The Delhi Bench of Appellate Authority for Advance Ruling (AAAR) has held that the Ministry of Housing and Urban Affairs (MoHUA), is not exempt from Goods and Service Tax (GST) on sale of commercial built-up areas.
The Appellant, NBCC India ltd is a Government of India enterprise and engaged in project management consultancy, real estate development and EPC contracts. They had signed a memorandum of understanding on 25.10.2016 with Ministry of Housing and Urban Affairs (MoHUA), Government of India, wherein MoHUA has appointed the Appellant as the executing agency for redevelopment of colonies having “General Pool Residential Accommodation” (GPRA) and “Government Pool Office Accommodation” (GPOA).
Under this arrangement, the Appellant was required to organise construction of dwelling units and office spaces, commercial space and supporting infrastructure. The appellant has sought advance ruling as to whether the MoHUA, Government of India, is liable to pay GST on sale of commercial built-up space, or not.
P.K Sahu on behalf of the appellant contented that the construction activities and sale thereof were exempted from tax under Notification No. 12/2017- Central Tax (Rate) being in relation to a function entrusted to Municipality under Article 243 W of the Constitution. As per them, DAAR had wrongly invoked the amendment w.e.f. 26.07.2018, in the said notification, without appreciating that this amendment was prospective in nature and would not apply to appellant’s transactions which had taken place prior to this date.
The Division bench of Mallika Arya (Centre Member) and S.B Deepak Kumar (state Member) held that, The MoHUA, Government of India, was not exempted from payment of GST on sale of commercial built-up space, as it was not related to any function entrusted to a municipality under Article 243 W of the Constitution. Hence, the exemption under S. No 4 of Notification No. 12/2017- Central Tax (Rate) and parallel notifications under SGST and IGST were not admissible.
The Bench further observed that, MoHUA, Government of India was not a Municipality under Articles 243P and 243Q of the Constitution. Also, since such services were being provided to business entities, exemption under S. No. 6 of the said Notification was also not admissible.
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