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2021 (9) TMI 320 - AAR - GSTAgreements entered on or before 29th September 2019 with unregistered persons - Applicability of paragraph 2A of Notification No. 03/2019-Central Tax (Rate) dated 29th March, 2019 - actual cost of construction of services are known - valuation rule applicable for identifying the value of supply for construction services rendered - Rule 30 of CGST Rule, 2017 - time of supply - adoption of Rule 31, instead of Rule 30 of CGST Rule, 2017 in terms of proviso to Rule 31 of CGST Rules - Section 15 (5) read with Section 2(87) of CGST Act, 2017 - HELD THAT:- Para 2A of the Notification provides the value to be taxed where a person transfers development rights or FSI to a promoter against consideration and does not limit itself to the transfer of development rights alone to be the taxable event as stated by the applicant. Here in the instant case, the owners have vested the rights to develop the immovable property owned by them, into a residential apartment, with the applicant. So the contention of the applicant that this para would not be applicable to this transaction as it does not involve transfer of development rights is not sustainable - Section 148 allows the Government, on the recommendations of the GST Council, to notify a certain class of registered persons and to prescribe special procedures with regard to payment of tax and administration of such persons. Payment of Tax encompasses value to be adopted for payment of such tax (measure) and time of payment of such tax (point of taxation). Vide Para 2A, the value to be adopted for construction service in respect of apartment handed over to the landowners against the development right received from such land owners are prescribed and the Time of Supply is notified vide Notification No. 06/2019-Central Tax (Rate) - the class of persons i.e., the promoters who receive development rights for construction against consideration payable in the form of construction of commercial or residential apartments or in any other form including cash and the value to be adopted for such construction services and the 'time of Supply' for payment of tax on such construction services rendered. In the case at hand, from the submissions of the applicant, it is evident that the applicant though had entered into the JDA with the landowners, who are unregistered before September 2019, when the clause 2A of the Notification No. 11/2017-C.T (Rate) dated 28.06.2017 as amended, was amended to 'person' instead of 'registered person', the time of supply in the case at hand falls after such amendment only. Here the date of completion is yet to arrive and so the developer being the taxable person would be liable to pay the tax on such date of completion - In the instant case, the 'Time of Supply' falls after the amendment in the Para 2A making the method of valuation to be adopted for the construction service extended to the land owners both registered or unregistered against the development rights and therefore, the applicant has to adopt the value as per Para 2A to the Notification and the liability to tax arises on the date of issuance of completion certificate for this project or the date of first occupation. Thus, the Value of construction services provided by a promoter to land owner being a non-registered person shall be determined based on the total amount charged by the promoter for similar apartments in the project from independent buyers, other than the land owner, nearest to the date on which such development right etc. is transferred to the promoter, less the value of transfer of land, if any, as prescribed in paragraph 2 of Notification No. 11/2017-CT(R) dated 28.06.2017. Whether the N/N. 03/2019 is applicable, when the actual cost of construction of services is known? - HELD THAT:- In the instant case, the date of levy being the date of issuance of completion certificate, Para 2A becomes applicable to them and so the value should be calculated only. The said para prescribes that the value of construction in respect of such apartments shall be deemed to be equal to the Total amount charged for similar apartments in the project from the independent buyers, other than the person transferring the development rights/FSI - As the law has provided for such valuation, the contention that para 2A is not applicable when the actual cost of construction is available does not hold water as we cannot go beyond the law pronounced. Hence the valuation as prescribed in the said para 2A becomes squarely applicable in the present case. Paragraph 2A the Notification no.3/2019-Central Tax (Rate) dt. 29.03.2019 is applicable to the agreement entered into between the applicant and the owners of the land in as much as the levy is imposable on the date of completion of the construction as per Notification No. 06/2019 -Central Tax (Rate) dated 29.03.2019 - Notification no.3/2019-Central Tax (Rate) dt. 29.03.2019 is applicable to this transaction even if the actual cost of construction is available.
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