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TMI Blog2021 (8) TMI 536X X X X Extracts X X X X X X X X Extracts X X X X ..... of the case: 3.1. The applicant was established in the year 1999 with the charter for policy advocacy in favour of housing and real estate. They are the prime knowledge sharing forum for latest industry data, technological advancements and industry benchmarks. They have emerged as the preferred platform with regard to national discourse on housing and habitat through strong networking with Government, policy makers, investors, financial institutions and real estate developers. 3.2. In the light of the evolving provisions of goods and services tax the members of the applicant engaged in the activity of construction and sale of apartments have queries regarding the date of completion of an apartment within the State of Kerala for the purpose of determining whether the transaction of sale of apartment would be treated as supply attracting GST liability under the CGST Act. 4. Accordingly, the applicant requested advance ruling on the following; 1. Whether prior to 08.11.2019 the activity of sale of apartment undertaken by the applicant would be treated a supply to determine GST liability, if the agreement for sale of the apartment is entered into by the applicant and entire consi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y Building Rules, 2019? 6. Post 08.11.2019, what would be the date of completion of an apartment constructed within the State of Kerala for the purpose of determining whether the transaction of sale of apartment would be treated as supply attracting GST liability? 5. Contentions of the Applicant: 5.1. Scope of supply for levy of GST is covered under Section 7 of the CGST Act which reads as follows; "7. Scope of supply- (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; and (c) the activities specified in Schedule I, made or agreed to be made without a consideration; (1A) where certain activities or transactions constitute a supply in accordance with the provisions of sub-section (1), they shall be treated either as supply of goods or supply of services as referred to in Schedule II. (2) Notwithstanding anything contained in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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; 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; (2) the expression "construction" includes additions, alterations, replacements or remodelling of any existing civil structure." 5.5. It may be understood from the explanation to clause (b) of paragraph 5 of Schedule II of the CGST Act that "competent authority" means the Government or any authority authorised to issue completion certificate under any law for the t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncy certificate. - (1) Every owner shall, on completion of the development or redevelopment of land or construction or reconstruction or addition or alteration of building, as per the permit issued to him, submit a completion certificate certified and signed by him, to the Secretary in the form in Appendix E: Provided that in the case of buildings, other than single residential units up to two floors with total floor area not exceeding 150 sq. meters, the completion certificate shall be certified and signed by the owner and registered architect or engineer or supervisor also as in Appendix F. (2) The Secretary shall, on receipt of the completion certificate and on being satisfied that the development or redevelopment of land has been effected in conformity with the permit given, issue a development certificate in the form in Appendix G, not later than 15 days from the date of receipt of the completion certificate: ............................................................................. (3) The Secretary shall, on receipt of the completion certificate and on being satisfied that the construction or reconstruction or addition or alteration has been carried out in confo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , the owner may proceed as if such occupancy certificate has been duly issued to him. On the expiry of fifteen clear days from the date of valid application for occupancy certificate, the applicant shall submit a letter stating that he is liable to get occupancy certificate and now it is deemed to have issued by the authority. All Secretaries of Local Self Government Institutions shall acknowledge the receipt of the letter stated in the above paragraph with stamp and date on the same day on the duplicate copy of the letter. This shall be a deemed occupancy certificate. 5.12. From the above extracted provisions, it may be understood that in the case of residential buildings having more than two floors and total built-up area exceeding 150 Sq.mtrs, the completion certificate is a certificate issued and signed by the owner and registered institution or Architect or Building Designer or Engineer or Supervisor in the stipulated form in Appendix F of the KMBR, 1999 for the period prior to 08.11.2019 and in form in Appendix E3 of the KMBR, 2019 for the period after 08.11.2019. The format of completion certificate in Appendix F and Appendix E3 is enclosed as Exhibits 5 and 6. 5.13. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lding Designer / Engineer / Supervisor as the case may be in form Appendix F to KMBR, 1999 or in form Appendix E3 to the KMBR, 2019 as applicable, upon completion of the project is sufficient to satisfy the requirement of obtaining a completion certificate under sub- clause (b) of paragraph 5 of Schedule II to the CGST Act. Therefore, the date of completion of construction for the purpose of determining whether the activity is to be treated as supply of service under sub-clause (b) of paragraph 5 of Schedule II of the CGST Act is the date of issue of completion certificate. 5.18. Therefore, if the consideration towards sale of apartment is received after obtaining completion certificate from a Registered Architect / Building Designer / Engineer / Supervisor as the case may be in form Appendix F to KMBR, 1999 or in form Appendix E3 to the KMBR, 2019 as applicable, the said transaction would not be treated as a supply of service and would therefore, not attract GST liability under the CGST Act. 6. Comments of the Jurisdictional Officer: The application was forwarded to the jurisdictional officer as per provisions of Section 98(1) of the CGST Act. The jurisdictional officer has not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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; 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; (2) the expression "construction" includes additions, alterations, replacements or remodelling of any existing civil structure." On a plain reading of the above provision, it is evident that the completion certificate mentioned therein is the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... being satisfied that the construction or reconstruction or addition or alteration has been carried out in conformity with the permit given, issue occupancy certificate in the form in Appendix H not later than fifteen days from the date of receipt of the completion certificate: Provided that if no such occupancy certificate is issued within the said fifteen days, the owner may proceed as if such occupancy certificate has been duly issued to him. (4) The owner of a building may if he intends to occupy the building before its completion, apply to the Secretary for that purpose and the Secretary shall, on being satisfied that such occupancy will not endanger life issue occupancy certificate in respect of the completed part." "Kerala Municipality Building Rules, 2019: - 20. Completion certificate, development certificate and occupancy certificate. - (1) Every owner shall, on completion of development or redevelopment of land or construction or reconstruction or addition or alteration of building, as per the permit issued to him, submit a completion certificate certified and signed by him to the Secretary in the form in Appendix El together with sufficient copies of plans and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... no such occupancy certificate is issued within the said fifteen days, the owner may proceed as if such occupancy certificate has been duly issued to him. On the expiry of fifteen clear days from the date of valid application for occupancy certificate, the applicant shall submit a letter stating that he is liable to get occupancy certificate and now it is deemed to have issued by the authority. All Secretaries of Local Self Government Institutions shall acknowledge the receipt of the letter stated in the above paragraph with stamp and date on the same day on the duplicate copy of the letter. This shall be a deemed occupancy certificate. (4) The owner of a building may, if he intends to occupy the building before its completion, apply to the Secretary for that purpose together with partial completion certificate by the owner and registered Institution / Architect/ Building designer/ Engineer/ Supervisor in Appendix E2 and E4 respectively, and sufficient copies of plans and drawings of partially completed building. (5) Secretary shall ensure the compliance of the provisions of these rules in respect of the partially completed building and on being satisfied that such occupancy ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the KMBR, 1999 and KMBR, 2019. On the basis of the discussion above, we conclude that the completion certificate under any law for the time being in force mentioned in clause (b) of Paragraph 5 of Schedule II of the CGST Act, in so far as the State of Kerala is concerned is the certificate in form in Appendix F prescribed under proviso to sub-rule (1) of Rule 22 of the KMBR, 1999 or the certificate in form in Appendix E3 prescribed under proviso to sub-rule (1) of Rule 20 of the KMBR, 2019. Accordingly. the date of issue of completion certificate for the purpose of clause (b) of Paragraph 5 of Schedule II of the CGST Act shall be the date of issue of the completion certificate submitted to the Secretary in form in Appendix F of the KMBR, 1999 or in form in Appendix E3 of the KMBR, 2019. In view of the observations stated above, the following rulings are issued; RULING 1. Whether prior to 08.11.2019 the activity of sale of apartment undertaken by the applicant would be treated as supply to determine GST liability, if the agreement for sale of the apartment is entered into by the applicant and entire consideration towards said sale is received from the customer after submission o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rds said sale is received from the customer after submission of completion certificate in Form Appendix E3 issued by the Registered Architect / Engineer / Supervisor to the Secretary for obtaining occupancy certificate in Form Appendix F2 as per Rule 20 of the Kerala Municipality Building Rules, 2019 but before expiry of 15 days from the date of such submission? If the entire consideration in respect of the transaction is received after submission of the completion certificate in Form Appendix E3 to the Secretary as per Rule 20 of the Kerala Municipality Building Rules, 2019 the transaction shall not be treated as supply under GST in view of provisions contained in Paragraph 5 of Schedule III of the CGST Act, 2017. 5. Whether post 08.11.2019 the activity of sale of apartment undertaken by the applicant would be treated a supply to determine GST liability, if the agreement for sale of the apartment is entered into by the applicant and entire consideration towards said sale is received from the customer after expiry of 15 days from the date of submission of completion certificate in Form Appendix E3 issued by the Registered Architect / Engineer / Supervisor to the Secretary for obt ..... X X X X Extracts X X X X X X X X Extracts X X X X
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