TMI Blog2018 (9) TMI 236X X X X Extracts X X X X X X X X Extracts X X X X ..... icant would be required to pay GST at normal applicable rate. Ruling:- The applicant’s case is covered under the tax rate of 12%, under Heading 9954 (Construction Services) - In case of other flats which have carpet area more than 60 sq.mtrs. the applicant would be required to pay GST at normal applicable rate. - GST-ARA-02/2018-19/B-58 - - - Dated:- 3-7-2018 - Shri B.V. Borhade, And Shri Pankaj Kumar, Member PROCEEDINGS (under section 98 of the Central Goods and Services Tax Act, 2017 and the Maharashtra Goods and Services Tax Act, 2017) present application has been filed under section 97 of the Central Goods and Services Tax Act, 2017 and the Maharashtra Goods and Services Tax Act, 2017 [hereinafter referred to as the CGST Act and MGST Act ] by PRAJAPATI DEVELOPERS, the applicant, seeking an advance ruling in respect of the following question : Whether the construction services provided under the project Prajapati Magnum qualifies for the reduced CGST Rate of 6% as provided in Sl. No 3 - item (v)- sub item (da) vide Notification 01/2018- CT (Rate) dated 25.01.2018? At the outset, we would like to make it clear that the provisions of both the CGST ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... missions on issues on which the advance ruling is sought) 1. Initially, Notification No. 11/2017-Centra Tax (Rate) dated 28.06.2017 has been issued under GST law to provide GST rate for supply of services made by the registered person. Sl. No 3 of the said notification provides to levy GST at the rate of 18% (CGST 9% and SGST 9% for intra state supplies) on the Construction Services subject to certain exceptions, 2. Explanation 2 of the said rate notification also provides that the value of supply of service and goods portion in such construction services shall be equivalent to the total amount charged for such supply less the value of land or undivided share of land, as the case may be. The value of land/undivided share of land in such supply shall be deemed to be one third of the total amount charged for Such supply 3. The rate Notification 11/2017- CT (Rate) has been amended from time to time to change the rate of GST towards supply of various goods and or services or both. Recently on 25.01.2018, it has been amended again vide Notification 01/2018-CT (Rate) to reduce the rate of GST on specified Construction Services from the earlier 18% to 12% (effectively 8% a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the above referred notification dated 30-03.2017 that Carpet Area Shall have the same meaning as assigned to it in clause (k) of section 2 of the Real Estate (Regulation and Development) Act, 2016. 11. As per Sec 2(k) of RERA, carpet area means the net usable floor area of an apartment, excluding the area covered by the external walls, areas under services shafts, exclusive balcony or verandah area and exclusive open terrace area, but includes the area covered by the internal partition walls of the apartment. 12. The expression exclusive balcony or verandah area means the area of the balcony or verandah, as the case may be, which is appurtenant to the net usable floor area of an apartment, meant for the exclusive use of the allottee and exclusive open terrace area means the area of open terrace which is appurtenant to the net usable floor area of an apartment , meant for the exclusive use of the allottee. 13. The applicant has obtained the Architect s Certificate in this regard to examine the carper area usage in the project under consideration. As per the said Architect s Certificate, it is evident that the project Prajapati Magnum has total consumed/ Permissi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Government of India. 19. Accordingly, Service by way of Construction of houses with carpet area up to 60 Square Meters per house in the said housing project would attract GST at 12% [CGST- 6% and SGST-6%] w.e.f. 25.01.2018. The effective tax rate would be 8% after reducing 1/3rd towards value of land. 03. CONTENTION - AS PER THE CONCERNED OFFICER Vide letter dated 14.05.2018, the concerned officer has submitted a report as under: Point No. 14 states that: Whether the construction services provided under the project Prajapati Magnum qualifies for the reduced CGST Rate of 60% as provided in Sr.No.3-item (V)-sub item (da) vide notification 01/2018CT (Rate) dated 25.01.2018? 1) Notification No.01/2018-CT(Rate) dated 25.012018 extend the concessional rate of 8% GST (after deducting the value of land ) to construction of low cost houses upto a carpet area of 60 square metre per house in an affordable housing project which has been given infrastructure status vide Notification No. 13/06/2009 dt. 30.03.2009. The said notification of department of Economic Affairs provides infrastructure status to Affordable Housing. Affordable Housing has been defined in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rs? b) How many flats are there in each category i.e. a) 41 Lacs, b) 87 Lacs, c) In between 41 Lacs to 87 Lacs? iv) Issue of Anti Profiteering:- Since there is no GST on second sale of flats. It is our apprehension that significant number of flats would be owned by promoter/ investor/partners may be sold to prospective buyers, thereby coming out of ambit of GST as there is no GST on second sale of flat. Consequently; it will be further Out of purview of Anti profiteering Authority also as this transaction does not involve in GST. This may become potential revenue loss for Government of India, Moreover, such a step will undermine the large objective of social welfare which is behind the recommendations and amendment in the Notification 1/ 2018-Central Tax (Rate) dt.25.01.2018. 04. HEARING The Preliminary Hearing was held on date 15.05.2018. Shri Vasant K Bhatt, Chartered Accountant, duly authorized appeared along with Shri Rakesh Prajapati, Director and Shri Nagender Hegde, Chartered Accountant. They requested for admission of the application as per contentions made therein. They were orally requested to give details of all flats in their projects and names o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ply of works contract as defined in clause (119) of section 2 of the Central Goods and Services Tax Act, 2017, supplied by way of construction, erection, commissioning, installation, completion, fitting out, repair, maintenance, renovation, or alteration of,- (a) ; (b) a civil structure or any other original works pertaining to a scheme under Jawaharlal Nehru National Urban Renewal Mission or Rajiv Awaas Yojana; (c) a civil structure or any other original works pertaining to the In-situ rehabilitation of existing slum dwellers using land as a resource through private participation under the Housing for All (Urban) Mission/Pradhan Mantri Awas Yojana, only for existing slum dwellers; (d) a civil structure or any other original works pertaining to the Beneficiary led individual house construction / enhancement under the Housing for All (Urban) Mission/Pradhan Mantri Awas Yojana; (e) ; or (f) 6 -] (v) Composite supply of works contract as defined in clause (119) of section 2 of the Central Goods and Services Tax Act, 2017, s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lowing sub-item shall be inserted, namely: - (da) low-cost houses up to a carpet area of 60 square metres per house 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 the 30th March,2017; According to sub item (da) of item iv, a civil structure or any other original works pertaining to the Economically Weaker Section (EWS) houses constructed under the Affordable Housing in partnership by State or Union territory or local authority or urban development authority under the Housing for All (Urban) Mission/ Pradhan Mnntri Awas Yojana (Urban) would attract a tax rate of 12%. This clause will not be applicable to the applicant because the same envisages partnership by State or Union territory or local authority or urban development authority. According to sub item (db) in item iv a civil structure or any other original works pertaining to the houses constructed or acquired under the Credit Linked Subsidy Scheme for Economically Weaker Section (EWS)/Lower Income Group (LIG)/ Middle Income Group-1 (MIG-1)/ Middle ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Urban Public Transport (except rolling stock in case of urban road transport) Energy Electricity Generation Electricity Transmission Electricity Distribution Oil pipelines Oil/ Gas/ Liquefied Natural Gas (LNG) storage facility Gas pipelines Water and Sanitation Solid Waste Management Water supply pipelines Water treatment plants Sewage collection, treatment and disposal system Irrigation (dams, channels, embankments, etc.) Storm Water Drainage System Slurry Pipelines Communication Telecommunication (fixed network) Telecommunication towers Telecommunication Telecom Services Social and Commercial Infrastructure Education Institutions (capital stock) Sports Infrastructure Hospitals (capital stock) Three-star or higher category classified hotels located outside cities with population of more than 1 million Common inf ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CST regime and reduces the ex-GST price of flats. The CST Council has also mentioned that the builders/ developers are expected to follow the principles laid down under Section 171 of the CST Act (Anti-Profiteering Rules) scrupulously. In response to a request for clarification to enable availing 8% GST on Affordable Housing made by the builders association namely , CREDAI vide their letter no. CREDAI/MOF/2018/14 dated 19th March, 2018, the Government vide F.No. 354/52/2018-TRU, Government of India Ministry of Finance Department of Revenue (TRU) dated 7th May, 2018 has clarified that Low cost houses up to a carpet area of 60 .square metres per house in an affordable housing project, which has been given infrastructure status under notification F. No. 13/6/2009-INF, dated the 30th March, 2017 of MOF (DEA), attract concessional GST of 8% (the value of the undivided share of land is included in the price of the house). Whether the housing project qualifies as affordable housing project or not, shall be determined by the builder/ developer as per the definition of affordable housing given in the above mentioned notification (i.e., affordable housing has been defined as a housing ..... X X X X Extracts X X X X X X X X Extracts X X X X
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