TMI Blog2023 (4) TMI 44X X X X Extracts X X X X X X X X Extracts X X X X ..... d reading of the definitions of both the supplier and the agent as given in section 2(5) and Section 2(105) respectively of the CGST Act, 2017 makes it clear that the appellant is an agent of MoHUA as they are in the business of supply of commercial built-up space on behalf of later. Therefore, he is a taxable person as defined under Section 2(107) of CGST Act, 2017 and is liable to discharge the tax liability as per statutory provisions - It is clear from the Explanation (i) to Section 22 and Clause (vii) of Section 24 of the CGST Act, 2017, that the appellant is required to be registered while acting as an agent for supply of services and is a taxable person as per Section 2(107) of the CGST Act, 2017. Therefore, the responsibility to collect and/ or deposit GST on the taxable supply of goods or services as an agent of MoHUA lies with the appellant, since he is engaged in the sale of commercial built-up area on behalf of MoHUA. Whether or not MoHUA, Government of India, is liable to pay GST on the sale of commercial built-up space? - HELD THAT:- The exemption was granted vide S. No. 4 of Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017 (as applicable upto 25.07 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... AND DR. S.B. DEEPAK KUMAR, MEMBER Represented by : Sh. P. K. Sahu, Advocate 1. The present Order is being issued with respect to the appeal filed by M/s NBCC (India) Limited, NBCC Bhawan, Lodhi Road New Delhi-110003 (herein after referred to as Appellant) under Section 100 of the Central Goods and Service Tax Act, 2017 and Delhi Goods and Service Tax Act, 2017 (herein after referred to as CGST Act, 2017 and SGST Act, 2017) against the Advance Ruling No. 07/DAAR/2018 dated 05.10.2018 given by DAAR. The date of communication of Advance Ruling to the appellant was 18.10.2018. 2. At the outset, we would like to make it clear that the provisions of CGST Act, 2017 and Delhi GST Act, 2017 (Herein after called DGST Act, 2017) are pari materia and have the same provisions in like matter and differ from each other only on a few specific provisions. Therefore, unless a mention is particularly made to such dissimilar provisions, a reference to the CGST Act would also mean reference to the corresponding similar provisions in the DGST Act. BRIEF FACTS OF THE CASE 3.1 The Appellant is a Government of India enterprise and engaged in project management consultancy, real ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... selling the proposed built-up area on behalf of MoHUA. The terms and conditions of such sale provide that Government of India through nominated officer will sign the agreement to sell and execute the sale deed with the successful bidder. 3.4 The Appellant had applied to Real Estate Regulatory Authority (RERA) on behalf of MoHUA, Government of India, for registration under the Act, but the Regulator had refused to give such registration in its letter dated 11.08.2017. In this letter, it has been stated that application by the present Appellant (i.e. NBCC) for registration of the project considering MoHUA as the promoter cannot be accepted. In these circumstances, the Appellant applied for registration under RERA as per instruction of MoHUA. In the above mentioned factual background, the Appellant had sought advance ruling in respect of any GST liability on sale of built-up area on behalf of MoHUA in the colonies redeveloped by it for MoHUA. 3.5 The details of question on which advance ruling has been requested for are as under a) Whether the Appellant is liable to pay GST on sale of commercial super built up area on behalf of MoHUA, Government of India, by considering the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (b) of Schedule II of the CGST Act, 2017. SUBMISSIONS OF THE APPELLANT The appellant, vide appeal filed under section 100 of the Central Goods and Service Tax Act 2017 and Delhi Goods and Service Tax Act 2017 (herein after referred to as COST Act, 2017 and SGST Act, 2017) against the Advance Ruling No. 07/DAAR/2018 dated 05.10.2018 given by DAAR, has submitted as under:- 4.1 That they are not required to pay GST on sale of built-up space by MoHUA because it is not a supplier of any goods and service in a transaction between the MoHUA and the purchaser of built-up space. The appellant has explained that section 9 of the CGST Act, casts responsibility to pay tax on the supplier of goods or services, except in a situation carved out in section 9(3) and 9(4) of the Act where the receiver of the supply of goods or services is liable to pay tax. 4.2 Appellant has submitted that a combined reading of section 2(107), which defines taxable person , and sections 2(105), 22 and 24 of the CGST Act, provides that a supplier of goods or services is a taxable person. Hence, ordinarily, supplier of goods or services is liable to pay tax on the consideration received by him. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d maintaining thereof for thirty years. the appellant is entitled to receive cost plus 8% of such cost from MoHUA. Further as per MoU Government of India (MoHUD) through its nominated office/officer will sign the Agreement to Sell in favour of the Allottee/buyer after payment of 10% of sale consideration, and on receipt of all outstanding dues from the allottees, Government of India (MoHUD) through its nominated office/officer shall execute the Sale Deed in favour of the allottees. From these terms, it is clear that it is MoHUA which is selling such built-up area, not the appellant. In the developed area, the appellant is not acquiring any interest or right and, therefore, there is no question of it selling any built-up commercial area, being constructed by it, on its own account. 4.6 The appellant is merely constructing the buildings for MoHUA. It is not like a promoter or developer who is selling the units in the building constructed by it. Therefore, the appellant cannot be held responsible for payment of GST on sale of commercial space as it cannot be construed as taxable person making any taxable supply to the persons who had booked the space/units in the buildings. The a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the nature of a function normally undertaken by municipality under Article 243W of the Constitution. Thus, DAAR's reliance on the amendment of Notification No. 12/2017-CT(Rate) alone, without taking into account the amendment in Notification No. 14/2017-CT(Rate) is not legally sustainable. 5.3 Even if sale of under-constructed flat is held liable to GST, the Central Government is not liable to pay any GST. As per Sl. No. 6 of Notification No. 12/2017-CT (Rate), all services by the Central Government, except those mentioned therein are subjected to Nil rate of tax. But some categories are not entitled to this benefit. The excluded categories are certain services by department of force, services in relation to aircraft/vessel, transportation of goods/passengers and all other services provided to business entities. That means, all services to non-business entities, other than the excluded categories are exempt from tax. Hence, services by way of selling under-constructed commercial space to non-business entities are not taxable. DAAR has referred to Sl. No. 6 of this Notification and has stated that benefit of this is not applicable to services provided to business entities. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... elopment. Hence, DAAR has wrongly concluded that MoHUA is liable to pay GST on sale of commercial built-up space, which relates to a function entrusted to a municipality under Article 243W of the Constitution. 5.7 The legality of construction of a commercial complex has been upheld by the Supreme Court of India in G.B. Mahajan and Others vs. Jalgaon Municipal Counsel and Others, (1991) 3 SCC 91. Here, Jalgaon Municipal Council contemplated erection of an Administrative Building and commercial complex on a piece of its land for better use of the same. The construction of the project was to be done through a developer at his own cost and he was to handover certain constructed space to the municipality free of cost. The developer was free to sell his share of the space and the allottees (buyers) were to be given occupancy rights for a period of 50 year under section 272 (1) of Maharashtra Municipalities Act, 1965. They were expected to pay rent to the Municipal Council for a period of 50 years at the rate prescribed in the scheme. The project was awarded to a real estate developer by the Municipality through competitive bidding. However, this was challenged by the appellants in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) as applicable prior to 01.07.2012 on the ground that there is no mechanism under the Act to levy service tax on the service portion of the transaction. 6.2 DAAR has wrongly relied upon the Department's FAQ to reject the appellant's submission that the appellant is not liable to pay GST on sale of built-up space prior to 01.07.2017. It failed to appreciate that the Department's FAQ are not binding when such FAQ is contrary to the established legal principles as enunciated by the Hon'ble Court that tax cannot be levied where machinery to determine such tax has not provided in the statute. 6.3 The appellant had also pleaded that GST cannot be levied on a part consideration received for a continuing transaction which was not taxable earlier. It may be noticed that sale of flat is a single supply which is performed over a period of time. Under GST law, tax is payable on supplies made on or after 01.07.2017. But in a composite supply which has already commenced prior to 01.07.2017, the amount received after 01.07.2017 cannot be considered as consideration attributable to any supply taking place after 01.07.2017. It is a cardinal principle of the law that a single ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Court in writ. Therefore, Appellate Authority noted that as the matter is sub-judice they were not in a position to proceed further. Appellant was asked to submit a copy of writ petition. 9.2 Appellant vide his email dated 16.06.2020 submitted a copy writ petition No. 358/2019 filed in the Hon'ble High Court of Delhi. However, during the court proceeding it was submitted by the appellant that Appellate authority had got constituted and had heard the appeal filed by the appellant. Therefore, Hon'ble High Court of Delhi vide its order dated 21.10.2021 dismissed the writ petition as withdrawn. 9.3 The matter was posted for Personal Hearing on 10.02.2021, when Shri P. K. Sahu, Advocate appeared before the Appellate Authority and reiterated his written submissions including additional submission made copy of which was also handed over. He emphasis that their activity i.e. sale of commercial space was squarely covered under non taxability clause being an act by a Local Authority covered in Article 243W of the constitution of India. He was requested to provide the following documents: 1. Copy of agreement/entered into with Ministry of Housing Urban Development. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... entrusted to a municipality under Article 243W of the constitution of India. He further referred to the amendment in the notification no. 12/2017 CT(R) w.e.f 26.07.2018 thereby removing the term Central Government from the scope of the exemption. 4. DAAR has not noticed that even though the words Central Government was removed from the purview of exemption provided at Si. No. 4 of Notification No. 12/2017-CT(R), w.e.f. 26.07.2017, there was another amendment on the same date in Notification No. 14/2017-CT (R) dated 28.06.2017 issued by the Central Government wherein it was enumerated that by way of any activity in relation to a function entrusted to a municipality under Article 243W of the Constitution, shall be neither a supply of goods nor as supply of service. Therefore, no tax is payable by the Central Government constructing and selling space in commercial complexes at any point of time. The interpretation of DAAR while passing the order that there was an amendment w.e.f. 26.07.2018 removing Central Government from the scope of exemption means that such exemption was applicable prior to this date is incorrect. 5. Even otherwise, the Central Government is not liable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Affairs (MoHUA), Government of India, wherein MoHUA has appointed them as the executing agency for redevelopment of colonies having General Pool Residential Accommodation (in short GPRA) and Government Pool Office Accommodation (in short GPOA) at Nauroji Nagar, Sarojini Nagar and Netajl Nagar in Delhi. Under this arrangement, they are required to organise construction of GPRA (i.e. dwelling units), GPOA (i.e. office spaces), commercial space and supporting infrastructure, such as local convenience shopping centre, banquet hall/ community centre, creche, schools, hospital/dispensary. ATM/Banks, parking facilities, parks and play grounds etc. at the specified locations in place of old existing buildings. They are also required to maintain constructed buildings for a period of thirty years after construction. Further, the estimated cost of abovementioned redevelopment work and maintenance thereof i.e. Rs. 24,682 crores shall be met from free-hold sale of specified commercial built-up area. The sale proceeds of commercial built-up area shall be deposited in an escrow account which shall be managed by Capital Management Committee constituted by MoHUA. Capital Management Committee sh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the person supplying the said goods or services or both and shall include an agent acting as such on behalf of such supplier in relation to the goods or services or both supplied ; Section 2(107) of the CGST Act, 2017 `taxable person means a person who is registered or liable to be registered under section 22 or section 24; 11.5 Further, we find that it is apparent that the relationship between the appellant and MoHUA is not on the basis of partnership/ joint venture/ collaboration. Moreover, this MOU is not on Principal-to-Principal basis. The appellant is engaged in selling the commercial built up area through e-auction on behalf of MoHUA. The relevant sale deed with the successful bidder will also be signed by the nominated officer of the MoHUA. The role of the appellant shall be that of a facilitator of execution of sale deed. They are not acquiring any right or interest in the project. It is an admitted fact by the appellant that they are constructing and selling the commercial built up space on behalf of MoHUA. It is very clear from the provisions given in para 1.10 and 1.11 of the MoU dated 25.10.2016 signed between the appellant and MoHUA that the Capital Mana ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... W of the Constitution. As per them DAAR has wrongly invoked the amendment w.e.f. 26.07.2018, in the said notification, without appreciating that this amendment is prospective in nature and would not apply to appellant's transactions which have taken place prior to this date. 12.2 We find that exemption was granted vide S. No. 4 of Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017 (as applicable upto 25.07.2018) to the Services by Central Government, State Government, Union territory, local authority or governmental authority by way of any activity in relation to any function entrusted to a municipality under article 243 W of the Constitution. The said notification was amended vide Notification No. 14/2018-Central Tax(Rate) dated 26.07.2018 and against S. No. 4, in column (3), the words Central Government, State Government, Union territory, local authority or have been omitted. It shows that after the above amendment the exemption under the notification is admissible only if such services are provided by a government authority . 12.3 Therefore, the test to be able to avail the benefit of exemption from payment of GST under S. No. 4 of Notification No. 12/2017 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at all these functions are relating to the welfare of general public without any commercial consideration. 12.4 Therefore, we find no force in the claim of the appellant that the functions of Municipalities given in Twelfth Schedule of the Constitution covers construction of commercial built-up space in the redevelopment projects. In the present case, the appellant is selling the commercial built-up space to the private entities and this activity cannot be treated as a function of Municipality, as envisaged under article 243W of the Constitution of India which provides powers, authority and responsibilities of the Municipalities. Moreover, the commercial built-up spaces are for the purpose of sale to individual buyers who will use them for their commercial gain and this by no stretch of imagination this can be termed as a facility meant for use of common public. 13.1 The third issue is, as to whether the appellant is liable to pay GST on the services supplied under GST regime i.e. w.e.f 01.07.2017, even if a part of the consideration had been received prior to 01.07.2017. As per the appellant, DAAR has wrongly relied upon the Department's FAQ to reject the appellant's ..... X X X X Extracts X X X X X X X X Extracts X X X X
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