TaxTMI 
TaxTMI 
2026 (9) TMI 1566
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....s modification works and ancillary services. 4.2. The applicant has classified the construction services provided for new villa projects under SAC 995411 - General construction services of single dwelling or multi-dwelling or multi-storied residential buildings. Further, additional modification works and ancillary services provided during the project stage are stated to be classifiable under SAC 995419-Services involving repair, alterations, additions, replacements, renovation, and maintenance or remodeling of buildings. 4.3. The applicant submits that the services provided includes consideration for transfer of land/ undivided share of land and they adopted the 1/3 rd. deduction towards value of land as allowed under Notification No. 11/2017-CT dated: 28.06.2017 and discharges tax at effective rate of 12% for their residential projects prior to 01.04.2019. 4.4. The applicant further submits that the Government introduced changes in the GST rate structure for construction services through Notification No. 03/2019-Central Tax (Rate) dated 29.03.2019, under which promoters of existing "ongoing projects" were required to exercise an option to continue under the earlier tax re....
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....application is admitted and taken up for consideration on merits. 7.2. The issues to be determined are the classification of construction services provided by the applicant in respect of villa projects constructed and sold after 01.04.2019, in light of the amendments made to Notification No. 11/2017-Central Tax (Rate) dated 28.06.2017. The applicant has also sought clarification regarding the applicable rate of tax on additional works executed for villa buyers and the eligibility to avail input tax credit on inward supplies used for such projects. 7.3. The applicant is engaged in the construction and sale of residential villas which are stated to form part of Residential Real Estate Projects (RREP). The present application relates to villa projects claimed to have been commenced after 01.04.2019, namely "Winds of Change - Phase II" and "The 44 Club - Phase II". According to the applicant, these projects are distinct from the earlier projects for which option had been exercised under Notification No. 03/2019-Central Tax (Rate), dated 29.03.2019, and do not fall within the category of "ongoing projects" as on 31.03.2019. The applicant has submitted that the approvals/permission....
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....espect 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 Provided that............. 7.5. Further, the valuation of service as per the above entry is governed by paragraph 2 of the Notification, which says that "in cases of supply of service 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, 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". This means that where the gr....
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....), dated 28.06.2017, for the real estate sector with effect from 01.04.2019 which provided that the services of construction of residential apartments in a Residential Real Estate Project (RREP) are taxable at the prescribed concessional rate subject to the condition that credit of input tax charged on goods and services used in supplying the said service has not been taken except to the limited extent specifically provided in the notification. 7.8. In this regard, it is imperative to distinguish between ongoing projects as on 31.03.2019 and projects commencing thereafter. For the ongoing projects, the promoter was given a one-time option to continue to pay tax at the earlier applicable rates with eligibility to avail input tax credit subject to the conditions prescribed in the said notification. Further, where such option was not exercised, the said ongoing project would fall under the revised rate structure without the benefit of input tax credit applicable from 01.04.2019 onwards. In such cases, the transitional mechanism prescribed in Annexure I/Annexure II to Notification No. 03/2019-Central Tax (Rate), as applicable, becomes relevant for determining the eligible input tax ....
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....ed to have been availed by the applicant "under protest" in respect of projects claimed to be other than ongoing projects, but not utilised and retained in the electronic credit ledger. The applicant has sought to know whether such credit can be availed or utilised for projects taxable at the rate prescribed under Entry 3(ia), or whether the applicant can choose to pay tax at a higher rate with availment of input tax credit. As discussed above, in respect of residential real estate projects commencing on or after 01.04.2019 and falling under Entry 3(ia) of Notification No. 11/2017-Central Tax (Rate), as amended, the prescribed rate is subject to the condition that input tax credit on goods and services used in supplying such construction service shall not be taken. The said entry also requires that the tax payable at the specified rate shall be discharged in cash, that is, by debiting the electronic cash ledger only. 7.12. Therefore, where the projects under consideration are projects commencing on or after 01.04.2019 and are not ongoing projects, the applicant is not entitled to avail or utilise input tax credit attributable to such projects for discharge of tax liability under....
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....ice, the classification shall be determined based on the nature of such service in accordance with the scheme of classification of services. Question No. 2. What is the rate of tax as applicable under Notification 11/2017-CT (rate) as amended from time to time for, a) Services specified in (a) above for other than ongoing projects. RULING: The supply of construction services relating to residential villas other than affordable residential apartments in a Residential Real Estate Project (RREP) is taxable under Entry 3(ia) of Notification No. 11/2017-Central Tax (Rate) dated 28.06.2017, as amended, at the rate of 3.75% CGST and 3.75% SGST, subject to the conditions prescribed therein. In cases where the supply involves transfer of land or undivided share of land, as per Paragraph 2 of the said notification the value attributable to land shall be deemed to be one-third of the total amount charged, and GST shall be payable on the remaining two-thirds of the consideration, resulting in an effective GST rate of 5% (2.5% CGST and 2.5% SGST) on the total value. b) Services specified in (b) above. RULING: Where the additional modification works and ancillary services provided....