TaxTMI 
TaxTMI 
2024 (10) TMI 1376
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....LTORS, Shop No 1,6, Parwani Properties, Ajay Nagar, AJMER-305003, Rajasthan (hereinafter "the applicant") is fit to pronounce advance ruling as they have deposited prescribed fee under GST Act and it falls under the ambit of the Section 97 (2) (a) given as under: (b) Applicability of a notification issued under the provisions of the Act (d) Admissibility of input tax credit paid or deemed to have been paid A. SUBMISSION OF THE APPLICANT (in brief):- The M/s. CASTLE REALTORS, SHOP NO 1,6, M/s. CASTLE REALTORS, PARWANI PROPERTIES, Ajay Nagan Ajmer, Rajasthan, 305003 (hereinafter referred to as the 'Applicant' or 'CASTLE REALTORS') is engaged in supplying services of construction, erection, commissioning, installation, completion, fitting out, repair, maintenance, renovation or alteration of affordable and other than affordable residential apartments under GSTIN 08AAQFC5503J1Z9. The Applicant is supplying services of construction of affordable housing, non-affordable housing and commercial apartments under Real Estate Project (REP) in the name of M/s. CASTLE REALTORS. The applicant filled Advance ruling for applicability of notification and applicability of ....
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....artly, in the form of construction of apartments, - (i) the developer-promoter shall pay tax on supply of construction of apartments to the landowner promoter, and (ii) such landowner - promoter shall be eligible for credit of taxes charged from him by the developer promoter towards the supply of construction of apartments by developer-promoter to him, provided the landowner promoter further supplies such apartments to his buyers before issuance of completion certificate or first occupation, whichever is earlier, and pays tax on the same which is not less than the amount of tax charged from him on construction of such apartments by the developer promoter. Explanation. (i) "developer-promoter" is a promoter who constructs or converts a building into apartments or develops a plot for sale, (ii) "landowner-promoter" is a promoter who transfers the land or development rights or FSI to a developer-promoter tor construction of apartments and receives constructed apartments against such transferred rights and sells such apartments to his buyers independently. Provided also that eighty percent of value of input and input services, [other than services by way o....
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....ported every month by reporting the same as ineligible credit in GSTR-3B [Row No. 4(D)(2)]. (id) Construction of residential apartments other than affordable residential apartments by a promoter in a REP Other than a RREP which commences on or after 1st 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 certificate, where required, by the competent authority or after its first occupation, whichever is earlier. (Provisions of paragraph 2 of this notification shall apply for valuation of this service) 3.75 (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 has exer....
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....sons and includes his assignees; or b. A person who develops the land into a project whether or not the person also constructs structures on any of the plots, for the purpose of selling to other persons all or some of the plots in the said project, whether with or without structures thereon; or c. any development authority or any other public body in respect of allottees of- • Buildings or apartments, as the case may be, constructed by such authority or body on lands owned by them or placed at their disposal by the Government; or • Plots owned by such authority or body or placed at their disposal by the Government, for the purpose of selling al/ or some of the apartments or plots; or d. An apex State level co-operative housing finance society and a primary co-operative housing society which constructs apartments or buildings for its Members or in respect of the allottees of such apartments or buildings; or e. Any other person who acts himself as a builder, coloniser, contractor, developer, estate developer or by any other name or claims to be acting as the holder of a power of attorney from the owner of the land on which....
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....eant for the exclusive use of the allottee; SCOPE The Applicant falls under the definition of Real Estate Project (REP) because it has carpet area for commercial apartments more than 15 percent out of total carpet area of project. That to suffice our explanation that commercial apartments areas are more than 15 percent of total carpet area we hereby attaching Approved map from Ajmer Development Authority which is also available to verify on https://rera.raiasthan.gov.in/.(Project Name-ATLANTIS) Applicant views on the Questions raised 1. GST Rate on supply of affordable and non-affordable apartments under REP. Ans-For Affordable residential apartments-The applicant falls under the heading serial no. (ic) of Notification No. 03/2019-Central tax (Rate) which states that construction of affordable residential apartments by a promoter in REP other than RREP is GST @ 1.5 percent less 1/3^rd value of land as per Notification No. 11/2017-CT (rate) dated 28th June 2017 which is equivalent to GST @ 1% on the transaction value. For Non-affordable residential apartments-The applicant falls under the heading serial no. (id) of Notification No. 03/2019-Central tax (Rate) which ....
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....al support that are used for making outward supply of goods or services or both and includes such foundation and structural supports but excludes- (i) land, building or any other civil structures; (ii) telecommunication towers; and (iii) pipelines laid outside the factory premises. A summary of the eligibility of ITC as per the provisions of section 17 (5) (c) and (d) is given in the following Table; Type of property Construction of Treatment in books ITC eligibility Immovable Other than plant and machinery Capitalized Not eligible Movable P&M or otherwise Capital or Revenue Eligible Movable or immovable Plant and machinery Capital or Revenue Eligible Movable or Immovable P&M or otherwise Revenue Eligible ITC FOR ACTIVITIES OF REPAIR, RE-CONSTRUCTION, RENOVATION, ALTERATION, ETC. The concept of "construction" has been widened to include the activities of reconstruction, renovation, additions or alterations or repairs. The term 'construction' generally refers to the act of making or creating the immovable property for the first time. On the other hand, the activities of repair, renovation....
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....to the treatment as per the books of accounts itself, the same has been clarified in Para 62 of the Circular No. 125/44/2019-GST, dated 18-11-2019 as follows: "It has been represented that on certain occasions, departmental officers do not consider ITC on stores and spares, packing materials, materials purchased for machinery repairs, printing and stationery items, as part of Net ITC on the grounds that these are not directly consumed in the manufacturing process and therefore, do not qualify as input. There are also instances where stores and spares charged to revenue are considered as capital goods and therefore the ITC availed on them is not included in Net ITC, even though the value of these goods has not been capitalized in his books of account by the applicant. It is clarified that the ITC of the GST paid on inputs, including inward supplies of stores and spares, packing materials etc., shall be available as ITC as long as these inputs are used for the purpose of the business and/or for effecting taxable supplies, including zero-rated supplies, and the ITC for such inputs is not restricted under section 17 (5) of the CGST Act. Further, capital goods have been clearly....
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.... person - Warehouse was constructed by applicant and same was accounted for in his books of account and ownership was retained by applicant - Construction was on own account in this case Warehouse construction involved cement, marble, paver block etc, and, hence, warehouse could not be moved after construction Without damage - ITC of GST charged on inward supply of goods and services related to construction of warehouse which was capitalized in books of account was not available - ITC would be available if such expenses were not capitalized [Section 17 of central Goods and Services Tax Act, 2017/West Bengal Goods and Services Tax Act, 2017]. [paras 4.10 and 4.11] The above judgment of Hon'ble High Court clearly specify that ITC is available for construction if expenses are not capitalized in books of accounts. That we also hereby declare that all the expenses which we will incur for construction of commercial apartments will be treated as revenue expenditure in Financial Statements. The applicant should be eligible for Input Tax Credit of Input, Input Service and Capital goods which will be used in supply of Commercial Apartments in REP other than RREP for in the course....
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....; गई है │ बिन्दूसंख्या 1 REP Affordable & Non-Affordable residential apartments सप्लाई पर अधिसूचना संख्या 03/2019 Central Tax Rate 29.03.2019 (तदनुरूप State Tax Notification) Serial No 3 के कॉलम संख्या 3 की प्रविष्टि (ic) के अनुरूप Affordable Residential Apartment 0.75 Central Tax & @ 0.75 State Tax टैक्स रेट अधिसूचित है, तथा Non-Affordable apartments पर कॉलम संख्या 3 की प्रविष्टि (id) के अनुरूप @ 3.75 Central Tax & @ 3....
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....#2381;या 3 की प्रविष्टि (if) के अनुरूप commercial apartments @ 9% Central Tax & @9% State Tax टैक्स रेट अधिसूचित है │जो की उक्त अधिसूचना के कॉलम 5 की शर्तों के अध्यधीन होगी │ बिन्दू संख्या 4 में Eligibility of Input Tax Credit which will be used in the course of business or for furtherance of business for Construction of Commercial apartments in a Real Estate Project (REP) इस पर निर्भर होगा की अधिसूचना क्रमांक 03/....
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....the service and accordingly one-third of the total amount charged for the supply is eligible as deduction as the value of transfer of land or undivided share of land involved in the supply in determining the taxable value irrespective of the actual value of land or undivided share of land. F.3 A new tax structure for real estate sector was introduced with effect from 1-4-2019 onwards by amendment of Notification No. 11/2017-CentraI Tax (Rate) dated 28-6-2017 by Notification No. 3/2019-Central Tax (Rate) dated 29-3-2019, The Notification 03/2019-CT (Rate) states that- (ii) in the Table, -(a) against serial number 3, for item (i), and the entries relating thereto in column (3), (4) and (5), the following items and entries shall be substituted, namely,- (3) (4) (5) (ic) Construction of affordable residential apartments by a promoter in a Real Estate Project (herein after referred to as REP) other than RREP, which commences on or after 1st 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 ....
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.... against such transferred rights and sells such apartments to his buyers independently. Provided also that eighty percent of value of input and input services, [other than services by way of grant of development rights, long term lease of land (against upfront payment in the form of premium, salami, development charges etc.) or FSI (including additional FSI), electricity, high speed diesel, motor spirit, natural gas], used in supplying the service shall be received from registered supplier only; Provided also that inputs and input services on which tax is paid on reverse charge basis shall be deemed to have been purchased from registered person; Provided also that where value of input and input services received from registered suppliers during the financial year (or part of the financial year till the date of issuance of completion certificate or first occupation of the project, whichever is earlier) falls short of the said threshold of 80 per cento tax shall be paid by the promoter on value of input and input services comprising such shortfall at the rate of eighteen percent on reverse charge basis and all the provisions of the Central Goods and services Tax Act, 2017 (1....
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....owns 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 has exercised option to pay central tax on construction of apartments at the rates as specified for this item in the manner prescribed herein, but excluding supply by way of services specified at items (i), (ia), (ib), (ic), (id) and (ie) above 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- Explanation. -For the removal of doubt, it is hereby clarified that, supply by way of services specified at items (i), (ia), (ib), (ic), (id) and (ie) in column (3) shall attract central tax prescribed against them in column (4) subject to conditions specified against them in column (5) and shall not be levied at the rate as specified under this entry. (Provisions of paragraph 2 of this notification shall apply for valuation of this service. 9 F.4 The relevant entries at Items (ic), (id) and (if) of Sl....
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....r 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. F.5 The rate of GST applicable for entry at item No. (ic) is 1.5% [0.75% - CGST + 0.75% SGST], for the entry at item No. (id) is 7.5% [3.75% - CGST + 3.75% - SGST] and for the entry at item No. (if) is 18% [9% - CGST + 9% - SGST]. The above rate of GST is subject to the conditions mentioned therein, The conditions that are common for the entry at item (ic) and (id) are as extracted below; "Condition : Provided that the central tax at the rate specified in column (4) shall be paid in cash, that is, by debiting the electronic cash ledger only : Provided also that credit of input tax charged on goods and services used in supplying the service has not been token except to the extent as prescribed in Annexure I in the case of REP other than RREP and in Annexure Il in the case of RREP : Provided also that the registered person shall pay, by debit in the electronic credit ledger or electronic cash ledger, an amount equivalent to the input tax credit att....
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....hever is earlier) falls short of the said threshold of 80 per cent., central tax shall be paid by the promoter on value of input and input services comprising such shortfall at the rate of nine per cent on reverse charge basis and all the provisions of the Central Goods and Services Tax Act, 2017 shall apply to him as if he is the person liable for paying the tax in relation to the supply of such goods or services or both : Provided also that notwithstanding anything contained hereinabove, where cement is received from an unregistered person, the promoter shall pay tax on supply of such cement at the applicable rates on reverse charge basis and al/ the provisions of the Central Goods and Services Tax Act, 2017 shall apply to him as if he is the person liable for paying the tax in relation to such supply of cement; Explanation. - 1. The promoter shall maintain project wise account of inward supplies from registered and unregistered supplier and calculate tax payments on the shortfall at the end of the financial year and shall submit the same in the prescribed form electronically on the common portal by end of the quarter following the financial year. The tax liabil....
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....ving carpet area not exceeding 60 square meter in metropolitan cities or 90 square meter in cities or towns other than metropolitan cities and for which the gross amount charged is not more than forty five lakhs rupees. For the purpose of this clause, - (i) Metropolitan cities are Bengaluru, Chennai, Delhi NCR (limited to Delhi, Noida, Greater Noida, Ghaziabad, Gurgaon, Faridabad), Hyderabad, Kolkata and Mumbai (whole of MMR) with their respective geographical limits prescribed by an order issued by the Central or State Government in this regard; (ii) Gross amount shall be the sum total of; - A. Consideration charged for the services specified at item (i) and (ic) in column (3) against sl. No. 3 in the Table; B. Amount charged for the transfer of land or undivided share of land, as the case may be including by way of lease or sub lease; and C. Any other amount charged by the promoter from the buyer of the apartment including preferential location charges, development charges, parking charges, common facility charges etc. (b) an apartment being constructed in an ongoing project under any of the schemes specified in sub-i....
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....; or (ii) a person who develops land into a project, whether or not the person also constructs structures on any of the plots, for the purpose of selling to other persons all or some of the plots in the said project, whether with or without structures thereon; or (iii) any development authority or any other public body in respect of allottees of- (a) buildings or apartments, as the case may be, constructed by such authority or body on lands owned by them or placed at their disposal by the Government; or (b) plots owned by such authority or body or placed at their disposal by the Government, for the purpose of selling all or some of the apartments or plots; or (iv) an apex State level co-operative housing finance society and a primary cooperative housing society which constructs apartments or buildings for its members or in respect of the allottees of such apartments or buildings; or (v) any other person who acts himself as a builder, coloniser; contractor, developer, estate developer or by any other name or claims to be acting as the holder of a power of attorney from the owner of the land on which the building or apartment is c....
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....of the services of construction of residential apartments other than affordable residential apartments as per entry at item No. (id) and at the rate Of 18% [9% - CGST + 9% - SGST] in respect of the services of construction of complex, building, civil structure or a part including commercial apartments (shops, offices, godowns etc,) as per entry at item No. (if) of Notification No. 3/2019-CentraI Tax (Rate), dated 29-3-2019 subject to the conditions prescribed under the respective entries. F.10. The next question raised by the applicant is whether taxpayer can supply of Affordable residential apartments and residential apartments under REP conjointly. From the above discussion, it is clear that services provided by taxpayer is clearly fall under notification No. 03/2019-CT (rate) dated 29th March, 2019. AS per the notification, residential apartment is bifurcated by the area and gross amount charged for the apartment, as below: "(xvi) 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....
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....escribed; (b) he has received the goods or services or both. Explanation.-For the purposes of this clause, it shall be deemed that the registered person has received the goods where the goods are delivered by the supplier to a recipient or any other person on the direction of such registered person, whether acting as on agent or otherwise, before or during movement of goods, either by way of transfer of documents of title to goods or otherwise; (c) subject to the provisions of section 41, the tax charged in respect of such supply has been actually paid to the Government, either in cash or through utilization of input tax credit admissible in respect of the said supply; and (d) he has furnished the return under section 39: Provided that where the goods against an invoice are received in lots or installments, the registered person shall be entitled to take credit upon receipt of the last lot or installments: Provided further that where o recipient fails to pay to the supplier of goods or services or both, other than the supplies on which tax is payable on reverse charge basis, the amount towards the value of supply along with tax ....
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....n.-For the purposes of this Chapter and Chapter VI, the expression "plant and machinery" means apparatus, equipment, and machinery fixed to earth by foundation or structural support that are used for making outward supply of goods or services or both and includes such foundation and structural supports but excludes (i) land, building or any other civil structures; (ii) telecommunication towers; and (iii) pipelines 'aid outside the factory premises. According to section 16 (1) of the CGST Act, 2017, every registered person is entitled to take credit of input tax charged on any supply of goods or services or both to him which are used or intended to be used by him in course or furtherance of his business. We further find that apart from conditions as laid down under Section 16 of the CGST Act, 2017, Section 17 ibid provides for restriction and factual position and situation where ITC would not be available. Pursuant to the aforesaid legal provisions, it can be concluded that ITC is restricted in case of construction undertaken on his own account. Clause (d) restricts input tax credit of goods and services used by a person for construction of immovable....