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TMI Blog2025 (4) TMI 1004X X X X Extracts X X X X X X X X Extracts X X X X ..... sale of residential premises of the Project and also for premises already sold by the then-promoter? 3. Whether the applicant can discharge GST @5% to the existing as well as new customers? 4. Whether the applicant can discharge the GST at the rate of 12% with input tax credit on the balance consideration received from the Buyers to whom premises are already sold by the then-promoter and can discharge GST at the rate of 5% without input tax credit on the consideration for sale of premises to new buyers by the applicant in its name? Further, in this case, how input tax credit will be available to the applicant? 5. Whether one-time option given under Notification no. 3/2019-Central Tax (Rate) dated 29.03.2019 is qua the project or the promoter? That the provisions of both the CGST Act, 2017 and the MGST Act, 2017 are the same except for certain provisions. Therefore, unless a mention is specifically made to any dissimilar provisions, a reference to the CGST Act, 2017 would also mean a reference to the same provision under the MGST Act, 2017. Further to the earlier, henceforth for the purposes of this Advance Ruling, the expression 'GST Act' would mean CGST Act, 2017 and MGST ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssuance of the occupation certificate. 1.8. Under GST regime, i.e. with effect from 01.07.2017, the rate of GST applicable on supply of taxable services including the construction services was provided under Notification 11/2017-CT (Rate) dated 28.06.2017. Vide Notification no. 3/2019-Central Tax (Rate) dated 29.03.2019 (hereinafter referred as 'Notification'), the Notification no. 11/2017-CT (Rate) dated 28.06.2017 was amended and certain tax rates were notified for payment of GST on the construction services. Sr. no. 3 of the Notification, as amended, notified specific GST rates under various scenarios, for construction services under HSN 9954. 1.9. Sr. no. 3 (if) of the said Notification notified that in case of an ongoing residential real estate project, in respect of which promoter had exercised option to pay central tax on construction of apartments at the rates as specified for the said item in the manner specified therein, the rate of GST will be 18% (with 1/3rd abatement towards value of land) with an entitlement to avail input tax credit of GST paid both on inputs and inputs services. One of the conditions specified of the said Sr. No. 3 (if) required the developer to e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 97 or sub-section (1) of section 100 or of section 101C, in relation to the supply of goods or services or both being undertaken or proposed to be undertaken by the applicant;" Hence as per definition, advance ruling means decision provided in relation to supply of service being undertaken and proposed to be undertaken by applicant. Therefore, application can be filed in relation to supply of service which has been undertaken by the applicant. In the present case, the Applicant proposes to complete the Project. The applicant seeks advance ruling with respect to taxability of the flats already sold by the then Promoter and the proposed sale of flats. 02. STATEMENT CONTAINING APPLICANT'S INTERPRETATION OF LAW AND/OR FACTS 2.1 Notification no. 3/2019-Central Tax (Rate) dated 29.03.2019 TE MU 2.1.1 Vide Notification no. 3/2019-Central Tax (Rate) dated 29.03.2019, the Notification no. 11/2017-CT (Rate) dated 28.06.2017 was amended and different options were notified for payment of GST on the construction services. Sr. no. 3 of the Notification, as amended, notified, the options of the Developers, for paying GST at the different rates for providing Construction Services under Hea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , option to pay tax at the rates as applicable to item (i) or (ia) or (ib) or (ic) or (id) above, as the case may be, shall be deemed to have been exercised; 2.1.3 As per sr. no. 3 (ia) of the Notification, in case of an ongoing residential real estate project, in respect of which the promoter had not exercised option to pay central tax on construction of apartments at the rates as specified for item (ie) or (if), the rate of GST was notified at 7.5% i.e. central tax at 3.75% and state tax at 3.75% totaling to 7.5%. The condition, as notified under column (5) of the said sr. no. 3 (ia) provided that, if the option as specified therein was not exercised no ITC would be available. 2.14 As per sr. no. 3 (if) of the said Notification notified, in case of an ongoing residential real estate project, in respect of which the Promoter had exercised option to pay central tax on construction of apartments at the rates as specified for the said item in the manner specified therein, the rate of GST will be 18% with an entitlement to avail ITC of GST paid both on inputs and inputs services. 2.1.5 One of the conditions specified in column 5 of the said Sr. No. 3 (if) required the Developer to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arch, 2019: - (i) an architect registered with the Council of Architecture constituted under the Architects Act, 1972 (20 of 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. (b) where commencement certificate in respect of the project, is not required to be issued by the competent authority, it is certified by any of the authorities specified in subclause (a) above that construction of the project has started on or before the 31st March, 2019; (c) completion certificate has not been issued or first occupation of the project has not taken place on or before the 31st March, 2019; (d) apartments being constructed under the project have been, partly or wholly, booked on or before the 31st March, 2019. Explanation:- For the purpose of sub-clause (a) and (b) above, construction of a project shall be considered to have started on or before the 31st March, 2019, if the earthwork for site preparation for the project has been completed and excavation for foundation has started on or before the 31st March, 2019" ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Promoter in the RERA registrations, the Project continues to be registered under the existing registration. 2.3.4 The Applicant has applied for and MCGM has extended the existing commencement certificate issued to the then-promoter till 32nd Floor in the name of the then-promoter post the Conveyance. This also indicates that the Project is an ongoing project. 2.3.5 It appears that the Applicant will not be able to discharge GST at a different rate to existing buyers for the consideration received by the Applicant in view of the fact that the then-promoter has already discharged GST at 12 per cent and availed the ITC for the period during which it was executing the Project. 2.4. One-time exercise of the option under Entry (if) 2.4.1 The Notification provides for one-time option to discharge GST for the Project and no provisions are found for change of option during the completion of the Project either to the Promoter or the new Promoter. 2.4.2 The entry (if) of the Notification requires that the option should be exercised by 'the' promoter. The use of the article 'the' brings in specificity to the subject thereafter. Therefore, there can be only one person who is obligated t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... encement certificate is issued by competent authority for single project. For example, in case of a single tower comprising of 50 floors and registered as single project, separate commencement certificates may be issued by the competent authority for (i) basement and parking which is common to entire building (ii) first twenty floors (iii) next thirty floors. If one or two commencement certificates are received by the Developer prior to 1st April, 2019 and remaining on or after that date, will such a project be considered as an ongoing project? Where commencement certificate has been issued even for part of the project on or before 31-03-2019, it shall be treated as an ongoing project Provided other requirements of the definition of ongoing project are met. 2.5.2 Basis the above, it was pronounced that the entire project will be considered as an ongoing project. The relevant para is given below: "On a conjoint reading of the definitions of the terms and the clarification of CBIC as extracted above it is evident that the option envisaged under Item (if) of SI. No. 3 of Notification No. 11/2017-Central Tax (Rate), dated 28-6-2017 as amended by Notification No. 03/2019-Cent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of residential premises to buyers? Departmental submission: Effective rate of 12% after claiming 1/3rd abatement towards value of land. Details are as under: Notification 3/2019-Central Tax (Rate) dated 29.03.2019: - Paragraph 4 (xx) I.e. explanation for the purpose of the Notification defines "ongoing project". Definition Is reproduced herein below- "(xx) the term "ongoing project" shall mean a project which meets all the following conditions, namely: - (a) commencement certificate in respect of the project, where required to be issued by the competent authority, has been issued on or before 31st March, 2019, and it is certified by any of the following that construction of the project has started on or before 31st March, 2019: - (i) an architect registered with the Council of Architecture constituted under the Architects Act, 1972 (20 of 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. (b) where commencement certificate in respect of the project, is not required to be issued by the competent autho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the applicant is bound by the option exercised by the then-promoter of payment of GST at the effective rate of 12% with input tax credit or can the applicant discharge GST at the effective rate of 5% without input tax credit under the Notification no. 3/2019-Central Tax (Rate) dated 29.03.2019, for sale of residential premises of the Project and also for premises already sold by the then promoter? Departmental submission: The Notification provides for one-time option to discharge GST for the Project and no provisions are found for change of option during the completion of the Project either to the Promoter or the new Promoter. The entry (if) of the Notification requires that the option should be exercised by 'the' promoter. The use of the article 'the' brings in specificity to the subject thereafter. Therefore, there can be only one person who is obligated to exercise the option. At the time when the option was to be exercised, the obligation to exercise the option was with the then-promoter and he has fulfilled the obligation. When the Applicant continues with the project through the conveyance deed in December 2022, the said condition has no applicability since the exercise o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onsideration to be received from the buyers to whom premises are already sold by the then-promoter and at a different rate of 5% without input tax credit on the consideration for sale of premises to new buyers. The Applicant is eligible for input tax credit since he is bound to discharge GST @12% on consideration received from existing as well as new buyers. 3.4. Whether one-time option given under Notification no. 3/2019-Central Tax (Rate) dated 29.03.2019 is qua the project or the promoter? Departmental submission: The one-time option given under Notification no. 3/2019-Central Tax (Rate) dated 29.03.2019 is qua the project. 04. HEARING Preliminary e-hearing in the matter held on 10.01.2025. Mr. Archit Agrawal, Consultant appeared, and requested for admission of the application. Jurisdictional Officer Mr. Arun Kumar Singh, Superintendent of CGST, Deputy Commissioner of SGST is available. The application was admitted and called for final e-hearing on 13.02.2025. Mr. S. S. Gupta, C.A., Authorized Representative, appeared made oral and written submissions. Jurisdictional Officer Mr. G.N. Jha, Assistant Commissioner, CGST appeared. We heard both the sides. 05. OBSERVATIONS AND ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted up to 31-3-2019) for the ongoing projects. The provisions for continuing the old rate of tax for the ongoing projects were incorporated in clause (ie) and (if) of Entry. No. 3 of the Notification No. 11/2017-CT (Rate), dated 28-6-2017 as amended and the sub-clause (ii) of clause at (if) being in respect of construction of residential apartments other than affordable residential apartments is the provision that is applicable to the applicant. The condition prescribed under the above provision for continuing with the payment of tax at the old rates in respect of ongoing projects was that the registered person shall exercise within the specified time an option in the prescribed form to pay tax on construction of apartments in the project at the rates as specified for clause (if) of SI. No. 3 of the said notification. Accordingly, the then promoter exercised option in the prescribed form for paying tax at the old rate for their ongoing project. 5.1.7 The term "ongoing project" is defined under clause (xx) of Para 4 of Notification No. 11/2017-CT (Rate), dated 28-6-2017 as amended by Notification No. 03/2019-CT (Rate), dated 29-3-2019 as mentioned in applicant submission. It nee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the then-promoter has already discharged GST at 12 per cent and availed the ITC for the period during which it was executing the Project. 5.2. One-time exercise of the option under Entry (if) 5.2.1 We observed that the Notification provides for one-time option to discharge GST for the Project and no provisions are found for change of option during the completion of the Project either to the Promoter or the new Promoter. The entry (if) of the Notification requires that the option should be exercised by 'the' promoter. At the time, when the option was to be exercised, the obligation to exercise the option was with then-promoter and he has fulfilled the obligation. When the Applicant continues with the project through the conveyance deed in December 2022, the said condition has no applicability since the exercise of the option was one-time for the project. 5.2.2 This interpretation that the one-time option has to be exercised vis-à-vis the project and not vis-à-vis the legal entity promoting the project is supported by the text of the Annexure to be filed at the time of exercising the option. On perusal of the said Annexure, it is evident that the focus is on the proj ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the project-"VRINDHAVAN". Therefore, the applicability of normal rate will be for the entire project and the applicant will not have option to opt for GST rate of 5% without ITC for new buyers. 5.2.7 Thus, the applicant is bound by the option exercised by the then-promoter of payment of GST at the effective rate of 12% with input tax credit for sale of residential premises and also for premises already sold by the then promoter of the Project. The applicant can discharge the GST at the effective rate of 12% (after 1/3rd deduction for land cost) with input tax credit on the balance consideration received from the buyers to whom premises are already sold by the then promoter. 06. In view of the extensive deliberations as held hereinabove, we pass an order as follows: ORDER (Under Section 98 of the Central Goods and Services Tax Act, 2017 and the Maharashtra Goods and Services Tax Act, 2017) For reasons as discussed in the body of the order, the questions are answered thus - Question No. 1. What would be the rate of GST to be paid by the applicant on the consideration for sale of residential premises to buyers? Answer No. 1 Rate of GST to be paid by the applicant would be norm ..... X X X X Extracts X X X X X X X X Extracts X X X X
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