TMI Blog2018 (12) TMI 536X X X X Extracts X X X X X X X X Extracts X X X X ..... etion certificate by the competent authority, where required” and “first occupation”. The crucial aspect which decides the tax liability is the date of completion certificate or first occupation, whichever is earlier, issued by a competent authority. It is thus clear that the occupancy certificate. which is a legal requirement, would act like a completion certificate and hence the date of such occupancy certificate would be deemed to be the date of completion. Therefore the chartered engineer’s certificate can’t be a substitute for Completion Certificate / Occupation Certificate, required by the CGST Act 2017. Hence the Chartered Engineer’s certificate has no relevance to the question - the date of Occupancy Certificate issued by the Bruhat Bengaluru Mahanagara Palike, competent authority in the instant ease, shall be considered as the date of completion of the property and if the entire amount Of consideration has been received after such date of completion, then that would not be treated as a taxable service, If any part of the consideration is received before such date, then the transaction would be treated as a supply of service as per clause 5 of schedule II to the GST A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s a Partnership firm and is registered under the Goods and Services Act, 2017. The applicant has sought advance ruling in respect of the following question: (a) Which date should be considered as the date of completion of the property - the date of receipt of necessary approvals from BBMP / Karnataka Pollution Control Board / Karnataka Electricity Board or the date of receipt of completion certificate from a registered Chartered Engineer? (b) Whether the applicant is liable to pay GST on any amount received as consideration towards sale of completed offices, after the date of completion, where part of the consideration was received prior to the date of completion as determined in question (a) above? (c) Whether the applicant is liable to pay GST on the consideration received as consideration towards the sale of completed offices, where the entire consideration is received after the date of completion of construction as determined in question number (a) above? 3. The applicant furnishes some facts relevant to the stated activity: a. The applicant states that he is engaged in the business of real estate in the form of a partnership firm. As a part of his busin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Central Goods and Services Tax Act, 2017/Karnataka Goods and Services Tax Act, 2017 in entry 5 states as under: 5. Supply of services The following shall be treated as supply of services, namely:- (a) renting of immovable property; (b) construction of a complex, building, civil structure or a part thereof, including a complex or building 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. Explanation .-For the purposes of this clause- (1) the expression competent authority means the Government or any authority authorised to issue completion certificate under any law for the time being in force and in case of non-requirement of such certificate from such authority, from any of the following, namely:- (i) an architect registered with the Council of Architecture constituted under the Architects Act, 1972; (20 of 1972.) or (ii) a chartered engineer registered with the Institution of Engineers (India); or (iii) a licensed surveyor of the resp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er/ Supervisor and shall apply for permission to occupy the building . The certificate in Schedule VIII as mentioned above is a certificate from registered architect / engineer / supervisor stating that the building is complete in all respects. The applicant encloses a copy of the certificate obtained from Chartered Engineer certifying that the building is completed in all respects including all essential amenities such as BESCOM Power Connection, BWSSB Water Supply, Sanitation Connection by 1 st of December 2017 and is ready for occupation . Thus, the Bangalore Mahanagara Palike Building Byelaws, 2003 provides a clear distinction between a completion certificate and an occupancy certificate and that it cannot be deemed to be a completion certificate as contemplated under the GST Law. 5.1 The applicant states that the GST Law also defines the word competent authority: as an explanation to clause 5 in Schedule II and the same is as under: Explanation .-For the purposes of this clause- (1) the expression competent authority means the Government or any authority authorised to issue completion certificate under any law for the time being in force and in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cupied a unit in the complex, then the construction activity of the complex is deemed to have been completed and that the complex is ready for occupation. Consequently, any amount received towards sale of units of the complex after its first occupation, would be deemed to have been received for the sale of immovable property which is not liable for GST. Therefore, it can be concluded that first occupation as contemplated in the GST law is with reference to occupation of any unit of a building/ complex only. 5.4 The applicant claims that occupation in Bindu Galaxy had started as early as September 2017 and furnishes copies of affidavits from respective owners, stating the month of occupation, along with their respective sale deeds for purchase of respective property. They also furnishes a copy of Electricity Bill of the complex dated 01.12.2017, for the period 04.08.2017 to 30.11.2017, wherein the reading of the sub-meters installed for each is worked out, in support of their claim towards evidence of occupation of the building during the aforesaid period. The applicant requests to accede to their submissions. PERSONAL HEARING:/PROCEEDINGS HELD ON 03.04.2018. 6. Sri. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e expressions notify and notified shall be construed accordingly; In the instant case, therefore, the crucial aspect which decides the tax liability is the date of completion certificate or first occupation , whichever is earlier, issued by a competent authority. 7.5 The applicant filed the instant application in relation to the construction of Bindu Galaxy , a commercial complex, within the jurisdiction of the Bruhat Bengaturu Mahanagara Palike which is the corporation of Bengaluru City, Karnataka. The extract of the Karnataka State local Law (Bengaluru Mahanagara Palike Building Bye-Laws 2003) is as under: 5.6 Occupancy certificate 5.6.1 (a) Every person shall before the expiry of five years from the date of issue of licence shall complete the construction or reconstruction of a building for which the licence was obtained and within one month after the completion of the erection of a building shall send intimation to the Commissioner in writing of such completion accompanied by a certificate in Schedule VIII certified by a Registered Architect / Engineer / Supervisor and shall apply for permission to occupy the building. The Authority shall de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Bye-law 5.6 mandates an inspection and it also brings out the character of the certificate that is finally issued. Clause (b) provides that during inspection of the building, the authority will examine in detail the compliance of all the building bye-laws and the sanctioned plan. The sanctioned plan and building bye-laws are guidelines which take into account the habitat fitness of the buildings. In other words these building bye-laws, once complied with in totality ensure that the building is complete in all respects and is ready to be occupied. This brings us to a point where we see that the terms Occupancy Certificate and Completion Certificate become congruous to each other and the terms Occupancy and Completion only remain a matter of pedagogical difference. An Occupancy Certificate, thus issued, means that the building has complied with all the required bye-laws and is complete in all respects in so far as its construction is concerned and can be occupied. So a certificate, by whatever name called, certifying that the building fit to be occupied is essentially declaring that the building construction has reached a stage where all bye laws and features of sanctioned pl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... petent authority in the instant ease, shall be considered as the date of completion of the property and if the entire amount Of consideration has been received after such date of completion, then that would not be treated as a taxable service, If any part of the consideration is received before such date, then the transaction would be treated as a supply of service as per clause 5 of schedule II to the GST Act and attracts the levy of GST. 7.9 The next issue before us to decide is what constitutes first occupation . The word first occupation is not defined anywhere in the Act. The Bengaluru Mahanagara Palike Building Bye-Laws 2003, under clause 5.7, stipulates that nobody can occupy the building or portion of the building until the Occupancy Certificate is obtained from the competent authority. Therefore the question / situation of occupying the building / part of the building before obtaining the occupancy certificate does not arise and hence the date of first occupation can only be after the date of occupancy certificate. Thus the relevant date, in the instant case, would be the date of occupancy certificate or the first occupancy, which can only be after the date of occupa ..... X X X X Extracts X X X X X X X X Extracts X X X X
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