TMI Blog2019 (8) TMI 472X X X X Extracts X X X X X X X X Extracts X X X X ..... mplementation of GST regime- HELD THAT:- In these case, agreements for supply has been entered with the probable customers on or after 1/7/2017. It implies that the agreement has been entered prior to completion of the construction and also before issuance of completion certificate from BBMP, the competent authority - in the event that the agreements are entered into after 1/7/2017, the provisions of section 13 of the said act shall come into force and the applicant shall become liable to pay applicable tax. Value of supply for Partially completed flats, where customers are identified after implementation of GST regime - HELD THAT:- The applicant was engaged in the activity of construction on his own account - there was no event of supply to anyone - the value to be adopted for the computation of tax amount has to be the transaction value, i.e., the value at which the supply has been agreed upon. Levy of GST - Partially completed flats, where no customers are identified- HELD THAT:- The applicant admits that no customers are identified. Here we again draw attention to the provisions of Para 5 of Schedule II of the CGST Act, 2017. If the applicant completes the activity of con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts, their understanding of law and consequently their view points, on the issue raised by them, that construction activities relating to immovable property have been treated as Works Contract under the GST Law; construction and sale of residential flats falls under the Works Contract and hence classified as supply of Service that are leviable to GST, but with an exception that the GST is not leviable where entire consideration is received after issuance of completion certificate, wherever required, by the Competent Authority or after its first occupation, whichever is earlier. In other words in such cases the sale of immovable property is out of the purview of GST. 3.4 The Applicant further submits on the basis of Sections Sections Provisions of the CGST Act 2017 (Sections 141, 142, 143) that tax was leviable under earlier law to the extent of work executed under earlier law and not under GST Law and therefore in respect of partially completed flats, tax is applicable on the value of work to be executed under GST and not on the value of work already executed under earlier law, irrespective of whether payments are received or riot. The Applicant submits that in te ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Engineer. (c) Copy of application filed before the local authority (BBMP) seeking issuance of Occupany Certificate. (d) Copy of Hon'ble Apex Court decision in Larsen and Toubro Limited another Vs State of Karnataka another [2013] 65 VST 1. 5. FINDINGS DISCUSSION 5.1 We have considered the submissions made by the Applicant in their application for advance ruling as well as the submissions made by Sri. Sanjay M Dhariwal, Chartered Accountant and authorised representative of the applicant during the personal hearing. We have also considered the issues involved, on which advance ruling is sought by the applicant and relevant facts. 5.2 The Applicant seeks advance ruling in respect of the following questions: Applicability of GST on partially completed flats i.e. a) Partially completed flats having identified customers before GST regime b) Partially completed flats, where customers are identified after implementation GST regime, and c) Partially completed flats, where no customers are identified. 5.3 The Applicant ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ustomer for construction of particular flat. We now consider each of the questions one at a time. 5.6 It is pertinent to first discuss the taxability of works contract service. In terms of para 5(b) of Schedule II to the CGST Act 2017, construction activity is not leviable to GST where the entire consideration has been received after issuance of completion certificate, where required, by the Competent Authority or its first occupation, whichever is earlier. In other words the supply would amount to sale of building/flat if the transaction occurs after the issue of completion certificate. In this situation the activity is covered under Para 5 of Schedule III of the CGST Act. Consequently such an activity is neither a supply of goods nor that of services. Therefore it would not attract GST. 5.7 Now we proceed to answer the questions on the basis of the fact that the completion certificate has not been issued by the competent authority. The first question is with regard to applicability of GST on partially completed flats where customers had been identified prior to 01.07.2017. In this situation, the agreement with the customer was executed in pre-GST r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ransaction value, which is the price actually paid or payable for the said supply of goods or services or both where the Supplier and the recipients are not related and the price is the sole consideration for the supply. It is apparent from the aforesaid provision that the value to be adopted for the computation of tax amount has to be the transaction value, i.e. the value at which the supply has been agreed upon. Therefore the applicants view in this regard is not correct and we do not accept the same. 5.11. The third question is with regard to applicability of GST on Partially completed flats, where no customers are identified. The applicant admits that no customers are identified. Here we again draw attention to the provisions of Para 5 of Schedule II of the CGST Act, 2017. If the applicant completes the activity of construction and also obtains the occupancy/completion certificate from the competent authority and then enters into a transaction with a recipient then the applicant is not liable to pay GST as such an activity/ transaction then falls under Para 5 of Schedule III. In ease the transactions are initiated prior to the issue of completion/ occupancy cer ..... X X X X Extracts X X X X X X X X Extracts X X X X
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