TMI Blog2022 (10) TMI 863X X X X Extracts X X X X X X X X Extracts X X X X ..... visions of law, the facts as stated in the application and the terms and conditions in the draft agreement produced as Annexure 1 it is seen that the services of construction of apartments provided by the applicant in the residential real estate project squarely fall within the description of services specified in Item (i) and (ia) of SI. No. 3 of the Notification No. 11/2017 Central Tax (Rate) dated 28.06.2017 as amended by Notification No. 03/2019 Central Tax (Rate) dated 29.03.2019 and accordingly the tax rates as prescribed in the said entries shall apply to the said services supplied by the applicant. Accordingly, the applicant is liable to pay GST at the rate of 1.5% in respect of the services of construction of affordable residential apartments as per entry at Item (i) and the rate of 7.5% in respect of the services of construction of residential apartments other than affordable residential apartments in the project as per entry at Item No. (ia) of SI No. 3 of Notification No. 11/2017 Central Tax (Rate) dated 28.06.2017 subject to the conditions prescribed under the respective entries. - KER/142/2021 - - - Dated:- 12-7-2022 - DR. S. L. SREEPARVATHY, IRS SHRI ABRAHAM RE ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oped under the JDA comprises of both affordable residential apartments and also other than affordable residential apartments. 4.3. As per the Notification No.11/2017 CT (Rate) as amended by Notification No.03/2019 CT (Rate); 0.75 % CGST would be applicable on the construction of affordable residential apartments in a residential real estate project and the rate of 3.75 % would be applicable for the construction of residential apartments other than affordable residential apartments by a promoter in a RREP. However, the notification is silent as to whether the rate of 0.75 % is applicable to RREP having only affordable residential unit or even to RREP consisting of both affordable residential apartment and other than affordable residential apartment. At the same time the reference under the notification is to construction of residential apartment and not to a project. They are seeking advance ruling in the above factual scenario to determine the applicable GST rate in respect of units which qualify as affordable residential apartments in a RREP and other than affordable residential apartments. 4.4. The concessional rate of GST for low-cost house up to a carpet area of 60 sq. m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld be seen from the above discussions and minutes of the meeting that the concessional rate of GST for the affordable houses was not based on the project but was based on the individual house. There was no reference to the project, but it was based on the apartment unit. Based on the recommendations of the GST Council, Notification No. 03/2019 CT (Rate) dated 29.03.2019 was issued for amending Notification No. 11/2017 CT (Rate) dated 28,06.2017 and Item No. (i) of entry at SI. No. 3 was substituted with a new entry for giving effect to the concessional rate as per the decision of the Council. 4.7. The Item Nos (i), (ia), (ib), (ic) and (id) of SI. No.3 of Notification No. 11/2017 CT (Rate) dated 28.06.2017 as amended by Notification No. 03/2019 CT (Rate) dated 29.03.2019 which prescribes the concessional rate of tax nowhere makes a reference to the project, but it only talks about the construction of residential apartments or commercial apartments. The full text of the Notification No. 03/2019 CT (Rate) dated 29.03.2019 is produced as Annexure -3. 4.8. The said notification allows the concessional rate of tax for affordable residential unit even when the project contains comm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 01.04.2019. 7.2. A new tax structure for the real estate sector was introduced with effect from 01.04.2019 onwards by amendment of Notification No. 11/2017 Central Tax (Rate) dated 28.06.2017 by Notification No. 03/2019 - Central Tax (Rate) dated 29.03.2019. Admittedly, the services of construction of apartments are being rendered by the applicant after 01.04.2019 and hence the rate as notified under the new tax structure is applicable in respect of the construction services rendered by the applicant. 7.3. The entries at Items (i) and (ia) of SI. No. 3 of Notification No. 11/2017 Central Tax (Rate) dated 28.06.2017 as amended by Notification No. 03/2019 Central Tax (Rate) dated 29.03.2019 reads as follows; Heading 9954 - Construction services - (i) Construction of affordable residential apartments by a promoter in a Residential Real Estate Project (hereinafter 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wholly or partly, in the form of construction of apartments, - (i) the developer-promoter shall pay tax on supply of construction of apartments to the landowner- promoter, and (ii) such landowner - promoter shall be eligible for credit of taxes charged from him by the developer-promoter towards the supply of construction of apartments by developer-promoter to him, provided the landowner- promoter further supplies such apartments to his buyers before issuance of completion certificate or first occupation, whichever is earlier, and pays tax on the same which is not less than the amount of tax charged from him on construction of such apartments by the developer- promoter. Explanation. - (i) -developer- promoter is a promoter who constructs or converts a building into apartments or develops a plot for sale, (ii) landowner-promoter is a promoter who transfers the land or development rights or FSI to a developer- promoter for construction of apartments and receives constructed apartments against such transferred rights and sells such apartments to his buyers independently. Provided also that eighty percent of value of input and input services, [other than services by way of gra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in GSTR-3B /Row No. 4 (D)(2)]. 7.5. Para 4 of Notification No. 11 /2017 Central Tax (Rate) dated 28.06.2017 as amended by Notification No. 03/2019 Central Tax (Rate) dated 29.03.2019 defines the different terms used in the above entries. The relevant definitions are reproduced below:- (xiv) the term -apartment shall have the same meaning as assigned to it in clause (e) of section 2 of the Real Estate (Regulation and Development) Act, 2016; (xv) the term - project shall mean a Real Estate Project or a Residential Real Estate Project; (xvi) 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. (xvii) the term - ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wned by such authority or body or placed at their disposal by the Government, for the purpose of selling all or some of the apartments or plots; or (iv) an apex State level co-operative housing finance society and. a primary co-operative housing society which constructs apartments or buildings for its members or in respect of the allottees of such apartments or buildings; or (v) any other person who acts himself as a builder, coloniser, contractor, developer, estate developer or by any other name or claims to be acting as the holder of a power of attorney from the owner of the land on which the building or apartment is constructed or plot is developed for sale; or (vi) such other person who constructs any building or apartment for sale to the general public. (zn) real estate project ' means the development of a building or a building consisting of apartments, or converting an existing building or a part thereof into apartments, or the development of land into plots or apartment, as the case may be, for the purpose of selling all or some of the said apartments or plots or building, as the case may be, and includes the common areas, the development works, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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