TaxTMI 
TaxTMI 
2020 (1) TMI 789
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....ischarge Goods and Services Tax at the rate of 12%? 2. Whether the building completion and finishing services be regarded as a separate service or would it be a composite supply of works contract service as covered under entry V(da) of Notification No. 11/2017 to avail the benefit of reduced rate of tax? 3. What would be the appropriate rate of Goods and Services Tax on works contract services provided for the construction of the units and common areas and amenities on pro-rata basis which do not qualify the criteria of low cost houses'? At the outset, we would like to make it clear that the provisions of both the CGST Act and the MGST Act are the same except for certain provisions. Therefore, unless a mention is specifically made to any dissimilar 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 purpose of this Advance Ruling, the expression 'GST Act' would mean CGST Act and MGST Act. 2. FACTS AND CONTENTION - AS PER THE APPLICANT The submissions of the applicant made vide letter 19.07.2019 is as under:- 2.1 The present Application filed by Shapoorj....
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....ondition 1 2 3 4 5 3. Heading 9954 (Construction services) (v) Composite supply of works contract as defined in clause (119) of Section 2 of the CGST Act, 2017, supplied by way of construction, erection, commissioning, or installation of original works pertaining to, - (da) low-cost houses up to a carpet area of 60 sq. meters per house in an affordable housing project which has been given infrastructure status vide notification of Government of India in Ministry of Finance, Department of Economic Affairs, vide F. No. 13/6/2009-INF, dated the 30th March, 2017; 6% CGST + 6% SGST Nil 2.5 Applicant submits that dwelling units at Joyville, Virar qualifies for the benefit under Entry (v)(da) of Notification No.11/2017 as amended and that, Applicant being the Contractor as well is also eligible to the said benefit. Applicant submits that, benefit under Notification No.11/2017 does not create any embargo /restriction on the eligibility of the reduced rate of tax based on the provider of service. In other words, entry (v)(da) of Notification No, 11/2017 read with Notification No. 01/2018 is solely based on the nature of service provided & to that extent, ....
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....e specific entry does not create any embargo qua the provider of service, Applicant is also entitled to the concessional benefit of GST & should charge 12% to the Developer for the ongoing project. 2.9 Applicant has submitted that building completion and finishing services form part of the same transaction and is a composite supply of works contract services & eligible for the benefit under entry (v)(da) of Notification No. 11/2017: They have stated that in the subject case, services related to building, completion & finishing services are naturally bundled with construction contracts considering the business exigencies. Since the principal supply i.e. pre-dominant supply is of construction of "low cost houses' in an affordable housing project, the complete contract should be taxed as per the rate and provisions applicable to the principal supply. Accordingly, since the principal supply would be eligible for the concessional rate of tax i.e. 12% building completion and finishing services should also be taxed at reduced rate of GST. 2.9.1 Applicant further submits that the scheme of classification of services under GST regime states that Heading 9954 pertains to 'construction ....
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....ply of services till date. 6. In respect to question no. 1 raised by the applicant, the Contractor has nothing to do with the scheme of affordable Housing. So the transaction being from B2B, no reduced rate of tax is applicable for this transaction. As per the facts of the case, applicant is not eligible to avail the benefits of concessional rate of GST under Entry (v)(da) of Notification No.11/2017-C.T.(Rate) dt. 28.06.2017 as amended. Further, the supply of service made by applicant is not to the end user customer but to the Developer. To fit into the criteria of the eligibility for the concessional rate, the transaction needs to be from supplier to the end user customer. The Developer can avail the benefit of such concessional rate as his service would fit clearly into Business-to-Consumer (B2C) supply but not the Contractor. 7. With respect to question no. 2, it has been submitted that applicant's construction service shall not be covered under entry (v)(da) of Notification No.11/2017. 8. In respect of question no. 3, since applicant is not eligible for concessional rate of tax, they will be liable to GST @ 18% (CGST@9% and SGST@9%) as per entry 9954 ....
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....o a carpet area of 60 square metres per house in an affordable housing project, which has been given infrastructure status vide notification of Department of Economic Affairs vide F. No. 13/6/2009-INF, dated the 30th March,2017 will attract tax rate of 12 % (6% each of CGST & SGST.) 5.7 This clause is applicable to applicant only if the project undertaken by them is an affordable housing project which has been given infrastructure status vide Government of India notification mentioned above. 5.8 Department of Economic Affairs' notification dated 30.03.2017 has included Affordable Housing under the column "Infrastructure sub sector" against the category of Social and Commercial Infrastructure and has further defined "Affordable Housing" as a housing project using at least 50% of the Floor Area Ratio (FAR)/Floor Space Index (FSI) for dwelling units with carpet area of not more than 60 square meters and "Carpet Area" shall have the same meaning as assigned to it in clause (k) of section 2 of the Real Estate (Regulation and Development) Act, 2016. 5.9 One of the recommendations made by the GST Council in its 25th meeting held on 18^th January 2018 at Delhi was to extend the co....
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....Developer as per the definition of affordable housing given in the above mentioned notification (i.e., affordable housing has been defined as a housing project using at least 50% of FAR/FSI for dwelling units with carpet area of not more than 60 SQM). No certificate from any authority is required." 5.11 From a reading of the above clarification, notification and the clause (da) of item (v) of Notification No. 01/2018-C.T. (Rate) and facts on record, we find that that applicant's case is covered under concessional tax rate of 12% (8% GST after deducting value of land), under Heading 9954 (Construction Services), (v) (da) of above mentioned Notification No. 11/2017, as amended, since the project undertaken by them falls under the definition of "Affordable Housing Project". The benefit of reduced rate would be available to them only in the cases of supply effected after 25.01.2018 i.e. the date on which Notification 1/2018-Central Tax (Rate) was issued and the benefit of this reduced rate would be applicable in case of only those flats which are of carpet area upto 60 sq mtrs. In case of other flats which have carpet area more than 60 sq.mtrs. or commercial units, the applicant wou....
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..... 5.13.3 In view of the terms of the contract, we find that building completion and finishing services would not be regarded as separate services. It would be a part of the composite supply of works contract services rendered by the applicant with principal supply of building construction and in view of the discussions made above, supply of finishing services will be covered under entry (v)(da) of Notification No. 112017 and applicant will be eligible to avail the benefit of reduced rate of tax i.e 12%, only in respect of dwelling units having area less than 60 sq.mtrs. 5.14 Question No. 3:- What would be the appropriate rate of Goods and Services Tax on works contract services provided for the construction of the units and common areas and amenities on pro-rata basis which do not qualify the criteria of low cost houses'? 5.14.1 We have no doubt that the project undertaken by the applicant pertains to an affordable housing project. In the subject project, the applicant will be constructing dwelling units of less than 60 sq mtrs. carpet area as well as dwelling units having carpet area greater than 60 sq mtrs. 5.14.2 We find that common amenities form part of the overall....
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....mmon amenities and areas are a part of 'Affordable Housing Project' and therefore the applicant will be entitled to benefit of concessional rate for the same, only when they are a part of low cost houses i.e. units less than 60 sq.mtrs. The applicant will thus have to discharge GST @ 12% (after deducting value of land) on works contract services provided for the construction of the units and common areas and amenities, which do qualify the criteria of low cost houses. We also hold that, since concessional rate would be available only for construction services pertaining to dwelling units less than 60 sq. mtrs including common areas and amenities on pro-rata basis, construction services including common areas and amenities on pro-rata basis, performed by the applicant in respect of dwelling units exceeding 60 sq.mtrs. would be liable to full rate of GST i.e. 18%. 06. In view of the extensive deliberations as held hereinabove, we pass an order as follows: ORDER (Under section 98 of the Central Goods and Services Tax Act, 2017 and the Maharashtra Goods and Services Tax Act, 2017) No. GST-ARA-28/2019-20/B-122 Mumbai, dt. 26-12-2019 For reasons as discussed in the body....