TMI Blog2022 (1) TMI 300X X X X Extracts X X X X X X X X Extracts X X X X ..... ls under the category of RREP. According to clause (9) of section 2 of the Kolkata Municipal Corporation Act, 1980, Kolkata means the area described in Schedule I. The instant project, being located in the district of Purba Bardhaman, is undisputedly in the towns other than Kolkata metropolitan cities. It therefore qualifies for carpet area not exceeding 90 square meter for the purpose of affordable residential apartment. Applicable rate of tax to be charged from customers for sale of flats in the said property - HELD THAT:- The applicant has also raised his doubt towards applicability of new tax rate of 1% effective from 01.04.2019 on the ground that the said property or the firm is not registered under any affordable housing scheme of the Central or State Government. In this context, it is found that the schemes which are notified as affordable residential apartment are applicable only for an ongoing project in respect of which the promoter has not exercised option to pay tax on construction of apartment at the rates specified for items (ie) or (if) against Sl No, 3 of the relevant Notification. As the instant project has commenced after 01.04.2019, it cannot be termed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... O. Katwa under Katwa Municipality, District-Purba Bardhaman, West Bengal. 1.4 The applicant has made this application under sub-section (1) of section 97 of the GST Act and the rules made there under raising following questions vide serial number 14 of the application in FORM GST ARA-01: (i) Whether the property currently under construction is a Residential Real Estate Project (RREP) as defined under Notification No. 11/2017-Central Tax (Rate) dated 28.06.2017 amended vide Notification No. 03/2019-Central tax (rate) dated 29.03.2019. (ii) Whether the said property under construction is an affordable residential apartment as defined under the aforesaid notification. (iii) Whether the GST rate to be charged from customers for sale of flats in the said property should be 1.5% (0.75% CGST and 0.75% SGST), as further reduced by 1/3 rd to factor in the value of land or it should be 7.5% (3.75% CGST and 3.75% SGST), as further reduced by 1/3 rd to factor in the value of land. 1.5 The aforesaid questions on which the advance ruling is sought for are found to be covered under clause (b) and (e) of sub-section (2) of section 97 of the GST Act. 1.6 The applicant stat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 19) having carpet area upto 60 square meter in metropolitan cities and 90 square meter in cities or towns other than metropolitan cities and the gross amount charged for which, by the builder is not more than 45 lakhs rupees.[Cities or towns in the notification shall include all areas other than metropolitan city as defined, such as villages.]. Further, Residential Real Estate Project (RREP) shall mean a REP in which the carpet area of the commercial apartments is not more than 15 per cent. of the total carpet area of all the apartments in the REP. 2.3 The applicant thus contends that GST rate to be charged from customers for sale of flats in the said property should be 1.5% (0.75% CGST and 0.75% SGST), as further reduced by 1/3 rd to factor in the value of land i.e.@ 1% (0.5% CGST and 0.5% SGST) on the following grounds: (I) construction of the said project is in a non- metropolitan area; (II) carpet area is below 90 Sqm of all the flats; (III) the carpet area of the commercial areas is also not more than 15 percent; and (IV) the consideration being charged from customers is below 45 lakh. 2.4 However, the applicant has submitted that since the said pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n as: The term affordable residential apartment shall mean, - (a) a residential apartment in a project which commences on or after 1st April, 2019, or in an ongoing project in respect of which the promoter has not exercised option in the prescribed form to pay central tax on construction of apartments at the rates as specified for item (ie) or (if) against serial number 3, as the case may be, having carpet area not exceeding 60 square meter in metropolitan cities or 90 square meter in cities or towns other than metropolitan cities and for which the gross amount charged is not more than forty five lakhs rupees. For the purpose of this clause, - Metropolitan cities are Bengaluru, Chennai, Delhi NCR (limited to Delhi, Noida, Greater Noida, Ghaziabad, Gurgaon, Faridabad), Hyderabad, Kolkata and Mumbai (whole of MMR) with their respective geographical limits prescribed by an order issued by the Central or State Government in this regard; Gross amount shall be the sum total of; - (i) Consideration charged for the services specified at item (i) and (ic) in column (3) against sl. No. 3 in the Table; (ii) Amount charged for the transfer of land or u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f Section 2 of the Real Estate (Regulation and Development) Act, 2016 or not; however, it is assumed to be so. In such a scenario, as a construction project of affordable residential apartments in an RREP commencing after 01.04.2019, where the promoter is not availing any input tax credit, the rate of tax should be 0.75% of CGST and 0.75% of SGST, the total being 1.5% on the value of supply of service and goods, in terms of the relevant Notification. In the event of the applicant being a developer-promoter also transferring the land share rights, the value of such supply of service and goods shall be equivalent to the two-thirds of the total amount charged for such supply [vide Para 2 of the notification no. 11/2017-Central Tax (Rate) dt 28.6.2017]. In other words, the rate of tax would effectively become 1% (0.5% of CGST and 0.5% of SGST) on the total value of supply of service and goods effected by the promoter in case the supply involves transferring the land share rights also. 4. Observations Findings of the Authority 4.1 We have gone through the records of the issue as well as submissions made by the authorised representative of the applicant during the course of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le residential apartment since it fulfils following criteria: (I) construction of the said project is in a non- metropolitan area; (II) carpet area is below 90 Sqm of all the flats; (III) the carpet area of the commercial areas is also not more than 15 percent; and (IV) the consideration being charged from customers is below 45 lakh 4.8 The Commissioner of State Tax, West Bengal vide order No. 04/WBGST/PRO/2019 dated 12.04.2019 has prescribed that the metropolitan city of Kolkata as referred to in item (a) to clause (xvi) of Paragraph 4 of Notification No. 1135-F.T. dated 28.06.2019 as amended vide Notification No. 552-F.T. dated 29.03.2019 shall have the same meaning as assigned to it in clause (9) of section 2 of the Kolkata Municipal Corporation Act, 1980 (West Ben. Act LIX of 1980). 4.9 According to clause (9) of section 2 of the Kolkata Municipal Corporation Act, 1980, Kolkata means the area described in Schedule I. The instant project, being located in the district of Purba Bardhaman, is undisputedly in the towns other than Kolkata metropolitan cities. It therefore qualifies for carpet area not exceeding 90 square meter for the purpose of affor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hare of land, as the case may be. 4.11 The aforesaid notification has been amended from time to time. As per item number (i) and (ic) against Sl.No.3 of the relevant Notification, the Central Tax rate of 0.75% (effective tax rate being 0.5% without ITC) is applicable for the following: Construction of affordable residential apartments by a promoter in a Residential Real Estate Project (herein after referred to as RREP) which commences on or after 1st April, 2019 or in an ongoing RREP in respect of which the promoter has not exercised option to pay central tax on construction of apartments at the rates as specified for item (ie) or (if) below, as the case may be, in the manner prescribed therein, 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. Construction of affordable residential apartments by a promoter in a Real Estate Project (herein after referred to as REP) other than RREP, which commences on or after 1 st April, 2019 or in an ongoing REP other than RREP in respect of w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r after 1 st April, 2019 or in an ongoing REP other than RREP in respect of which the promoter has not exercised option to pay central tax on construction of apartments at the rates as specified for item (ie) or (if) below, as the case may be, in the manner prescribed therein, 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. 4.14 The aforesaid entries thus prescribe that a promoter shall pay tax @7.5% w.e.f. 01.04.2019 (effective rate of 5% after allowing 1/3rd abatement for land) on intra-state supply of: Construction of residential apartments other than affordable residential apartments in a RREP which commences on or after 1st April, 2019; or Construction of residential apartments other than affordable residential apartments in an ongoing RREP in respect of which he has not exercised option to pay central tax and state tax on construction of apartments at the rates as specified for item (ie) or (if); or Construction of residential apartments other than affordable res ..... 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May 2019# before exercising the option, but such invoices shall be in accordance with the option to be exercised.; # The date has been extended to 20th of May, 2019 vide Notification No. 10/2019-Central Tax (Rate) dated 10.05.2019 [ West Bengal State Notification No. 771 F.T. dated 10.05.2019 (if) Construction of a complex, building, civil structure or a part thereof, including, (i) commercial apartments (shops, offices, godowns etc.) by a promoter in a REP other than RREP, (ii) residential apartments in an ongoing project, other than affordable residential apartments, in respect of which the promoter has exercised option to pay State tax on construction of apartments at the rates as specified for this item in the manner prescribed herein, but excluding supply by way of services specified at items (i), (ia), (ib), (ic), (id) and (ie) above 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 removal of d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8 REP other than RREP Other than affordable Yes No 5% (without ITC) Not exercised option to pay tax at 12% or 18%, as applicable 4.17 In the instant case, we have already discussed that the project which is currently under construction by the applicant falls under the category of RREP. Further, the applicant has stated that the project has commenced after 01.04.2019 and in support of his submission, the applicant has produced following documents before us: (i) Photocopy of Development Agreement made on 15.03.2020; (ii) Photocopy of a letter dated 26.08.2020 addressed to the Chairman, Katwa Municipality in the matter of commencement of construction of project under Katwa Municipality as per approved on Permit No. 65/BP dated 27.02.2020. The said letter is found to be received in the office of Katwa Municipality on 02.09.2020. 4.18 The applicant has also raised his doubt towards applicability of new tax rate of 1% effective from 01.04.2019 on the ground that the said property or the firm is not registered under any affordable ho ..... X X X X Extracts X X X X X X X X Extracts X X X X
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