TaxTMI 
TaxTMI 
2025 (6) TMI 524
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 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 purposes of this Advance Ruling, the expression 'GST Act' would mean CGST Act and MGST Act. 1. FACTS AND CONTENTIONS - AS PER THE APPLICANT 1.1. This Application is being preferred by Raymond Limited - Realty Division ('the Company' / 'the Applicant'), which is registered as separate a business vertical of Raymond Limited under the provisions of the Central Goods and Services Tax Act, 2017 ('CGST Act') and Maharashtra Goods and Services Tax Act, 2017 ('MGST Act') bearing GSTIN 27AAACR4896A3ZB. 1.2. The Applicant is a promoter of residential real estate project named Ten X Habitat by Raymond Realty spread across 14 acres of land inter alia containing 10 towers (Towers A to H, J and K) each having 42-storeys consisting of residential apartments and some commercial units admeasuring not more than 15 per cent of the total carpet area of all the residential apartments in the said project and ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ssions / approvals including RERA Registration. The Applicant also launched the residential apartments in 3 towers and initiated booking by public at large post 15.01.2019. The Applicant discharged GST at the rate of 12% (net GST rate of 8% after abatement) on the consideration received from the prospective customers. Further, given the tax structure existing on the date of booking of flats, the Applicant also availed Input tax credit on the goods and services used for supply of such services in terms of Entry no. 3 of Notification No. 11/2017-Central Tax (Rate) dated 28.06.2017 ('NN 11/2017') as reproduced with this application. 1.9. However, with effect from 01.04.2019, a new tax structure was introduced wherein the developers of residential projects had the option of paying GST at the rate of 1% or 5% without Input tax credit. As regards all the projects which were incomplete as on March 31, 2019, the new structure gave a one-time option to continue paying GST at the old rates with ITC subject to the fulfilment of specified conditions on all on-going projects. However, the old tax structure as available upto March 31, 2019 was not available in respect of projects commencing w....
X X X X Extracts X X X X
X X X X Extracts X X X X
....idential apartment in an ongoing project under the scheme inter alia specified in sub-item (da) of item (v) i.e. low-cost houses up to a carpet area of 60 square metres 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, attract tax at the rate of 12 per cent (6 per cent CGST + 6 per cent MGST) with input tax credit provided the promoter exercises option to pay GST under the old tax structure. 2.3 Thus, the services of construction of residential apartments post April 1, 2019 would become liable to GST at the rate of 12% with Input tax credit subject to the fulfilment of the following conditions: a. The apartments shall be constructed in an ongoing project; (condition 1) b. The apartments shall be low-cost houses having carpet area of not more than 60 square meters per house; (condition 2) c. The apartments shall be in an affordable housing project which has been given infrastructure status vide notification of Government of India, in Ministry of Finance, Department of ....
X X X X Extracts X X X X
X X X X Extracts X X X X
..... of the total carpet area of all the apartments in the REP. 2.6 Further, the term "Real Estate Project" has been defined under clause (zn) of section 2 of the Real Estate (Regulation and Development) Act, 2016 (16 of 2016) ('RERA') to mean the development of a building or a building consisting of apartments, or converting an existing building or a part thereof into apartments, or the development of land into plots or apartment, as the case may be, for the purpose of selling all or some of the said apartments or plots or building, 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. 2.7 The expression "an apartment booked on or before the 31st March, 2019" shall mean an apartment which meets all the following three conditions, namely- (a) Part of supply of construction of which has time of supply on or before the 31st March, 2019; (b) At least one instalment has been credited to the bank account of the registered person on or before the 31st March, 2019 and (c) An allotment letter or sale agreement or any other similar document....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... constitute one single REP for all other purposes of the RERA. 2.11Reference may also be made to the decision of the Hon'ble Bombay High Court in the case of Lavasa Corporation Limited vs. Jitendra Jagdish Tulsiani and Anr. [Second Appeal (stamp) No. 9717 of 2018 with Civil Application No. 683 of 2018], wherein the Hon'ble Court observed that a huge and large township project by Lavasa has been rightly registered as a single REP under the RERA Act. The relevant extract of the decision of the Hon'ble Bombay High Court is as under: "74. This Section thus makes registration of the project mandatory for its sale. As per Clause (2) of Section 3, the RERA is made applicable even to the projects that are on-going on the date of commencement of the RERA and for which, Completion Certificate has not been issued. In respect of such projects also, Promoters are required to register the projects with the Real Estate Regulatory Authority within three months from the commencement of the RERA, with an option that they can register entire real estate project or part of it. The specific 'Explanation' to the Section 3 of the RERA provides that, where the real estate project is to be deve....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... [(2001) 252 ITR 1], it is submitted that a clarificatory note or press release does not have any statutory force and are not binding. Thus, the FAQs dated 07.05.2019 have no statutory force in so far as SI. No. 30 of the FAQs dated 07.05.2019 is contrary to the express provisions of amended NN 11/2017. 2.15 Therefore, in the absence of any explicit restriction under the CGST Act or Notifications issued thereunder, the entire Aspirational Project consisting of ten towers of residential apartments, commercial units and other amenities would constitute a single REP for the purposes of NN 11/2017. 2.16 In light of the above, it is amply clear that the entire Aspirational Project consisting of 10 towers constitutes an ongoing project. Accordingly, condition 1 stands fulfilled in the instant case. Condition 2 - Apartments shall be low cost houses up to a carpet area of 60 sq. mt. per house 2.17 As has been submitted in the foregoing paragraphs, the carpet area of each apartments proposed to be constructed in the Aspirational Project is less than 60 sq. mt., therefore, condition 2 stands fulfilled in the instant case. Condition 3 - Apartments shall be in an affordable hous....
X X X X Extracts X X X X
X X X X Extracts X X X X
....n case of non-requirement of such certificate from such authority, from any of the following, namely :- (i) An architect registered with the Council of Architecture constituted under the Architects Act, 1972; or (20 of 1972.) (ii) A chartered engineer registered with the Institution of Engineers (India); or (iii) A licensed surveyor of the respective local body of the city or town or village or development or planning authority; (2) The expression "construction" includes additions, alterations, replacements or remodeling of any existing civil structure; Relevant extract of Notification No. 11/2017-Central Tax (Rate) dated 28.06.2017, as amended by Notification No. 3/2019-Central Tax (rate) dated 29.03.2019 Sl.No. Chapter/Section/Heading Description of Service Rate Condition 2 Section 5 Construction Services 3 Heading 9954 (Construction Services) (i) 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 April, 2019 or in an ongoing RREP in respect of which the promoter has n....
X X X X Extracts X X X X
X X X X Extracts X X X X
....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 for 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....
X X X X Extracts X X X X
X X X X Extracts X X X X
....l be reported every month by reporting the same as ineligible credit in GSTR-3B [Row No. 4 (D) (2)]. (ie) Construction of an apartment in an ongoing project under any of the schemes specified in sub-item (b), sub-item (c), sub item (d), sub-item (da) and sub-item (db) of item (iv); sub-item (b), sub-item (c), sub-item (d) and sub-item (da) of item (v); and sub-item (c) of item (vi), against serial number 3 of the Table, 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. (Provisions of paragraph 2 of this notification shall apply for valuation of this service) 6 Provided that in case of ongoing project, the registered person shall exercise one-time option 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 20th of May, 2019; Provided also that where the option is not exercised in Form at annexure IV by the 20th 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 b....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ion of apartments at the rates as specified for item (ie) or (if) against serial number 3, as the case may be. (xvii) The term "promoter" shall have the same meaning as assigned to it in in clause (zk) of section 2 of the Real Estate (Regulation and Development) Act, 2016 (16 of 2016); (xviii) the term "Real Estate Project (REP)" shall have the same meaning as assigned to it in in clause (zn) of section 2 of the Real Estate (Regulation and Development) Act, 2016 (16 of 2016); (xix) The term "Residential Real Estate Project (RREP)" shall mean a REP in which 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; (xx) The term "ongoing project" shall mean a project which meets all the following conditions, namely- (a) Commencement certificate in respect of the project, where required to be issued by the competent authority, has been issued on or before 31st March, 2019, and it is certified by any of the following that construction of the project has started on or before 31st March, 2019: - (i) An architect registered with the Council of Architecture cons....
X X X X Extracts X X X X
X X X X Extracts X X X X
....all easement, rights and appurtenances belonging thereto; 3. Registration of real estate project and registration of real estate agents 3. (1) No promoter shall advertise, market, book, sell or offer for sale, or invite persons to purchase in any manner any plot, apartment or building, as the case may be, in any real estate project or part of it, in any planning area, without registering the real estate project with the Real Estate Regulatory Authority established under this Act: Provided that projects that are ongoing on the date of commencement of this Act and for which the completion certificate has not been issued, the promoter shall make an application to the Authority for registration of the said project within a period of three months from the date of commencement of this Act: Provided further that if the Authority thinks necessary, in the interest of allottees, for projects which are developed beyond the planning area but with the requisite permission of the local authority, it may, by order, direct the promoter of such project to register with the Authority, and the provisions of this Act or the rules and regulations made thereunder, sha....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ayer. Copy of commencement certificate is not available with this office. Whether commencement certificate is taken for entire project is not clear. b) Not applicable c) Not applicable d) As per tax payer's submission, condition is partly fulfilled. e) As per above definition Project," construction of a project shall be considered to have started on or before the 31st 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'. However, it is not clear from submission made by taxpayer. 3.2 Affordable Residential Apartment The term "Affordable Residential Apartment has been defined under Para 4 (xvi) of Notification Number 03/2019 dated 30/03/2019 state tax (Rate) means, 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 to pay State tax on construction of apartments at the rates as specified for item (ie) or (if) against serial number 3, as the case may be, having carpet area not exceeding 60 squa....
X X X X Extracts X X X X
X X X X Extracts X X X X
....r the provisions of the Central Goods and Services Tax Act, 2017 ('CGST Act') and Maharashtra Goods and Services Tax Act, 2017 ('MGST Act') bearing GSTIN 27AAACR4896A32B. The Applicant's project named 'Ten X Habitat' consists of 10 towers (Towers A to H, J and K) each having 42 storeys consisting of residential apartments and some commercial units. 5.2 With the intent of registering and developing the entire Aspirational Project as a single real estate project, the Applicant got the entire layout of the project approved and also obtained Commencement Certificate No. 3826 dated 22.05.2018 for development of all towers. 5.3 As on March 31, 2019, the Applicant also obtained registration under the provisions of the Real Estate (Regulation and Development) Act, 2016 ('RERA, 2016') for three of its towers covered under the Aspirational Project. The details of the RERA registration obtained by the Applicant is as under: SI. No Towers Aspirational Project RERA Number Number of floors 1. Towers A and B P51700019265 42 floors 2. Tower C P51700020256 42 floors 5.4 The applicant initiated booking to these 3 towers, A, B and C from 15-01-2019. The ap....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 2016 ('RERA') to mean the development of a building or a building consisting of apartments, or estate project converting an existing building or a part thereof into apartments, or the development of land into plots or apartment, as the case may be, for the purpose of selling all or some of the said apartments or plots or building, 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. 2. Furthermore, the Explanation to Section 3 (2) of the Real Estate (Regulation and Development) Act, 2016 ("RERA") explicitly provides that, in cases where a Real Estate Project ("REP") is to be developed in phases, each such phase shall be treated as a distinct and independent REP for the purposes of Section 3 of RERA. Consequently, the Promoter is required to obtain separate RERA registration for each individual phase. It is pertinent to note that Section 3 (2) unequivocally stipulates that every such phase shall constitute a separate REP for the purpose of obtaining registration under Section 3 of RERA. 3. The Explanation to Section 3 (2) of the Real Estate (....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... place by the said date shall be treated as ongoing projects. The applicant has submitted the RERA registration details of each of the towers as below:- Towers RERA registration no. RERA registration date A P51700019265 15-01-2019 B P51700019265 15-01-2019 C P51700020256 29-03-2019 D P51700020881 15-05-2019 E P51700022779 17-10-2019 F P51700034190 25-03-2022 G - - H P51700027036 10-11-2020 I P51700025355 30-04-2020 K P51700022940 05-11-2019 In accordance with the provisions of RERA, each phase of a Real Estate Project is to be considered as a separate stand-alone project. The applicant has 10 towers in the project which are being developed in phases. These towers have been registered separately under RERA and the applicant is taking the booking for these towers in phased manner. It is of no consequence, if the general amenities like club house are available for the entire gated community that included all the 10 towers. Hence, each of the towers A to H, J and K constitute separate project for the purpose of provisions under the GST Act. 5.8 Let us analyze if the towers A to H....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... Aspirational Project as on April 1, 2019 is as under: Parameters A B C D E F G H J K Booking of flats Partial Partial Partial Nil Nil Nil Nil Nil Nil Nil Earthwork completed Yes Yes Yes No No No No N No No Excavation initiated Yes Yes Yes No No No No No No No Commencement certificate 40^th Floor 40^th Floor 40^th Floor 1^st Floor 1^st Floor 1st Floor 1st Floor 1st Floor 1st Floor 1st Floor RERA registration 42^nd Floor 42^nd Floor 42^nd Floor None None None None None None None 5.10 Following observations regarding whether these towers fulfil criteria of 'ongoing project' are made. 1. The analysis of the aforementioned chart indicates that Towers D, E, F, G, H, J, and K do not satisfy the condition stipulated under Clause (d), which mandates that for a project to be classified as an "ongoing project," certain apartments within the project must have been either partially or wholly booked on or before March 31, 2019. Clause (d) expressly requires that at least some of the apart....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nt that the facts of Victoria Realtors differ materially from the present case concerning the Applicant. In Victoria Realtors, the conditions prescribed under the relevant notification, particularly those pertaining to the completion of excavation and earthwork, were duly satisfied. Conversely, in the present case concerning Raymond Realty, the requisite conditions laid down under the notification, specifically relating to the completion of excavation and earthwork for site preparation, have not been fulfilled. Accordingly, the ruling in Victoria Realtors cannot be considered applicable to the Applicant's case, as the factual matrix in both cases is distinct, and the conditions precedent to classification as an "ongoing project" remain unfulfilled in the instant matter. 5.12 In the matter of Amba Township Pvt. Ltd., the discussion regarding the terms and conditions pertaining to an "Ongoing Project" was not considered, as it appeared that there was no issue concerning an "Ongoing Project." However, in the present case, the applicant seeks to have ten (10) towers, which are at different stages of execution and earthwork, treated as a single project. It is pertinent to note that t....