The Chennai Authority for Advance Ruling held that the supply of Residential Flat Construction service which involving the Transfer of Undivided Share of Land can attract 8% Goods and Services Tax.
The applicant submitted a copy of challan dated 22.04.2023 regarding the payment of the application fees of Rs.5000/- under Rules of CGST Rules 2017 and SGST 2017.
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Prime Expant Infra, the applicant is a partnership firm registered under the Indian Partnership Act, 1932 who is engaged in the business of providing construction services in respect of Commercial or Residential buildings and Civil structures. The applicant later converted the Partnership firm into a private ltd company w.e.f 22nd August 2022. As a continuation, Advance Ruling Application has been madef by the Applicant under the GSTIN 33AANCP1700C1Z0. ( Private Company )
The applicant started the construction of Tower ‘Block A7’ in February 2019. The said project included residential units measuring approximately 42. Sq.m unit. The said project also includes commercial units, where the area of the unit is less than 15% of the total area of the project and the project is a RREP Project.
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According to the Notification dated April 2019, the applicant was given the chance to opt either for the new rate or old rate , without claim of input tax credit or with claim of input tax credit respectively. The applicant believed that his project is an RREP project, so the rate applicable to them will be 8% in case of output liability according to the notification dated 28.06.2017 but which was amended by notification dated 29.03.2019.
With regard to the condition that the services should be “ construction service “ falling under any of the schemes as stated in the notification, the applicant submitted that accordingly. Also submitted that as per notification , the term affordable housing is added under Social and Commercial Infrastructure. The applicant submitted the commencement certificate of the project attached and marked as Annexure “ A-4” which demonstrated that the project commenced before 31.03.2019 and the Chartered Engineers certificate to prove that the first requirement has been fulfilled i.e commencement of project before 31.03.2019. Later the applicant submitted the Chartered engineers certificate dated 15.04.2019 certified the the percentage of work completed on 31.03.2019 showing the project was not completed. As a result of which the second requirement of non-issuance of completion certificate on or before 31.03.2020 is also fulfilled.
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The applicant submitted that the last condition is that the project to be an ongoing project should have been, partly or wholly, booked on or before 31st March,2019 and this was also fulfilled in case of the project under consideration.
The applicant was given an opportunity to be heard on 08.01.2024, Ms Kushboo Vora, CA and Mr. R Subramanian, CA appeared for the personal hearing as the Authorized Representatives for the applicant. They reiterated the submissions and made additional submissions before the authority. The members enquired as to whether the ARs complies with the conditions of the notification, for which they stated that the conditions have been fulfilled and the relevant documents have been submitted and agreed to submit any further details if required.
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The AAR Bench consisting of Smt.D. Jayapriya, IRS, Additional Commissioner ( CGST ) Smt. A Valli, Msc, Joint Commissioner ( SGST ) observed “the sub item “ da “ of item “ v “ mentioned in item “ie” of SL No 3 of Notification No. 11/2017- Central Tax (Rate) dated 28.06.2017 as amended is applicable to the applicant and the rates as mentioned against the said item “ie” which is 12% ( CGST 6% + SGST 6% ) shall be applicable to the applicant, in respect of supply of construction services of residential flats qualifying the scheme mentioned in sub item “da” of item “v”. Further in case of supply of services involving transfer of land or undivided share of land the value of supply shall be reduced by one third making the effective rate 8% (CGST 4% + SGST 4)”.
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