rs./sq.Ft. (booking price) 1. Symphony 1C0301 1BHK 970 25,22,000 2,600 2. Symphony 1A0302 2BHK 1,332 28,30,500 2,125 3. Symphony 1C0101 2.5BHK 1,684 35,36,400 2,100 4. Symphony 1A1001 3BHK 1,760 45,76,000 2,600 5. Symphony 101202 3BHK 2,371 42,21,937 1,992 The sale market price per square feet of residential flats in the vicinity of the proposed residential apartment project of the applicant is about Rs. 4208 per sq. feet as per 99 acres.com, a real estate database website. 4.0 The lease rate per sq.feet for 1 BHK flat is ....
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....ted under the laws of Mauritius. IJM, on behalf of NITPL has deposited through MADC and Chourangi a Onetime Settlement (OTS) amount to M/s. Vijaya Bank towards the Settlement of loan amount, availed by Chourangi in respect of the development of the said Land. In consideration of NITPL paying the OTS amount and agreed dues in respect of the development of the said Land, MADC had entered in to Development Agreement (DA) with NITPL on 08th December 2017 along with a Power of Attorney (POA) dated 08th December 2017 and thereby entrusted to NITPL the rights to design, finance and develop a township project, on the said Land comprising apartment units, commercial space and allied infrastructure thereof and to lease the same to the prospective lessees (hereinafter referred to as "Township Project/ First City Project") and by virtue of the said DA and POA the Developer named herein above is now therefore entitled to complete the said Township Project and to lease, assign and transfer the various residential and non-residential units proposed to be constructed therein to the prospective lessee/s. Therefore, the Developer alone has the sole and exclusive right to allot on lease the residen....
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....ee agrees to take on lease from Development (Applicant) and Applicant agree to lease out to respective buyer the respective flat as mentioned specifically in the agreement. The lessee is not having any option to suggest any changes to the plan as approved. The prospective buyer would make an advance payment followed by instalments as presented. The buyer is liable to pay all applicable taxes including GST on the lease Consideration as applicable. The buyer is also liable to pay stamp duty and registration charges as applicable. The lease of property shall be registered in the name of buyer on full payment of consideration as scheduled. The deed is registered with right of inheritance of lease for the remaining period of lease as is dependent on the situation. The payments from the buyers are described as lease Consideration. Authenticated copies of certificates showing nature of title of MADC and Developer is made available to the prospective buyer. Copy of sanctioned plan on basis of which construction is undertaken is also made available to the buyer. From the above mentioned facts and paras of sample copy of lease agreement, it is reveal that developer is going to construct the....
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....- SUPREME COURT. The term works contract is broad and includes all obligations and all types of contract. Works contract is a contract for undertaking or bringing into existence some works. Hence, lease agreement between applicants and prospective lessee is for works contract service. A perusal of the above authorities leads us to the conclusion that "Works" means the carrying out of construction activities involving labour along with the supply of materials. Further, there appears to be a close nexus between "works contract" and construction activities. 1. "Works" is largely interpreted as a building or a structure which has emerged as a result of labour; 2. Works contract is a contract for executing of any works along with the right to sue for breach; 3. There should be a transfer of property in goods involved in the execution of works contract. From the final definition of "works contract" it becomes clear that to qualify as a "works contract", a contract shall not be a contract for mere supply of goods or supply of services; that is to say, the nature of contract executed shall be a composite supply involving supply of both goods and services which results in the crea....
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...., State Tax Officer ((NAG-BST-C-001) Nagpur appeared and made written submissions. The application was admitted and called for final hearing on 06.03.2019. Sh. Natrajan Ganesh, Advocate, appeared made oral & written submissions. During final hearing Sh Natrajan Ganesh was asked to submit details such as area of a unit that is to be leased the amount of lease received phase wise and sale price of similar unit as per ready reckoner or as the case may be transaction value in the ordinary course of business. Jurisdictional Officer Sh. Rahul Ganveer, State Tax Officer ((NAG-BST-C-001) Nagpur appeared. 05. OBSERVATIONS We have gone through the facts of the case, documents on record and submissions made e applicant as well as the jurisdictional office. The applicant has obtained development rights from Maharashtra Airport Development Company Ltd. (MADC) in respect of land owned by MADC and situated at Multi Modal international Hub Airport, Nagpur Project (MIHAN) which includes development of Nagpur Airport as an international Hub, development of a Special Economic Zone, & other facilities around the Nagpur Airport. The Applicant, having exclusive rights to design, finance and develop....
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....as is prevalent on the Mumbai market, would be around 2% to 3% of the property value, per month. The situation in the subject case is very much different. First of all the applicant says that they are receiving the lease amounts from their customers during the construction process. The applicant keeps paying instalments on completion of slabs and this type of payment is only made when a person has entered into an agreement with a builder/developer to purchase flats in an ongoing project. Such payments are generally liable tax under GST Laws but in the subject case the applicant is showing such payments as towards lease amount paid under a lease agreement. We may mention at this stage that rental income from residential properties is not liable to GST. During the course of hearings the applicant was requested to provide details of lease amount charged to the customers towards the leasing of residential apartment/flats in the proposed project covered in the subject application and also some other residential projects in the vicinity of the project of the applicant where flats are available for sale. The applicant made submissions details of the lease amount proposed to be charged/r....
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....The Government, has granted exemption to certain services vide Notification No. 12/2017-Central Tax (Rate)dated 28.06.2017. As per Sl. No. 12 of said notification, GST on following service is NIL: Sr.No. 12 : Heading 9963 or Heading 9972 : Services by way of renting of residential dwelling for use as residence. We find that the applicant has in their application mentioned that "Applicant is developing the property by construction of Commercial & residential units and integrated facilities and is having exclusive rights to design, finance and develop the property and lease/assign/transfer same to prospective customers on lease basis on payment of amount referred to as 'lease Consideration'". Thus, they are going to construct both commercial and residential units. However, it appears that their query is only limited to residential units. It also appears from the submissions made by the applicant that they are is going to construct the said property for their prospective lessees. We have no doubt whatsoever that in the subject case there is a supply as defined under Section 7 of the CGST Act, 2017. As per Schedule II (2), in respect of Land and Building : (a) any lease, tenancy,....