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TMI Blog2020 (3) TMI 240X X X X Extracts X X X X X X X X Extracts X X X X ..... rst occupation of the project, where the project has been completed and promoter has applied for issuance of completion certificate, which is pending before local authority; is outside the purview of Goods and Services Tax? 2. Facts of the case :- (I) M/s. Bilaspur Infrastructure Private Limited having its registered office of BF-1. First Floor, Rajiv Plaza, Opposite Axis Bank, Bilaspur, Chhattisgarh, Pin-495001 (hereinafter referred to as the company) is a company registered under GST vide Registration NO. 22AACCB4045MIZV. (II) The company is engaged in development of real estate projects. The company is having a project at Juno, Bilaspur named as City Centre comprising of 77 individual saleable units. The said project is residential-cum-commercial project. (III) Out of total of 77 units, the company has booked 33 units in advance and received consideration in advance in respect of those 33 units when the project was under construction. The company has duly collected and paid applicable service tax or GST on those 33 units. (IV) At present, the project has been completed fully in all respect and the company has also applied for completion certificate before the competen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the occupier/ allottee/transferee. (VII) In applicant's case, the first occupation was done in the first week of March, 2019. Further that they have already submitted some sample photographs proving the completion of building before the Advance Ruling Authority in the hearing conducted on 3rd July, 2019. (VIII) Thus in applicant's case, whether the first occupation can be said to have taken place in the applicant's building as on date and hence Whether the entire consideration against bookings if received after the said first occupation will be outside the purview of GST, is the main question to be decided by the authority, as levy of GST will depend on this interpretation of first occupation. The same question has been raised as Question No. 2 of applicant's advance ruling application, as under: "2 Whether the booking of units and consequently receipt of advance against that booking after first occupation of the project, where applied issuance of completion certificate and pending before local authority is outside the purview of Goods and Services Tax?" (IX) If answer to the aforesaid question raised in Para 8 is negative, when the first occupa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ll give to the Commissioner all necessary facilities for the inspection of such work. (2) Within seven days after the receipt of the said notice the Commissioner shall depute an officer to commence the inspection of such work. (3) Within seven days from the date of Commencement of such inspection the Commissioner shall - (a) give permission for the occupation of the building erected or for the of the part of the building re-erected : or (b) refuse such permission in case such erection, Construction or re-construction is in contravention of any provision of this Act or any rule or bye-law made thereunder or any other enactment for the time being in force. (4) No person Shall occupy or permit to be occupied any such building or use or permit to be used any part affected by the re-erection of such building - (a) until the permission referred to in clause (a) of sub-section (3) has been granted in the manner prescribed by bye-laws; (b) unless the Commissioner has failed for fifteen days after the receipt of notice of completion to intimate his refusal to grant the said permission." (XI) Thus both the aforesaid Act, clearly provid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er scope of supply is provided u/s 7 of the said Act, Section 7(2) is relevant and hence reproduced below : "Section 7. Scope of supply - (2) Notwithstanding anything contained in sub-section activities or transactions specified in Schedule III shall be treated neither as a supply of goods nor a supply of services." 5.3 Thus from above it follows that the activities or transactions specified in Schedule Ill shall not be regarded as supply of goods or supply of services. Relevant Entry of the said Schedule is reproduced below for ready reference : "SCHEDULE III [See Section 7] ACTIVITIES OR TRANSACTIONS WHICH SHALL BE TREATED NEITHER AS A SUPPLY OF GOODS NOR A SUPPLY OF SERVICES 5. Sale of land and, subject to clause (b) of paragraph 5 of Schedule II, sale of building." 5.4 Thus above entry clearly provides that sale of building subject to clause (b) of Paragraph 5 of Schedule II shall be regarded as neither supply of goods nor supply of services and hence tax shall not be payable. 5.5 Schedule II of the Central Goods and Services Tax Act. 2017 at Entry 5 stipulates as under : - "5. Supply of services The following shall be treated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... issuance of completion certificate by the competent authority, where required" and "first occupation". Further the competent authority stands defined in clause (29) of Section 2 of the Central Goods and Services Tax Act, 2017 and the same reads as under :- (29) "competent authority" means such authority as may be notified by the Government; Clause (80) of Section 2 of the Central Goods and Services Tax Act provides for the meaning of the words "notified" and the same reads as under :- (80) "notification" means a notification published in the Official Gazette and the expressions "notify" and "notified" shall be construed accordingly; Thus primarily the crucial aspect that decides the tax liability is the date of completion certificate or first occupation, whichever is earlier, issued by a competent authority. 8.2 The applicant, engaged in development of real estate projects has filed the instant application in relation to the construction of a project by the name of City Centre at Juna, Bilaspur. 8.3 Section 191 of "The Chhattisgarh Municipalities Act, 1961" provides as under : "(1) Every person who - (i) erects or re-erects any building; or (ii) mak ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (4) No person shall occupy or permit to be occupied any such building or use or permit to be used any part affected by the re-erection of such building- (a) until the permission referred to in clause (a) of sub-section (3) has been granted in the manner prescribed by bye-laws; (b) unless the Commissioner has failed for fifteen days after the receipt of notice of completion to intimate his refusal to grant the said permission." 8.5 In the aforesaid context, taking into consideration the aforesaid contentions made by the applicant that the Completion certificate is pending authorities. a reference in this regard was made to the Commissioner, Municipal Corporation, Bilaspur vide Letter No. 8313, dated 25-7-2019 to ascertain the status of building completion certificate as applied by the applicant. In response to the above under their dated 21-08-2019, the office of the O/o Municipal Corporation, Bilaspur, has informed as under (The scanned copy of the same is pasted herewith) * * * * [Not ligible] 8.6 Thus it gets amply evident from point ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... certificate is a legal requirement and is issued only on compliance, certifying therein that the building is fit to be occupied thereby 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 and that the same is ready for safe occupancy. 9. In View of the deliberations and discussions as above, we pass the following order : ORDER 10. Thus in view of the facts and circumstances of the issue in hand, the ruling so sought by the applicant is answered as under (i) The date of issuance of completion certificate by the competent jurisdictional authority in the instant case 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, attracting the levy of GST. The first occupation as claimed by the applicant in the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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