TMI Blog2020 (1) TMI 789X X X X Extracts X X X X X X X X Extracts X X X X ..... d be applicable in case of only those flats which are of carpet area upto 60 sq mtrs - In case of other flats which have carpet area more than 60 sq.mtrs. or commercial units, the applicant would be required to pay GST at normal applicable rate, since the benefit of reduced rate is available only for residential units of carpet area less that 60 sq. mts. We agree with applicant s submission that entry (v) (da) of Notification 01/2018, mentioned above no-where restricts the benefit to a Developer only. The Notification entry is qua the supply of service and not qua the person and therefore once a project qualifies as an Affordable Housing Project, the benefit of concessional rate of tax would be available in respect of works contract services pertaining to Low Cost Houses, irrespective of it being supplied by the Developer or the Contractor - In the subject case, the project qualifies as an Affordable Housing Project, and the benefit of concessional rate of tax @12% GST, would thus be available to the applicant. Whether the building completion and finishing services be regarded as a separate service or would it be a composite supply of works contract service as covered under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pany Private Limited, the applicant, seeking an advance ruling in respect of the following questions. 1. Whether the Applicant, being the Contractor at Joyville, Virar, will be eligible for concessional rate of Goods and Service under Entry (v) (da) of Notification No. 11/2017-Central Tax (Rate) dated 28.06.2017 as amended by Notification No.01/2018-Central Tax (Rate) with effect from 25.01.2018 and discharge Goods and Services Tax at the rate of 12%? 2. Whether the building completion and finishing services be regarded as a separate service or would it be a composite supply of works contract service as covered under entry V(da) of Notification No. 11/2017 to avail the benefit of reduced rate of tax? 3. What would be the appropriate rate of Goods and Services Tax on works contract services provided for the construction of the units and common areas and amenities on pro-rata basis which do not qualify the criteria of low cost houses ? At the outset, we would like to make it clear that the provisions of both the CGST Act and the MGST Act are the same except for certain provisions. Therefore, unless a mention is specifically made to any dissimilar provisions, a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 28.06.2017 specifies the rate of construction services. Notification No. 11/2017 was thereafter amended by Notification No.1/ 2018 with effect from 25.01.2018 and a new entry (da) under item (v) to Chapter 99 was inserted wherein specific benefit of reduced rate of GST with respect to low cost housing was introduced. It read as; S.No. Chapter, Section or Heading Description of Service Rate Condition 1 2 3 4 5 3. Heading 9954 (Construction services) (v) Composite supply of works contract as defined in clause (119) of Section 2 of the CGST Act, 2017, supplied by way of construction, erection, commissioning, or installation of original works pertaining to, - (da) low-cost houses up to a carpet area of 60 sq. meters 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g to railways to the main contractor. 2.7 Applicant submits that services provided to Developer is of a similar nature to the service provided by Developer to customer. Construction of original works are performed by Applicant for the Developer the property in goods i.e. materials used in the construction, gets transferred to the customer directly. Hence, Applicant submits that services provided to the Developer also fulfil the criteria of a works contract service as defined in Section 2(119) of the CGST Act. 2.8 Further, the units being constructed fulfill the criteria of low cost houses under the affordable housing scheme mentioned in Entry (v) (da) of Notification 11/2017 since the specific entry does not create any embargo qua the provider of service, Applicant is also entitled to the concessional benefit of GST should charge 12% to the Developer for the ongoing project. 2.9 Applicant has submitted that building completion and finishing services form part of the same transaction and is a composite supply of works contract services eligible for the benefit under entry (v)(da) of Notification No. 11/2017: They have stated that in the subject case, services rel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tween the Applicant and Joyville Shapoorji Housing Private Limited and signed by the respective Directors, nowhere mentions anything about Scheme of Affordable Housing . 2. Construction Contract between the developer applicant has not yet been entered into till date. Applicant has merely submitted a draft agreement, which nowhere mentions anything in regards to Scheme of Affordable Housing . 3. In the subject project 95.37 % housing apartments would be of having carpet area less than 60 Sq. Mtrs in terms of FSI utilization. 4. As on 30/03/2017, quantum of work completed/executed pending is not on record. 5. Contractor has charged GST @18% on his supply of services till date. 6. In respect to question no. 1 raised by the applicant, the Contractor has nothing to do with the scheme of affordable Housing. So the transaction being from B2B, no reduced rate of tax is applicable for this transaction. As per the facts of the case, applicant is not eligible to avail the benefits of concessional rate of GST under Entry (v)(da) of Notification No.11/2017-C.T.(Rate) dt. 28.06.2017 as amended. Further, the supply of service made by applicant is not to the end user ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CGST SGST), as provided in Sr. No. 3 - item (v) - sub item (da) of Notification No. 01/2018-CT (Rate) dated 25.01.2018. 5.5 It is submitted that total FSI consumed in the said project is 63,166 Sq. Mtrs. out of which 95.37% sq mtrs. of FSI will be consumed for flats having carpet area below 60 sq mtrs. Therefore, the applicant is of the opinion that their project falls under the definition of Affordable Housing as mentioned in notification issued by Department of Economic Affairs vide F. No. 13/6/2009-INF, dated the 30th March, 2017. 5.6 As per Sr. No. 3, column 3, item (v) sub-item (da) of Notification No. 1/2018-C.T.(Rate) dated 25.01.2018, 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 Department of Economic Affairs vide F. No. 13/6/2009-INF, dated the 30th March,2017 will attract tax rate of 12 % (6% each of CGST SGST.) 5.7 This clause is applicable to applicant only if the project undertaken by them is an affordable housing project which has been given infrastructure status vide Government of India notification mentioned above. 5.8 Depart ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ilders association namely, CREDAI vide their letter no. CREDAI/MoF/2018/14 dated 19 th 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 30 th 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 project using at least 50% of FAR/FSI for dwelling units with carpet area of not more than 60 SQM). No certificate from any authority is required. 5.11 From a reading of the above clarification, notification and the clause (da) of item (v) of Notification No. 01/2018-C.T. (Rate) and facts on record, we find that that applicant s case is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ghting, fire alarm, elevators, and other Mechanical works etc. whether, executed in-house by the Contractor or through a Sub-Contractor . . 5.13.2 It is seen that the terms entered into between the Applicant and Developer is for a composite supply of works contract which includes the supply of building, completion and finishing services. Supply of these services are pertaining to original work. We agree with the applicant s contention that the building completion and finishing services cannot be treated as a separate service since the contract envisages that the said services would be provided as a part and parcel of the main activity which is, construction of dwelling units. 5.13.3 In view of the terms of the contract, we find that building completion and finishing services would not be regarded as separate services. It would be a part of the composite supply of works contract services rendered by the applicant with principal supply of building construction and in view of the discussions made above, supply of finishing services will be covered under entry (v)(da) of Notification No. 112017 and applicant will be eligible to avail the benefit of reduced rate of tax i.e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... upto 60 sq mtrs.. In case of amenities provided to purchasers of flats which have carpet area more than 60 sq.mtrs., the applicant would be required to pay GST at normal applicable rate i.e. @18% GST. 5.14.4 Subject project consists of both, dwelling units less than and also greater than 60 sq mtrs. Benefit of concessional rate is only available to Affordable Housing as already discussed above. The definition of Affordable Housing is confined to dwelling units with carpet area of not more than 60 square meters. Thus, in our opinion, concessional rate available to applicant is only in respect of low cost houses along with amenities constructed by the applicant. We find that the common amenities and areas are a part of Affordable Housing Project and therefore the applicant will be entitled to benefit of concessional rate for the same, only when they are a part of low cost houses i.e. units less than 60 sq.mtrs. The applicant will thus have to discharge GST @ 12% ( after deducting value of land ) on works contract services provided for the construction of the units and common areas and amenities, which do qualify the criteria of low cost houses. We also hold that, since conc ..... X X X X Extracts X X X X X X X X Extracts X X X X
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