2018 (9) TMI 236 – AUTHORITY FOR ADVANCE RULING, MAHARASHTRA – 2018 (16) G. S. T. L. 320 (A. A. R. – GST) – Rate of GST – construction services – Affordable Housing Project – Whether the construction services provided under the project “Prajapati Magnum” qualifies for the reduced CGST Rate of 6% as provided in Sl. No 3 – item (v)- sub item (da) vide Notification 01/2018- CT (Rate) dated 25.01.2018?
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Held that:- The applicant’s case is covered under the tax rate of 12%, under Heading 9954 (Construction Services), (v) (da) of above mentioned Notification No, 11/2017, as amended since the project undertaken by them falls under the definition of “Affordable Housing” as stated by them in the application – The benefit of reduced rate would be available to them only in the cases of supply effected after 25.01.2018 i.e. the date on which Notification 1/2018-CentraI Tax (Rate) was issued and the benefit of this reduced rate would be applicable in case of only those flats which are of carp
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spect of the following question : Whether the construction services provided under the project Prajapati Magnum qualifies for the reduced CGST Rate of 6% as provided in Sl. No 3 – item (v)- sub item (da) vide Notification 01/2018- CT (Rate) dated 25.01.2018? At the outset, we would like to make it clear that the provisions of both the CGST Act and the MGST Act are the same except for certain provisions. Therefore, unless a mention is specifically made to provisions, a reference to the CGST Act would also mean a reference to the same provision under the MGST Act. Further to the earlier, henceforth for the purposes of this Advance Ruling, a reference to such a similar provision under the CGST Act / MGST Act would be mentioned as being under the GST Act . 02. FACTS AND CONTENTION – AS PER THE APPLICANT The submissions, as reproduced verbatim, could be seen thus- Statement of relevant facts having a bearing on the question(s) raised 1. M/s. Prajapati Developers, located at No.406-407 Perse
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vice Tax on the consideration received from the flat owners till 30.06.2017 at the applicate rate of service tax and later GST is being discharged at the effective rate of 12% after availing the 1/3rd deduction towards the land portion as provided in explanation to Notification No. 11/2017- Central Tax (Rate) issued under the provisions of Central Goods and Service Tax Act, 2017, 5. Architect s Certificate on the carpet area usage and the Flat wise FSI Statement have been enclosed for examination. Statement containing the applicant s interpretation of law and/or facts, as the case may be, in respect of the aforesaid question(s) (i.e. applicant s view point and submissions on issues on which the advance ruling is sought) 1. Initially, Notification No. 11/2017-Centra Tax (Rate) dated 28.06.2017 has been issued under GST law to provide GST rate for supply of services made by the registered person. Sl. No 3 of the said notification provides to levy GST at the rate of 18% (CGST 9% and SGST
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ide Notification 01/2018-CT (Rate) to specify the rate of CGST as 6% in case of following service: Composite supply of works contract as defined in clause (119) of section 2 of the Central Goods and Services Tax Act, 2017, supplied by way of construction, erection, commissioning, or installation of original works pertaining to – Low-cost houses up to a carpet area of 60 square metres per house in an affordable housing project which has been given infrastructure status vide notification of Government of India, in Ministry of Finance, Department of Economic Affairs vide F. No. 13/6/ 2009-INF, dated the 30th March, 2017 5. The Maharashtra State Government also issued the similar notification under SGST law to reduce the SGST rate also to 6% on the above specified services in item (v) sub item (da) for the intra state supply. 6. Works Contract is defined in section 2(119) of the CGST Act, 2017 as means a contract for building, construction, fabrication, completion, erection, installation,
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ing units with carpet area@ of not more than 60 square meters has been given the infrastructure status by the GOI and therefore would be eligible for the benefit of reduced rate. 10. Further it was also mentioned in the above referred notification dated 30-03.2017 that Carpet Area Shall have the same meaning as assigned to it in clause (k) of section 2 of the Real Estate (Regulation and Development) Act, 2016. 11. As per Sec 2(k) of RERA, carpet area means the net usable floor area of an apartment, excluding the area covered by the external walls, areas under services shafts, exclusive balcony or verandah area and exclusive open terrace area, but includes the area covered by the internal partition walls of the apartment. 12. The expression exclusive balcony or verandah area means the area of the balcony or verandah, as the case may be, which is appurtenant to the net usable floor area of an apartment, meant for the exclusive use of the allottee and exclusive open terrace area means the
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eeting dated 18.01.2018 would be relevant: a) The Fourth Recommendation of the Council is to extend the concessional rate of 12% to services by way of construction of low cost houses up to a carpet area of 60 sqm in a housing project which has been given infrastructure status under notification No. 13/06/2009 dated 30th March, 2009. b) The recommendation of the Council would extend the concessional rate of 8% GST (after deducting value of land) to construction of flats/houses of less than 60 sqm in projects other than the projects covered by any scheme of the Central or State Government also. c) As against this, most of the housing projects in the affordable segment in the country would now attract GST of 8% (after deducting value of land) 16. From the above discussion, it is reasonably understood that PD s Magnum project could qualify as to be an affordable housing project and accordingly in the applicant s considered view, the construction of low cost houses with carpet area up to 60
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be 8% after reducing 1/3rd towards value of land. 03. CONTENTION – AS PER THE CONCERNED OFFICER Vide letter dated 14.05.2018, the concerned officer has submitted a report as under: Point No. 14 states that: Whether the construction services provided under the project Prajapati Magnum qualifies for the reduced CGST Rate of 60% as provided in Sr.No.3-item (V)-sub item (da) vide notification 01/2018CT (Rate) dated 25.01.2018? 1) Notification No.01/2018-CT(Rate) dated 25.012018 extend the concessional rate of 8% GST (after deducting the value of land ) to construction of low cost houses upto a carpet area of 60 square metre per house in an affordable housing project which has been given infrastructure status vide Notification No. 13/06/2009 dt. 30.03.2009. The said notification of department of Economic Affairs provides infrastructure status to Affordable Housing. Affordable Housing has been defined in the said notification as a housing project using at least 50% of the FAR/FSI for dwelli
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ious agencies like RBI and MOHUPA, etc. Therefore, cost is the most important factor while deciding the benefits of said Notification. The second condition is being fulfilled here as the percentage of FSI used in the flats having carpet area below 60 sq.m is approximately 72.63% as per Area Certificate given by the Architect of Prajapati Developers on 15.3.2018. There are certain Apprehensions which need to be investigated further. These are: i) Nature of Project:- Above mentioned Notification is silent on whether the concessional rate of 8% GST(after deducting value of land) is applicable on new projects or, ongoing projects or both. Project Prajapati Magnum is an ongoing project since December, 2013. ii) Timeline of Project:-The project Magnum started in December 2013 and it is obvious that many of the dwelling units could have been sold out to prospective buyers, promoters and investors which may or may not belong to the category of low income groups and economically weaker sections
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on 1/ 2018-Central Tax (Rate) dt.25.01.2018. 04. HEARING The Preliminary Hearing was held on date 15.05.2018. Shri Vasant K Bhatt, Chartered Accountant, duly authorized appeared along with Shri Rakesh Prajapati, Director and Shri Nagender Hegde, Chartered Accountant. They requested for admission of the application as per contentions made therein. They were orally requested to give details of all flats in their projects and names of buyers. Shri Kapil Prajapati, Asstt. Comm., Belapur, CGST & Central Excise, appeared and made written submissions. The Final Hearing was held on 26.06.2018. Shri Vasant K Bhatt, Chartered Accountant, and Shri Nagender Hegde, Chartered Accountant appeared and made reference to Circular No. 354 dated 07.05.2018 which is taken on record. Shri Kapil Prajapati, Asstt. Commr., Belapur, CGST & Central Excise, appeared and also made written submissions. 05. OBSERVATIONS We have gone through the facts of the case. The only issue that is before us is whether t
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India, Ministry of Finance, Department of Economic Affairs vide F. NO. 13/6/2009-INF, dated the 30th March, 2017. Notification No. 11/2017-Central Tax (Rate) dated 28.06.2017, has specified the rate of central tax to be levied on Intra State supply of services of description specified in Column 3 of the Table in the said Notfn, falling under scheme of classification of services mentioned therein. The relevant clauses of the said Notfn as amended by Notfn No. 20/2017-Central Tax (Rate) dated 22.10.2017 is reproduced below:- Sl.No. Chapter, Section or Heading Description of Service Rate (per cent) Condition 3. Heading 9954 (Construction services) (iv) Composite supply of works contract as defined in clause (119) of section 2 of the Central Goods and Services Tax Act, 2017, supplied by way of construction, erection, commissioning, installation, completion, fitting out, repair, maintenance, renovation, or alteration of,- (a)……………………&h
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Tax Act, 2017, supplied by way of construction, erection, commissioning, or installation of original works pertaining to,- (a)…………………………………; (b)………………………………….; (c) low-cost houses up to a carpet area of 60 square metres per house in a housing project approved by competent authority empowered under the 'Scheme of Affordable Housing in Partnership' framed by the Ministry of Housing and Urban Poverty Alleviation, Government of India; (d) low cost houses up to a carpet area of 60 square metres per house in a housing project approved by the competent authority under- (1) the Affordable Housing in Partnership component of the Housing for All (Urban) Mission/Pradhan Mantri Awas Yojana; (2) any housing scheme of a State Government; (e)………………………
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thority or urban development authority under the Housing for All (Urban) Mission/Pradhan Mantri Awas Yojana (Urban); (db) a civil structure or any other original works pertaining to the houses constructed or acquired under the Credit Linked Subsidy Scheme for Economically Weaker Section (EWS)/ Lower Income Group (LIG)/ Middle Income Group-1 (MIG-1)/ Middle Income Group-2 (MIG-2) under the Housing for All (Urban) Mission/ Pradhan Mantri Awas Yojana (Urban); ; (III)…………………………………………………… ; (B) in item (v), (I) in sub-item (a), for the word excluding ,……………………………………; (II) after sub-item (d), the following sub-item shall be inserted, namely: – (da) low-cost houses up to a carpet area of 60 square metres per house in an affordable housing project which has be
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MIG-1)/ Middle Income Group-2 (MIG-2) under the Housing for All (Urban) Mission/ Pradhan Mantri Awas Yojana (Urban). This clause also shall not be applicable to the applicant since this clause states that the houses should be constructed or acquired under the Credit Linked Subsidy Scheme of the Government. According to sub item (da) of item (v), low-cost houses up to a carpet area of 60 square metres per house in an affordable housing project which has been given infrastructure status vide notification of Government of India, in Ministry of Finance, Department of Economic Affairs vide F. No. 13/6/2009-INF, dated the 30th March, 2017 would attract a tax rate of 12%. This clause will be applicable to the applicant if the project undertaken by them is an affordable housing project which has been given infrastructure status vide Government of India notification mentioned above. Department of Economic Affairs notification issued vide F. No. 13/6/2009-INF, dated the 30th March, 2017 has incl
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e-I Updated Harmonized Master List of Infrastructure Sub-sectors Sl. No. Category Infrastructure sub-sectors Transport Roads and bridges Ports Shipyards Inland Waterways Airport Railway Track, tunnels, viaducts, bridges Urban Public Transport (except rolling stock in case of urban road transport) Energy Electricity Generation Electricity Transmission Electricity Distribution Oil pipelines Oil/ Gas/ Liquefied Natural Gas (LNG) storage facility Gas pipelines Water and Sanitation Solid Waste Management Water supply pipelines Water treatment plants Sewage collection, treatment and disposal system Irrigation (dams, channels, embankments, etc.) Storm Water Drainage System Slurry Pipelines Communication Telecommunication (fixed network) Telecommunication towers Telecommunication & Telecom Services Social and Commercial Infrastructure Education Institutions (capital stock) Sports Infrastructure Hospitals (capital stock) Three-star or higher category classified hotels located outside cities
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lip;…………….. 9. ……………………….. 10. Affordable Housing is defined as a housing project using at least 50% of the Floor Area Ratio (FAR)/Floor Space Index (FSI) for dwelling units with carpet area of not more than 60 square meters. @ Carpet Area shall have the same meaning as assigned to it in clause (k) of section 2 of the Real Estate (Regulation and Development) Act, 2016. One of the recommendations made by the GST Council in its 25th meeting held on 18th January 2018 at Delhi was to extend the concessional rate of 12% (8% CST after deducting value of land) to services by way of construction of low cost houses up to a carpet area of 60 sqm in a housing project which has been given infrastructure status under notification No. 13/06/2009 dated 30th March, 2009. The said notification of Department of Economic Affairs provides infrastructure status to Affordable Housing. The recommendation of the
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uncil has also mentioned that the builders/ developers are expected to follow the principles laid down under Section 171 of the CST Act (Anti-Profiteering Rules) scrupulously. In response to a request for clarification to enable availing 8% GST on Affordable Housing made by the builders association namely , CREDAI vide their letter no. CREDAI/MOF/2018/14 dated 19th March, 2018, the Government vide F.No. 354/52/2018-TRU, Government of India Ministry of Finance Department of Revenue (TRU) dated 7th May, 2018 has clarified that Low cost houses up to a carpet area of 60 .square metres per house in an affordable housing project, which has been given infrastructure status under notification F. No. 13/6/2009-INF, dated the 30th March, 2017 of MOF (DEA), attract concessional GST of 8% (the value of the undivided share of land is included in the price of the house). Whether the housing project qualifies as affordable housing project or not, shall be determined by the builder/ developer as per t
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ble in case of only those flats which are of carpet area upto 60 sq mtrs. In this scheme which is covered in the category of affordable housing. In case of other flats which have carpet area more than 60 sq.mtrs. the applicant would be required to pay GST at normal applicable rate. 06. In view of the 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) NO. GST-ARA-02/2018-19/B-58 Mumbai, dt.03/07/2018 For reasons as discussed in the body of the order, the question in answered thus- Question : Whether the construction services provided by the applicant under the project Prajapati Magnum qualifies for the reduced CGST rate of 6% as provided in Sr. No. 3 – item (v) – sub item (da) of Notification No. 01/2018-CT (Rate) dated 25.01.2018? Answer :- Answered in the affirmative as discussed above. – Case laws – Decisions – Judgements – Orders – Tax Manageme
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