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2023 (7) TMI 520 - AAR - GSTClassification of services - rate of tax - taxable value - construction services of the Villas - effective rate of tax as per N/N. 03/2019 dated 29.03.2019 - agreement for construction is entered into with a purchaser before the execution of sale deed for land in favour of the purchaser - agreement for construction with a purchaser is entered into after the execution of sale deed for land in favour of the purchaser - agreement for sale of land and agreement for construction entered into with a purchaser, and existence of supplementary items of works executed by PPD for the purchaser prior to completion of construction of the villa - HELD THAT:- On a plain reading of the entries at Item (i) and (ia) of SI. No. 3 of the Notification No. 11/2017-Central Tax (Rate) dated 28.06.2017, it is evident that the rate of GST prescribed under the entry at Item (i) applies to construction of affordable residential apartments and under the entry at Item (ia) applies to construction of residential apartments other than affordable residential apartments by a promoter in a residential real estate project intended for sale to a buyer except where the entire consideration is received after issuance of completion certificate. From the terms and conditions in the agreements and the documents produced it is seen that the services of construction of villas provided by the applicant squarely fall within the description of services specified in Item (ia) of SI. No. 3 of the Notification No. 11/2017 Central Tax (Rate) dated 28.06.2017 as amended by Notification No. 03/2019 Central Tax (Rate) dated 29.03.2019 and accordingly the tax rates as prescribed in the said entries shall be applicable to the said services supplied by the applicant. Accordingly, the applicant is liable to pay GST at the rate of 7.5% in respect of the services of construction of residential apartments other than affordable residential apartments as per entry at Item No. (ia) of SI. No. 3 of Notification No. 11/2017 Central Tax (Rate) dated 28.06.2017 subject to the conditions prescribed under the respective entry. Taxable value of the services of construction of residential villas - HELD THAT:- The amount charged by them from the villa buyers for some structural changes, to add some additional area or undertake interior works etc. carried out before completion of the construction being part of overall construction services and naturally bundled when supplied to the villa buyers should be included in the consideration charged for the construction service and shall form part of the total amount charged for the supply as defined in explanation to Para 2 of the said notification - in terms of the Para 2 of the said notification the taxable value in respect of the service specified at item (i) and (ia) of SI. No. 3 of the said notification is the total amount charged for the supply less the value of land or undivided share of land and the value of land or undivided share of land shall be deemed to be one third of the total amount charged for the supply. As the value of land or undivided share of land is deemed to be one-third of the total amount charged for the supply irrespective of the actual value of land the applicant is eligible to avail deduction of one-third of the total amount charged for the supply in arriving at the taxable value of the supply.
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