The Tamil Nadu Authority of Advance Ruling (AAR) ruled that the value of construction in respect of Apartments shall be deemed to be equal to the Total amount charged for similar apartments in the project from the independent buyers.
The applicant, Thiru Neelakanta Realtors LLP is engaged in the business of providing works contract and construction services. They had entered into a Joint development agreement (JDA) with K. Alamelu and N. Rama who are the owners of the property for construction of apartments. The applicant has stated that the owners approached them for developing the property and entered into an agreement for this purpose.
The applicant has sought the advance ruling on the issue whether paragraph 2A of Notification No. 03/2019-Central Tax (Rate) dated 29th March, 2019, is applicable to those agreements entered on or before 29th September 2019 with unregistered persons.
The coram of Tmt. T.Padmavathi and B. Senthilvelavan observed that the date of levy being the date of issuance of completion certificate, Para 2A becomes applicable to them and so the value should be calculated only as prescribed in the said para. The said para prescribes that the value of construction in respect of such apartments shall be deemed to be equal to the Total amount charged for similar apartments in the project from the independent buyers, other than the person transferring the development rights/FSI. From the wording of this para, it is seen that the only value which can be adopted is as prescribed, there being no choice of adoption of any other value. As the law has provided for such valuation, the contention that para 2A is not applicable when the actual cost of construction is available does not hold water as we cannot go beyond the law pronounced. Hence the valuation as prescribed in the said para 2A becomes squarely applicable in the present case.
“It is clear that Para 2A of the Notification no. 3/2019 is applicable to the transaction between the applicant and the owners of the land and the valuation shall be done as stipulated therein,” the AAR ruled.
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