TaxTMI 
TaxTMI 
2022 (1) TMI 300
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....18. 1.1 At the outset, we would like to make it clear that the provisions of the Central Goods and Services Tax Act, 2017 (the CGST Act, for short) and the West Bengal Goods and Services Tax Act, 2017 (the WBGST Act, for short) have the same provisions in like matter except for certain provisions. Therefore, unless a mention is specifically made to such dissimilar provisions, a reference to the CGST Act would also mean reference to the corresponding similar provisions in the WBGST Act. Further to the earlier, henceforth for the purposes of these proceedings, the expression 'GST Act' would mean the CGST Act and the WBGST Act both. 1.2 The applicant is stated to be involved in construction of property used for residential purpose. 1.3 Presently, the applicant is constructing a property at Ghosh Hat, Madhaitala, P.S. & P.O. Katwa under Katwa Municipality, District-Purba Bardhaman, West Bengal. 1.4 The applicant has made this application under sub-section (1) of section 97 of the GST Act and the rules made there under raising following questions vide serial number 14 of the application in FORM GST ARA-01: (i) Whether the property currently under construction is a R....
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....ered under any affordable housing scheme of the Central Government or the State Government or under any other similar scheme of the Governments. • At least 80% of the inputs and input services have been purchased from registered persons only. 2.2 The applicant has submitted that as per Notification No. 11/2017- Central Tax (Rate) dated the 28th June, 2017 as amended vide Notification No. 03/2019- Central Tax (Rate) dated the 29th March, 2019 [corresponding West Bengal State Notification No.1135-F.T. dated 28.06.2019 as amended vide Notification No. 552-F.T. dated 29.03.2019 and herein after collectively referred to as, the relevant Notification],affordable residential apartment under GST is a residential apartment in a project which commences on or after 01-04-2019 or in an ongoing project in respect of which the promoter has opted for new rate of 1%(effective from 01-04-2019) having carpet area upto 60 square meter in metropolitan cities and 90 square meter in cities or towns other than metropolitan cities and the gross amount charged for which, by the builder is not more than 45 lakhs rupees.[Cities or towns in the notification shall include all areas other than m....
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....lding, as the case may be, and includes the common areas, the development works, all improvements and structures thereon, and all easement, rights and appurtenances belonging thereto. In the opinion of this office, the property currently under construction of Kayal Infra can only be treated as a Residential Real Estate Project (RREP) if the same satisfies the above definitions. It appears that if the disclosures in Para 15 of the GST ARA-01 made by the applicant are true and correct, including the disclosure that the carpet area of the commercial apartments in the project is zero per cent, the same should be treated as a Residential Real Estate Project (RREP). 3.3 Question No.2: Whether the said property under construction is an affordable residential apartment as defined in the relevant Notification? Comments: The definition of affordable residential apartment is given in the relevant Notification as: The term "affordable residential apartment" shall mean, - (a) a residential apartment in a project which commences on or after 1st April, 2019, or in an ongoing project in respect of which the promoter has not exercised option in the prescribed form t....
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....atisfies all the criteria as embodied in the above quoted definitions. 3.4 Question No.3: Whether the GST rate to be charged from Customers for sale of Flats in the said property should be 1.5% (0.75%-CGST and 0.75%-SGST), as further reduced by 1/3rd to factor in the value of land or it should be 7.5% (3.75%of CGST and 3.75% of SGST), as further reduced by 1/3rd to factor in the value of land? Comments: From the disclosures in Para 15 of the GST ARA-01 made by the applicant it appears that the project under consideration is an Affordable Residential Apartment coming up in a non-metro area with apartment units each having carpet area not exceeding 90 sq meters, and value not exceeding Rs. 45 lakh. It is not clear from the application whether the project involves transfer of property in land or undivided share of land. It is also not expressly mentioned whether the applicant is undertaking the project as a 'promoter' as defined in clause (zk) of Section 2 of the Real Estate (Regulation and Development) Act, 2016 or not; however, it is assumed to be so. In such a scenario, as a construction project of affordable residential apartments in an RREP commencing after 01.04.2019....
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....uilder does not exercise such option, it shall be deemed that he has opted for new rates in respect of ongoing projects. 4.6 The activities undertaken by the applicant, as it appears from the available records, is development of a building consisting of apartments for the purpose of selling all or some of the said apartments. The instant project, therefore, can be termed as a 'real estate project'. Further, a REP shall be treated as RREP if the carpet area of the commercial apartments is not more than 15 per cent. of the total carpet area of all the apartments in the REP. Here, from the submitted documents, we find that the instant project doesn't have any commercial apartment. As a result, the instant project falls under the category of RREP. 4.7 Now we proceed to decide whether the apartments in the project can be regarded as 'affordable residential apartment' or not. The applicant has contended that the apartments shall be treated as affordable residential apartment since it fulfils following criteria: (I) construction of the said project is in a non- metropolitan area; (II) carpet area is below 90 Sqm of all the flats; (III) the carpet area of t....
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....t item (i) against serial no. 3 of the Table above, involving transfer of property in land or undivided share of land, as the case may be, the value of supply of service and goods portion in such supply shall be equivalent to the total amount charged for such supply less the value of land or undivided share of land, as the case may be, and the value of land or undivided share of land, as the case may be, in such supply shall be deemed to be one third of the total amount charged for such supply. Explanation. - For the purposes of paragraph 2, "total amount" means the sum total of, - (a) consideration charged for aforesaid service; and (b) amount charged for transfer of land or undivided share of land, as the case may be. 4.11 The aforesaid notification has been amended from time to time. As per item number (i) and (ic) against Sl.No.3 of the relevant Notification, the Central Tax rate of 0.75% (effective tax rate being 0.5% without ITC) is applicable for the following: • Construction of affordable residential apartments by a promoter in a Residential Real Estate Project (herein after referred to as RREP) which commences on or after 1st Apri....
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....truction of residential apartments other than affordable residential apartments by a promoter in an RREP which commences on or after 1 st April, 2019 or in an ongoing RREP in respect of which the promoter has not exercised option to pay central tax on construction of apartments at the rates as specified for item (ie) or (if) below, as the case may be, in the manner prescribed therein, 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. • Construction of residential apartments other than affordable residential apartments by a promoter in a REP other than a RREP which commences on or after 1 st April, 2019 or in an ongoing REP other than RREP in respect of which the promoter has not exercised option to pay central tax on construction of apartments at the rates as specified for item (ie) or (if) below, as the case may be, in the manner prescribed therein, intended for sale to a buyer, wholly or partly, except where the entire consideration has been received after issuance of completion....
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....in the Form at Annexure IV to pay central tax on construction of apartments in a project at the rates as specified for item (ie) or (if), as the case may be, by the 10th of May, 2019#; Provided also that where the option is not exercised in Form at annexure IV by the 10th of May, 2019#, option to pay tax at the rates as applicable to item (i) or (ia) or (ib) or (ic) or (id) above, as the case may be, shall be deemed to have been exercised; Provided also that invoices for supply of the service can be issued during the period from 1st April 2019 to 10th May 2019# before exercising the option, but such invoices shall be in accordance with the option to be exercised.; # The date has been extended to 20th of May, 2019 vide Notification No. 10/2019-Central Tax (Rate) dated 10.05.2019 [ West Bengal State Notification No. 771 F.T. dated 10.05.2019 (if) Construction of a complex, building, civil structure or a part thereof, including, - (i) commercial apartments (shops, offices, godowns etc.) by a promoter in a REP other than RREP, (ii) residential apartments in an ongoing project, other than affordable residential apartments, in respect of which the promoter h....
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....ated that the project has commenced after 01.04.2019 and in support of his submission, the applicant has produced following documents before us: (i) Photocopy of Development Agreement made on 15.03.2020; (ii) Photocopy of a letter dated 26.08.2020 addressed to the Chairman, Katwa Municipality in the matter of commencement of construction of project under Katwa Municipality as per approved on Permit No. 65/BP dated 27.02.2020. The said letter is found to be received in the office of Katwa Municipality on 02.09.2020. 4.18 The applicant has also raised his doubt towards applicability of new tax rate of 1% effective from 01.04.2019 on the ground that the said property or the firm is not registered under any affordable housing scheme of the Central or State Government. In this context, we find that the schemes which are notified as affordable residential apartment are applicable only for an ongoing project in respect of which the promoter has not exercised option to pay tax on construction of apartment at the rates specified for items (ie) or (if) against Sl No, 3 of the relevant Notification. As the instant project has commenced after 01.04.2019, it cannot be terme....