9911796707
TMI Blog2018 (12) TMI 536X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 business, he undertakes construction of commercial complexes which are subsequently sold or given on rent. b. The applicant states that they had undertaken one such project by the name "Bindu Galaxy" which is a co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (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 respective local body of the city or town or village or development or planning authority; 4.2 The applicant states that from the above reading of the law, the following inferences can be drawn: a. Construction of complex, building, civil structure which is intended for sale to a b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ered 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 1st 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 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e, 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. Jayesh Z Shah, Partner, M/s. Bindu Ventures appeared on behalf of the applicant before the Authority for Advance Ruling on 21.03.2018 and submitted that the Applicant is into the business of construction of commercial complexes; they started construction of "Bindu Galaxy" in February 2016 & all necessary approvals are received in November 2017; no occupancy certificate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 decide after due physical inspection of the building (including whether the owner had obtained commencement certificate as per section 300 of the Karnataka Municipal Corporations Act, 1976 and compliance regarding production of all required documents including clearance from the Fire Service Department in the case of high rise buildings at the time of submitting application) and intimate the applicant within thirty days o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 plan have been accomplished or completion has taken place. Therefore, we are of the opinion that an occupancy certificate is in the nature of completion certificate because unless the construction is complete it can not be occupied. c. The contention of the applicant, in para 8, Annexure 2 of the application that the law does not provide issuance of any completion certificate is thus ill founded and not correct. Therefore the Authori ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sue 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 occupancy certificate, whichever is earlier. 8. Entry No.5 of Schedule II of CGST Act 2017, specifies that the "Completion certificate" (Occupancy Certificate) is mandatory. Further the word "wherever required", clearly stipulates that the said certificate is essentially required to be obtained, if the competent authority issues such certificate in the name of "Completion Certificate" or "Occupancy Certificate". Explanation to the said entry clarifies that in cas ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
