9911796707
TMI Blog2019 (3) TMI 924X X X X Extracts X X X X X X X X Extracts X X X X ..... ennai-600034 (hereinafter called the Applicant) is engaged in business of Construction activities. They are Registered under GST with GSTIN 33AAKFK9951G1Z1. They have preferred an Application seeking Advance Ruling on the following question: "What is the value of supply of services provided from July 1, 2017 in terms of the provisions of CGST ACT 2017 read with Notification No. 11/2017-Central Tax (Rate) dated 28.06.2017(as amended from time to time)"? The Applicant has submitted the copy of Application in Form GST ARA - 01 and also submitted the copy of Challan evidencing payment of Application Fees of Rs. 5,000/- each under Sub-rule (1) of Rule 104 of CGST Rules 2017 and SGST Rules 2017. 2.1 The Applicant has stated that they have a residential project by the name of 'One Crest' in Chennai comprising of 4 Basement + Stilt + 16 floors having 43 units ('Project'). They enter into a separate Agreement with the Customers for the sale of undivided share in the land (Land Agreement) and construction of a super- structure (Construction Agreement) on the said land. Both the agreements are registered for the purpose of Stamp duty. 2.2 The details of transaction as submitted by the Ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for sale of land and for construction and the payments are accounted separately. However, both contracts are tied together and cannot exist without the other. They are providing construction services and as per the Notification explanation, are eligible for 1/3rd land value deduction. They submitted copy of a Construction Agreement and Agreement for Sale for a buyer of an Apartment, Invoices raised for these agreements, ledger accounts for these transactions. 4.1 The submissions of the Applicant were carefully examined. From the submissions, it is seen that the Applicant is undertaking the construction of a residential project by the name of 'One Crest', with 43 units with other facilities such as Club House, Swimming Pool etc., in Chennai. They have purchased the land and are developing the project. They have entered into two agreements with the customers simultaneously- One for sale of undivided share in the land and the other for the construction of the super-structure. The 'Agreement of Sale' is for purchase of a proportionate undivided share of land identified in the attached schedule for a consideration with the understanding that Sale deed will be executed subsequently. Cl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n land owned by them and when a customer purchases the unit, they also purchase a portion of the land. Supply under GST is defined under Section 7 of CGST Act, 2017: 7. (1) for the purposes of this Act, the expression "supply" includes- (a) all forms of supply of goods or services or both such as sale, transfer, barter, exchange, licence, rental, lease or disposal made or agreed to be made for a consideration by a person in the course or furtherance of business; (b) import of services for a consideration whether or not in the course or furtherance of business; (c) the activities specified in Schedule l, made or agreed to be made without a consideration; and (d) the activities to be treated as supply of goods or supply of services as referred to in Schedule II. (2) Notwithstanding anything contained in sub-section (1),- (a) activities or transactions specified in Schedule III; or (b) such activities or transactions undertaken by the Central Government, a State Government or any local authority in which they are engaged as public authorities, as may be notified by the Government on the recommendations of the Council, shall be treated neither as a supply of goods nor a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Construction agreement is equivalent to cancellation of the Agreement of sale of undivided share of land. Hence, it is seen that though there are two Agreements with separate consideration for this transaction, it is a single supply which is squarely covered under Sl.5 (b) of Schedule II making this transaction a supply of service as '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' where consideration is being paid while construction. We find this position is not contested by the Applicant. 5.2 The value of Supply is determined under provisions of Section 15 of the GST Act and is as follows: 15 (1) The Value of a supply of goods or services or both shall be the transaction value, which is the price actually paid or payable for the said supply of goods or services or both where the supplier and the recipient of the supply are not related and price is the sole consideration of the supply .......................................................... (5) Notwithstanding anything contained in sub-section (1) or sub-section (4), the value of such supplies as may be notified by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Government as per Section 15(5) of the CGST Act as the total amount charged for such supply less the value of land or undivided share of land, as the case may be, and the value of land or undivided share of land, as the case may be, in such supply shall be deemed to be one third of the total amount charged for such supply where the "total amount" means the sum total of consideration charged for construction service and amount charged for transfer of undivided share of land, as the case may be.
6. In view of the foregoing, we rule as under:
RULING
The value of supply of services provided by the Applicant in the project 'One Crest' in Chennai, wherein the Applicant has entered into two separate agreements, viz., one for 'Sale of undivided share of land' and the other for 'Construction' with the customers, the measure of levy of GST on the supply of service of 'Construction' shall be 2/3rd of the total value charged for construction service and amount charged for transfer of undivided share of land, as per entry No. 3(i) of Notification No. 11/2017-C.T.(Rate) dated 28.06.2017 as amended and No.II(2)/CTR/532(d-14)/2017vide G.O. (Ms) No. 72 dated 29.06.2017 as amended. X X X X Extracts X X X X X X X X Extracts X X X X
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