The Kerala Authority for Advance Ruling (AAR) has recently ruled that one-third the amount charged for supply of residential apartments after construction is taxable at 18% Goods and Services Tax (GST), 9% Central Goods and Services Tax (CGST) and 9% State Goods and Services Tax (SGST).
The applicant, M/s Galaxy Homes Private Limited seeked the ruling in regard of taxability of residential apartments constructed on building permits obtained in their own name supplied after construction. The applicant seeked whether the concessional rate of GST at 12% is applicable in the case of residential apartments constructed in this manner.
The Authority comprising S. L. Sreeparvathy, IRS and Abraham Renn, IRS observed that, the concessional rate of GST is available only in respect of the construction services of apartments, in any of the schemes specified in item (ie) of entry at Sl. 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; which did not cover the nature of services as submitted by the assessee.
It was observed that “the services of construction of residential apartments in the project rendered by the applicant do not qualify for the concessional rate of tax of 12% GST [6% CGST+ 6% SGST] prescribed under Item (ie) of Sl. No.3 of the said notification” and it was ruled that “the applicant is liable to pay GST at the rate of 18% [9% – CGST + 9% – SGST] in respect of the services of construction of residential apartments supplied by them.”
The entry item (if), that the services provided by the developers are taxable at 12% concessional GST rate as contended by the applicants was ruled not to be applicable in this regard by the AAR.
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