TaxTMI 
TaxTMI 
2021 (7) TMI 541
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....ities from 2012 onwards. They first identify locations suitable for the gated community villa projects and will buy land in their own name and take layout approval in their name and promote the villas to various villa buyers. In another situation they identify locations suitable for the gated community villa projects and enter into agreement with the landlords for the purchase of the entire land area required for the project. The total area of land is divided into various plots and the layout approval is taken in the name of landlord and the villa approval is taken either in the name of landlord or in the name of villa buyers from concerned local authorities at their expense. After the approval from local authorities, they provide amenities like road, arch, compound wall, rain water harvest, health club etc required for the gated communities. They do marketing activities such as digital, paper ads, media advertisement etc and identify the suitable villa buyers for the projects. 3.2. They are having several projects out of which one project is "VRINDHAVAN" (all units in this project are "other than affordable villas") in which there are 20 units. Out of the 20 units, 9 units were....
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....pt 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." 5.2. As per SI.No.3, item (if), in Notification 11/2017-CT (Rate) dated 28.06.2017 as amended by Notification 03/2019-CT (Rate) dated 29.03.2019 the old CGST rate of 9% (effective tax rate being 12% with ITC) is applicable for the following; "Construction of a complex, building, civil structure or a part thereof, including; (i)...................................(ii) residential apartments in an ongoing project, other than affordable residential apartments, in respect of which the promoter has exercised option to pay central tax on construction of apartments at the rates as specified for this item in the manner prescribed herein." 5.3. As per Sl.No.3, item (if), in Notification 11/2017 CT (Rate) dated 28.06.2017 as amended by Notification 03/2019-CT (Rate) dated 29.03.2019 the old CGST rate of 9% (effective tax rate being 12% with ITC) is applicable for Construction of a complex, building, civil structure or a part thereof including residential apartments in an ongoing pr....
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....more villa under the project "VRINDHAVAN" stating that 70% of the construction was already completed on 31.03.2019. The revised option was rejected by the Joint Commissioner as the last date for filing option was on 20.05.2019. 7. Personal Hearing: The applicant was granted opportunity for personal hearing on 22.12.2020. Shri. M.P.Tony, Chartered Accountant represented the applicant for personal hearing. He reiterated the contentions made in the application and requested to issue the ruling on the basis of the submissions made in the application. 8. Discussion and Conclusion: 8.1. The matter was examined in detail. A new tax structure for real estate sector was introduced with effect from 01.04.2019 onwards by amendment of Notification No. 11/2017 Central Tax (Rate) dated 28.06.2017 by Notification No. 03/2019 - Central Tax (Rate) dated 29.03.2019. The Notification No. 03/2019 -Central Tax (Rate) dated 29.03.2019 substituted the rate for services related to real estate sector with effect from 01.04.2019 and also made provisions for continuing the old rate of tax (as it existed up to 31.03.2019) for the ongoing projects. The provisions for continuing the old rate of tax ....
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....ect, is not required to be issued by the competent authority, it is certified by any of the authorities specified in sub-clause (a) above that construction of the project has started on or before the 31St March, 2019; (c) completion certificate has not been issued or first occupation of the project has not taken place on or before the 31' March, 2019; (d) apartments being constructed under the project have been, partly or wholly, booked on or before the 31St March, 2019. Explanation- For the purpose of sub-clause (a) and (b) above, construction of a project shall be considered to have started on or before the 31" March, 2019, if the earthwork for site preparation for the project has been completed and excavation for foundation has started on or before the 31st March, 2019. 8.3. The definition of the term project is contained in clause 4(xv) of Para 4 of the Notification No.11/2017 - CT (Rate) dated 28.06.2017 as amended by Notification No. 03/2019 CT (Rate) dated 29.03.2019; wherein it is specified that the term 'project" shall mean a Real Estate Project or a Residential Real Estate Project. In clause 4(xviii) of the said notification it is sta....
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....ructure for real estate sector with effect from 01.04.2019 the CBIC has issued FAQs under F.No. 354/32/2019 - TRU dated 07.05.2019 clarifying the various doubts raised by trade and industry. The doubts regarding the meaning and scope of the term "ongoing project" and the exercise of option in respect of continuing payment of tax at the old rates for the ongoing projects were clarified by CBIC in Question Nos. 24,29,33 and 34 of the above FAQ's and the same is extracted below; Q.No. 24: From the plain reading of the provisions and the definitions of the various terms as defined in the Notification No. 3/2019- CT(R), it appears that the onetime option is required to be exercised for the entire REP or RREP. Does this mean that a Promoter can opt for old rates or new rates, as the case may be, for different projects being undertaken by him under the same entity? Ans: Yes. The option to pay tax on construction of apartments in the ongoing projects at the effective old rates of 8% and 12% with ITC has to be exercised for each ongoing project separately. As per RERA, 2016, project wise registration is allowed. So, the promoter may exercise different options for diffe....
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....e definition of "ongoing project" are met. Q.No.34: It is a prevalent practice that more than one commencement certificate is issued by competent authority for single project. For example, in case of a single tower comprising of 50 floors and registered as single project, separate commencement certificates may be issued by the competent authority for (i) basement and parking which is common to entire building (ii) first twenty floors (iii) next thirty floors. If one or two commencement certificates are received by the Developer prior to 1st April, 2019 and remaining on or after that date, will such a project be considered as an ongoing project? Ans: Where commencement certificate has been issued even for part of the project on or before 31-03-2019, it shall be treated as an ongoing project provided other requirements of the definition of ongoing project are met. 8.7. On a conjoint reading of the definitions of the terms and the clarification of CBIC as extracted above it is evident that the option envisaged under Item (if) of Sl No. 3 of Notification No. 11/2017-Central Tax (Rate) dated 28.06.2017 as amended by Notification No. 03/2019-Central Tax (Rate) dated ....