TaxTMI 
TaxTMI 
TaxTMI 
2025 (6) TMI 524
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....ertain 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 other common amenities such as club house, swimming pool, ....
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....tments 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 with effect from April 1, 2019. 1.10. In terms of Entry 3(ie) of Notification No. 11/2017-Central ....
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....atus 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 Economic Affairs vide F. No. 13/6/2009-INF dated 30.03.2017; (condition 3). d. The promoter shall have exercised the option to pay tax on construction of apartments at the rates as specified for item (ie) by furnishing a Form prescribed to amended NN 11/2017 on or before....
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.... 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 evidencing booking of the apartment has been issued on or before the 31st March, 2019; 2.8 A bare reading of the definition of ongoing project clearly shows that every condition mentioned such as commencement of construction on or before March 31, 2019, booking of apartments, obtaining completion certificate are all mentioned qua the project. In the instant case as o....
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....ject 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 developed in phases, every such phase shall be considered as a standalone real estate project and the Promoter shall obtain registration under this Act for each phase separately. This 'Explanation' is important for the purpose of the present litigation, as here in the case, the Appellant has already got itself registered under RERA, by making an application under Section 4 of the said ....
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....ifications 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 housing project 2.18 The Aspirational Project constitutes an affordable housing project in terms of Notification No. 13/6/2009-INF dated 30.03.2017 issued by Government of India, Ministry of Finance, Department of Economic Affairs which inter alia defines affordable housing as a housing project using at least 50% of the Floor Area Ratio (FAR)/Floor Space Index (FSI) for dwelling units with carpet are....
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....ion "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 not exercised option to pay central tax on construction of apartments at the rates as specified for item (i.e.) 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) ....
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....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 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 d....
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....r 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 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 20th May 2019 before exercising the option, but such invoices shall be in accordance with the option to be exercised .; (v) Composite supply of works contract as defined in clause (119) of section 2 of the Central Goods and Services Tax Act, 2017 other than that covered by items (i), (ia), (ib), (ic), (id), (ie) and (if) above, supplied by way of construction, erection, commissioning, or installation of original works pe....
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....partments 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 constituted under the Architects Act, 1972 (20 of 1972); or (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. (b) Where commencement certificate in respect of the project, 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 31st March, 2019; (d) Apartments being constructed under....
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....er 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, shall apply to such projects from that stage of registration. (2) Notwithstanding anything contained in sub-section (1), no registration of the real estate project shall be required - Explanation.- For the purpose of this section, where the real estate project is to be developed in phases, every such phase shall be considered a standalone real estate project, and the promoter shall obtain registration under this Act for each phase separately. 03. CONTENTION - AS PER THE CONCERNED OFFICER: 3.1 Ongoing Project The term "ongoing project" has been defined under para 4 (xx) of Notification Number 03/2019 dated 30/03/2019 state tax (Rate), means 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....
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....er 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 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. The factual position is as follows: 1) Condition of Carpet area not exceeding 60 square meter per unit is fulfilled as mentioned by tax payer. 2) Condition of Gross amount charged is not more than forty-five lakhs rupees is not fulfilled as mentioned by tax payer. 3.3 Distinct Project Explanation to section 3 (2) of the RERA inter alia provides that in case n REP is to be developed in phases, every such phase shall be considered as stand-alone R....
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..... 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 applicant discharged GST @ 12% (net GST rate of 8% after considering land deduction) on the consideration received from prospective construction. Rate of 12% is applied as the project was to be an affordable housing project as per the criteria for the same prior to 01.04.2019. The applicant also availed input tax credit on the inward supplies of goods and services. 5.5 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% (in case of affordable housing apartment) or 5% without Input tax credit. As regards all the projects which were incomplete as on March 31, 2019, the new structure gave one-time option to continue paying GST at the old rates with ITC subject to the fulfilment of specified conditions for all ongoing projects. However, the old tax structure as available upto March 31, 2019 was not available in respect of projects commencing with effect from April 1, 2019. 5.6 In terms of Entry 3(ie) of N....
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....ute 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 (Regulation and Development) Act, 2016 ("RERA") is reproduced hereunder: "Explanation. - For the purpose of this section, where the real estate project is to be developed in phases, every such phase shall be considered a stand-alone real estate project, and the promoter shall obtain registration under this Act for each phase separately." In this context, the Frequently Asked Questions (FAQ) issued by the Ministry of Finance are of particular relevance. Notably, FAQ No. 30, as set out in F. No. 354/32/2019 dated 07.05.2019, clarifies that only those projects that had obtained RERA registration as of 31.03.2019 would be eligible to be classified as "ongoing projects," thereby allowing the assessee the option to adopt the old tax rate structure. The relevant portion of the FAQ is reproduced hereunder for ready reference: - Sr.No Question Answer 30. (a) In case of a single building registered as 2 (two) separate projects under the provisions of RERA viz. 1s to 10 floor as one Project and 11 to 20th floor as another project, whether th....
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.... Let us analyze if the towers A to H, J and K can be said to falling in the 'ongoing project' category. The term 'ongoing project' has been defined under para 4 (xx), of the notification No. 11/2017 dated 28.06.2017. It is reproduced as under :- (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 constituted under the Architects Act, 1972 (20 of 1972); or 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. (b) Where commencement certificate in respect of the project, 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 ....
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....no such bookings were made in respect of Towers D, E, F, G, H, J, and K. Consequently, these towers fail to meet the requisite criterion under Clause (d) for classification as an "ongoing project." 2. As per the conditions prescribed under Notification No. 03/2019, a project shall qualify as an "ongoing project" if, inter alia, the foundation earthwork for site preparation has been completed and excavation for the foundation has commenced on or before March 31, 2019. In the present case, as explicitly stated in the Taxpayer's submission, the foundation earthwork for site preparation and excavation for the foundation had not been completed, nor had the excavation for the foundation commenced for Towers C, D, E, F, G, H, J, and K. Accordingly, these towers do not fulfill the stipulated criteria under Notification No. 03/2019 for classification as an "ongoing project." 3. As per Clause (xxi) of Paragraph 4 of Notification No. 03/2019, the term "commencement certificate" refers to the commencement certificate, building permit, or construction permit-by whatever name called-issued by the competent authority, granting permission to the promoter to initiate development work on an immo....