TaxTMI 
TaxTMI 
2023 (4) TMI 155
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.... Road Thane, 400615. ("hereinafter referred to as "the Appellant") against the Advance Ruling No. GST-ARA-68/2019-20/B-52 dated 27.08.2021 pronounced by the Maharashtra Authority for Advance Ruling (hereinafter referred to as "MAAR"). 3. FACTS IN BRIEF. 3.1. M/s. Puranik Builders Limited, having its corporate office at Puranik One Kanchanpushp Complex Opp. Suraj Water Park, Kavesar Ghodbunder Road Thane, 400615, is, inter-alia, engaged in the business of construction and sale of residential apartments, wherein the appellant discharges Goods and Services Tax (GST) in respect of supply of construction of residential apartments sold prior to receipt of the Occupancy / Completion Certificate. The Appellant has obtained registration and holding valid registration certificate issued under CGST Act, 2017. 3.2. The terms of sale of an under construction residential apartments by the Appellant are governed by an "Agreement for Sale" entered between the Appellant and the customers, which upon completion of construction is supplemented by a sale deed. 3.3. The construction services provided by the appellant are classified under SAC code 9954 and are covered under Entry 3 of Notification N....
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....rges Additional charges for development of the project computed based on premium paid to the Municipal Corporation for the project and various other factors. 7 Share money, application and entrance fee of the organisation Charges for making application for allotment, share money for future society of residents, etc. 8 formation and registration Formation and registration of the organization and legal charges in connection therewith Charges in respect of formation of future society of residents and associated legal cost. 9 Infrastructure charges Additional charges for development of common area infrastructure. 10 Legal fees Charges for legal cost of the transaction of sale of residential apartments, 4. The order of Advance Ruling Authority: - 4.1 The Appellant had filed an application before the Advance Ruling Authority (AAR) to seek the answers for following two questions in respect of other charges recovered from the customer. (a) Whether the Other Charges received by the company will be treated as consideration for construction services of the Company and classified under HSN 9954 along with the main residential construction services of the Company or whether the....
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.... ground of barred by limitation. However, the appellant has found support in the Supreme Court order in SMW(C) No.3 of 2020 dt.23.9.2021. The relevant part of the Supreme Court order is reproduced below:- I. In computing the period of limitation for any suit, appeal, application or proceeding, the period from 15.3.2020 till 2.10.2021 shall stand excluded. Consequently, the balance period of limitation remaining as on 15.3.2021, if any, shall become available with effect from 03.10.2021. 5.2 Thus, the period from 27.8.2021 to 3.10.2021 will stand excluded from the period of limitation. As a result, appeal application filed on 02/11/2021 is treated as filed in time and it is admitted for disposal. 6. The Grounds of Appeal: - 6.1 The impugned order is erroneous and bad in law and has not properly appreciated the factual and legal position. 6.2 The AAR has overlooked the submissions made by the Appellant and has mechanically ruled that services supplied in respect of "other charges" are not naturally bundled. 6.3 The impugned order is liable to be set aside as it is arbitrary and based on fallacious presumptions. 7. Personal Hearing The personal hearing in the matter was conduc....
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....er the services are bundled in the ordinary course of business. If the nature of services is such that one of the services combined with such service are in the nature of incidental or ancillary services which help in better enjoyment of a main service. For example, service of stay in a hotel is often combined with a service or laundering of 3-4 items of clothing free of cost per day. Such service is ancillary service to the provision of hotel accommodation and the resultant package would be treated as services naturally bundled in the ordinary course of business. d) Other illustrative indicators, not determinative but indicative of bundling services in ordinary course of business are - - There is a single price or the customer pays the same amount, no matter how much of the package they actually receive or use. - The elements are normally advertised as a package - The different elements are not available separately - The different elements are integral to one overall supply- if one or more is removed, the nature of the supply would be affected. 8.4 The Appellant has submitted that principles laid down in the Education Guide are applicable in the present case in terms of....
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....ty, legal fees for transaction of sale of residential apartments can reasonably be expected to be supplied by the builder/ developer/ promoter of a residential project. They are inextricably linked to a residential apartment or dwelling. Without these aspects, the property may not be used. However certain other charges like advance maintenance, club house maintenance, infrastructure charges, share money application and entrance fee of the organization are not expected by every customer. These are not inextricably linked to the construction services in respect of residential projects. 9.3 In the said education note on which the appellant has relied heavily, other illustrative indicators which are indicative of bundling of services in ordinary course of business are provided (cited supra). The analysis of indicative indicators of bundled services show that they are largely not applicable to the case in hand. The other charges are received separately. It means indicator no a) and c) of para 8.3 are not complied with/ fulfilled. All the aspects may be or may not be advertised as a package. The submission of the appellant is silent on this aspect of the transaction. In fact, he has sub....
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....oever nature in respect thereof. These two clauses bring out the intention of the parties that customer will not have any claim other than the Apartment agreed to be taken by him/her. Even the benefits arising out of building will be available to promoter/Appellant only. 9.8 There is another clause that grants Promoter the right to use some of the common areas and external facilities to adjoining plot or any other plot in the vicinity of the said property (clause 33 (g)). All these clauses bring out the real nature of the services provided other than construction services. The property in such services (in terms of use, ownerships, etc.) isn't fully transferred to the customers. Hence it is logical and legal to treat such services as not having any inextricable link to the construction services and need to be treated as independent supply of services. 9.9 The Appellant has relied upon the case of Advance ruling authority order dated 26.12.2019 in respect of M/s Joyville Shapoorji Housing Private Limited (herein after referred as "Joyville").However the facts of the case are different from the present matter. Firstly, the project of the appellant doesn't fall under Afforda....
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.... of the property developed. Such charges cannot be traced directly to the value of any goods or value of land but are as a result of the development of the complex as a whole and the position of a particular unit in the context of the complex. Thus, it is an attempt on part of the appellant to subsume various other charges collected on the guise of Construction Services provided by him. The other charges collected by the appellant is clearly distinguishable from the main services provided. 10. Hence, in view of the above facts and discussion, it is clear that charges in respect of some services are inextricably linked while other services are independently provided to the customer. The dominant intention test and principles for determination of naturally bundled services point out the independent nature of some of the services. Therefore, following services are clearly identifiable as bundled services: (i) Water connection charges; (ii) Electric meter installation and deposit for meter; (iii) Development charges; (iv) Legal fees. These aforesaid services are considered as naturally bundled services and taxable as per the rate of construction services. On the other hand, s....