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TMI Blog2022 (10) TMI 863X X X X Extracts X X X X X X X X Extracts X X X X ..... fication No. 03/2019 Central Tax (Rate) can be availed in respect of those units which qualify as "Affordable Residential Apartment" in a "Residential Real Estate Project" when the project consists of both "Affordable Residential Apartments" as well as apartments other than Affordable Residential Apartments? 4. Contentions of the Applicant: 4.1. The applicant submits that they are planning to execute a Joint Development Agreement for the development of a plot of land into Multi Storied Residential Apartment Project [Residential Real Estate Project], A copy of the Draft Agreement is produced as Annexure -I. 4.2. The proposed residential project consists of 50 units out of which 14 apartments arc to be given to the landowner towards the landowner's area under the Joint Development Project. All the 50 units in the apartment complex are having the carpet area of less than 60 square metres and the total sale consideration including all charges in respect of 30 residential apartments will be above 45 lakhs and in respect of 20 residential apartments, the total sale consideration will be below 45 lakhs. Thus, the 20 residential units in the project would qualify as "Affordable Resi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e for low-cost houses were dependent on the status of the project; whether the housing project is approved by competent authority under the scheme of affordable housing or whether the housing project is part of any housing scheme of the State Government or whether the housing project is given the status of infrastructure project etc. 4.5. The GST Council in its 33rd meeting held on 20.02.2019 and 24.02.2019 had detailed discussions regarding the GST rate changes for boosting Real Estate Sector which also included the need for redefining "Affordable Houses". The following decisions were approved by the Council; (a) GST to be levied at effective rate of 5% without ITC on residential properties outside affordable segment; (b) GST to be levied at effective GST rate of 1 without ITC on affordable housing properties; (c) the new rate to become applicable from 1st of April 2019; (d) Definition of affordable housing shall be a residential house / flat of carpet area of up to 90 sq m in nonmetropolitan cities / towns and 60 sq m in metropolitan cities having value up to Rs. 45 lakhs; (e) Tax on TDR, long term lease, FSI to be exempted for such residential property on which GST ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ins apartments that are not affordable residential apartments. 5. Comments of the Jurisdictional Officer: 5.1. The application was forwarded to the jurisdictional officer as per provisions of Section 98(1) of the CGST Act. The jurisdictional officer has not offered any comments and hence it is presumed that the jurisdictional officer has no specific comments to offer. It is also construed that no proceedings are pending on the issue against the applicant. 6. Personal Hearing: 6.1. The applicant was granted an opportunity for a personal hearing on 05.11.2021. The authorised representative of the applicant represented the applicant in the personal hearing. The representative reiterated the contentions made in the application and requested to issue a ruling based on the submissions in the application. 7. Discussion and Findings: 7.1. The matter was examined in detail. The applicant is engaged in the development and construction of residential apartments. The question to be answered is regarding the rate of GST applicable in respect of the construction of "Affordable Residential Apartments" in a Residential Real Estate Project [RREP] having both "Affordable Residential Apartments ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aph 2 of this notification shall apply for valuation of this service). 7.4. The rate of GST applicable for entry at Item (i) is 1.5% [0.75% - CGST + 0.75% - SGST] and for the entry at Item No. (ia) is 7.5% [3.75% - CGST + 3.75% - SGST], The above rate of GST is subject to the conditions mentioned therein. The conditions that are common for both the entries are as extracted below; "Condition: Provided that the central tax at the rate specified in column (4) shall be paid in cash, that is, by debiting the electronic cash ledger only; Provided also that credit of input tax charged on goods and services used in supplying the service has not been taken except to the extent as prescribed in Annexure 1 in the case of REP other than RREP and in Annexure II in the case of RREP; Provided also that the registered person shall pay, by debit in the electronic credit ledger or electronic cash ledger, an amount equivalent to the input tax credit attributable to construction in a project, time of supply of which is on or after 1st April, 2019, which shall be calculated in the manner as prescribed in the Annexure I in the case of REP other than RREP and. in Annexure II in the case of RREP; ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... apply to him as if he is the person liable for paying the tax in relation to the supply of such goods or services or both; Provided also that notwithstanding anything contained herein above, where cement is received from an unregistered person, the promoter shall pay tax on supply of such cement at the applicable rates on reverse charge basis and all the provisions of the Central Goods and Services Tax Act, 201 7 shall apply to him as if he is the person liable for paying the tax in relation to such supply of cement; Explanation. - 1. The promoter shall maintain project wise account of inward supplies from registered and unregistered supplier and calculate tax payments on the shortfall at the end of the financial year and shall submit the same in the prescribed form electronically on the common portal by end of the quarter following the financial year. The tax liability on the shortfall of inward supplies from unregistered person so determined shall be added to his output tax liability in the month not later than the month of June following the end of the financial year. 2. Notwithstanding anything contained in Explanation 1 above, tax on cement received from unregistered per ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or by any other name, means a separate and self-contained part of any immovable property, including one or more rooms or enclosed spaces, located on one or more floors or any part thereof, in a building or on a plot of land, used or intended to be used for any residential or commercial use such as residence, office, shop, showroom or godown or for carrying on any business, occupation, profession or trade, or for any other type of use ancillary to the purpose specified. (zk) promoter" means,- (i) a person who constructs or causes to be constructed an independent building or a building consisting of apartments, or converts an existing building or a part thereof into apartments, for the purpose of selling all or some of the apartments to other persons and includes his assignees; or (ii) a person who develops land into a project, whether or not the person also constructs structures on any of the plots, for the purpose of selling to other persons all or some of the plots in the said project, whether with or without structures thereon; or (iii) any development authority or any other public body in respect of allottees of- (a) buildings or apartments, as the case may be, cons ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... project to be undertaken by the applicant falls within the definition of a real estate project and the applicant falls within the definition of "promoter". Further, on a conjoint reading of the above provisions 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% [0.75% - CGST + 0.75% - SGST] in respect of the services of construction of affordable residential apartments as per entry at Item (i) and the rate of 7.5% [3.75% - CGST + 3.75% - SGST] in respect of the services of construction of residential apartments other than affordable residential apartments in the project ..... X X X X Extracts X X X X X X X X Extracts X X X X
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