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2022 (2) TMI 1101 - AAR - GSTClassification of supply - composite supply or not - naturally bundled with 'Construction Services' or not - recovery of charges for the ancillary services by builders - rate of GST - charges for 'the ancillary services' would attract GST at the rate specified for 'Construction Services' (principal supply) at 1% or 5%? - recovery of the charges for 'the ancillary services' by builders, after completion certificate - composite supply naturally bundled with Construction Services - GST not attracted once completion certificate is issued - levy of GST for 'the ancillary services' as individual respective service (considering 18% GST rate) - Input Tax Credit can be claimed in respect of GST paid on expenses incurred to provide the said ancillary services? Whether the Charges for the 'Ancillary Services' recovered by the applicant will be treated as consideration for 'construction services' and classified under SAC 9954 along with the main residential construction services or whether the same will be treated as consideration for independent service(s) under the respective head. And consequently, what would be the applicable GST rate on such Charges collected for the 'Ancillary Services? - HELD THAT:- There are more than two supplies which are independent supplies and so taxable separately, the supply of construction services of residential unit and the other supply of 'ancillary services' (as mentioned in 'Agreement for Sale' provided), viz. JDA Lease Charges, Electrification Charges, Sewage Treatment Plant Charges, Non-refundable IFMS (Interest Free Maintenance Security) and Club Membership from the residents. Ancillary Services supplied in respect of the 'other charges' are different from the service of construction of residential flats. Therefore, it is observed that the 'ancillary services' provided cannot be said to be naturally bundled and supplied in conjunction with each other in the ordinary course of business with main supply of residential flat in the subject case - services to be provided by the applicant covered under entry No. (i) or (ia) as the case may be, is specifically related to Construction of affordable residential apartments other than affordable residential apartments by a promoter in a Residential Real Estate Project (RREP). The 'Construction services' and the 'ancillary services' provided by the applicant are not naturally bundled and are not supplied in conjunction with each other in the ordinary course of business with main supply. These are the facilities/amenities provided by the applicant to its customers for the limited period because, for these facilities created the customers have not been given perpetual rights. The amount or consideration is charged separately for different services. Therefore, the other charges for the ancillary services provided is not covered under the scope of 'Composite supply of services'. Therefore, the contention of the applicant is found not acceptable - the other charges to be charged for ancillary services' mentioned as above are held taxable as per their SAC under the GST Act, at 18% in terms of the respective and appropriate entries in Notification No. 11/2017 CT (R) dated 28.6.2017 as they are covered under services, other than construction services. The consideration for providing the construction services by way of construction of residential unit and the consideration for the ancillary services (i.e. other charges collected) are considerations against separate independent services being provided by the applicant - the services for each of the service head/description are covered under Notification No. 11/2017 CT (R) dated 28.6.2017 and therefore, the Other Charges would attract GST @18%. Thus, the l/3rd deduction from total value as per Sr. No. 2 of the Notification (as claimed by the applicant) cannot be allowed as deduction from the Other Charges. Input Tax Credit (ITC) on goods & services received for supply of the ancillary services - HELD THAT:- As 'ancillary services' are subject to outward tax liability at the rate of 18% (without any abetment) therefore, as per Section 16 of the CGST and RGST Act, the applicant shall be eligible to take ITC of the GST paid on goods or services used or intended to be used in the course or furtherance of business subject to the conditions as prescribed and the provisions of sub section 5 of the Section 17 of the GST Act.
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