TaxTMI 
TaxTMI 
2020 (1) TMI 789
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.... 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 Shapoorji Pallonji and Company Private Limited (Applicant) is in respect of ....
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....y 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, Applicant is also eligible for the benefit of reduced rate of GST. Benefit under Entry (v) (da) of Notificat....
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....sional 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 services', which includes various groups contained thereunder. Group heading 99547 pertains to 'building completion & ....
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....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 (i). 04. HEARING Preliminary hearing in the matter was held on 05.11.2019. Ms. Kanupriya Bhargava, Advocate and Sh. Arjyadeep Roy appeared and requested for admission of their app....
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.... 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 18th January 2018 at Delhi was to extend the concessional rate of 12% (8% GST after deducting value of land) to services by way of construction of low cost houses up to a carpet area of 60 sqm in a housing project which has been given infrastructure statu....
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....h 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 would be required to pay GST at normal applicable rate, since the benefit of reduced rate is available only for residential units of carpet area less that 60 sq. mts. 5.12 As decided by us, in the case of Puranik Con....
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.... 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 construction service and are always naturally bundled when offered to the customer. Therefore, such services will qualify as composite supply of works contract service, where the principal supply would be, construction services. Accordi....
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....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 of the order, the questions are answered thus - Question 1. Whether the Applicant being the Contractor at Joyville, Virar will be eligible for concessional rate of Goods and Service under Entry (v) (da) of Notification No. 11/2017-Central Tax (Rate) ....