2018 (9) TMI 974 – AUTHORITY FOR ADVANCE RULING, MAHARASHTRA – 2018 (17) G. S. T. L. 80 (A. A. R. – GST) – Rate of Tax – sale of Flats/ Units to the prospective buyers – Pradhan Mantri Awas Yojana – Composite works contract service – inward supply.
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What is the rate of tax to be levied on the sale of Flats/Units to the prospective buyers? And whether registration of project under Pradhan Mantri Awas Yojana is required? – 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 (Whether the housing project qualifies as affordable housing project or not, shall be determined by the applicant as per the definition of affordable housing given in the above mentioned notification.) The benefit of reduced rate would be available to them only in
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y if he recalibrates the cost of the flat after factoring in the full ITC available in the GST regime and reduces the ex-GST price of flats – The applicant will be eligible for ITC subject to fulfilment of conditions as prescribed under the GST Act.
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Ruling:- The rate of tax to be levied is 12% (8% GST after deducting value of land) in case of Affordable Housing Project. If the project qualifies as an Affordable Housing Project, then registration under Pradhan Mantri Awas Yojana is not required to avail this benefit – The applicant will be eligible for ITC subject to fulfilment of conditions as prescribed under the GST Act. – GST-ARA-01/2018-19/B-109 Dated:- 5-9-2018 – SHRI B. V. BORHADE, AND SHRI PANKAJ KUMAR, MEMBER PROCEEDINGS (under section 98 of the Central Goods and Services Tax Act, 2017 and the Maharashtra Goods and Services Tax Act, 2017) The present application has been filed under section 97 of the Central Goods and Services Tax Act, 2017 and the Maharashtra Goods and
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o 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 The dealer i.e. The Ideal Construction is a partnership firm duly registered under GST. The nature of business of the firm is that of builders and developers. The said firm is desirous to undertake an affordable housing project in Kolhapur. The land required for the project is already possessed by the Firm. The firm is currently in the process of designing and planning for the said project. The units to be constructed in the said project will be of upto 30 sqmtrs(EWS) or upto 60 sqmtrs (LIG). The firm is considering following two options regarding the activities of the project. 1. To undertake construction activity on its own. I
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entral tax (rate) dated 25/1/18. A combined reading of both the notifications give two different possible situations for applying concessional rate of tax of 12% for affordable housing projects (and after claiming 1/30 deduction for Land effective rate will be 8%). First Scenario: Wide Notification 1/2018 following amendment was made: Against serial number 3, in column (3), – after sub-item (d), the following sub-items shall be inserted, namely: – (da) a civil structure or any other original works pertaining to the Economically Weaker Section (EWS) houses constructed under the Affordable Housing in partnership by State or Union territory or local authority 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 Inc
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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; In this case as regards insertion of clause (da) above, notification of Government of India, in Ministry of Finance, Department of Economic Affairs vide F. No. 13/6/2009-INF, dated the 30th March, the affordable housing projects are given infrastructure status under the category of 'Social and Commercial Infrastructure by adding a new sub-sector – Affordable Housing . In the same notification affordable housing is defined as 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. Thus as per our interpretation we w
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ices on his own account and will be issuing his Tax Invoice to us. Thus the firm will be having inward supply of works contract service . As per our interpretation of Law and notification mentioned above, the services supplied by the said contractor will be covered under Sr, 3 Column No 3 item no (iv) (db) or Item No (v) (da). In this case since the other contractor is providing the works contract service to the affordable housing project the rate of tax which he will be levying in his tax invoice will have to be 12% and not 18%. 3. Admissibility of Input tax credit. Whether full ITC is allowable or it will be restricted to output GST liability? If the rate of tax to be levied on our outward supply of works contract service is 12% (Effective rate after land deduction 8%), In this case our purchases or inward supplies will be of the rate 12% or 18% or 28% as the case may be. Thus there will be a considerable amount of ITC (Input Tax Credit) available in our electronic credit ledger. Sec
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partly (the value of land is deemed to be one-third of the total amount charged for such supplies) 12% with no refund of accumulated ITC But since the project is of affordable housing the above entry rate will not be applicable to the same. Thus as per our interpretation of provisions of law full ITC is allowable to us and balance amount in our electronic credit ledger can be claimed as refund. Vide further communication the applicant has submitted the Area Statement as follows:- Area of Plot 16090.00 sq mtrs. Less- Amenity Space 810.00 sq mtrs. Net Plot Area 15280.00 sq mtrs. Total consumed FSI of the plot 26055.00 sqmtrs. FSI Area consumed in flats having carpet area below 60 sq mtrs. 26055.00 sq mtrs. FSl Area consumed in flats having carpet area above 60 sq mtrs. NIL FSI consumed 1.7 03. CONTENTION – AS PER THE CONCERNED OFFICER No contentions has been filed by the department in the matter. 04. HEARING The Preliminary Hearing was held on date 24.04.2018. Shri Kedar P Hasabnis, Char
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rd and the submissions made by the Applicant. The applicant has posed three questions for which they are seeking responses from this authority. We shall deal with each question as under:- Question NO. 1: What is the rate of tax to be levied on the sale of Flats/Units to the prospective buyers? And whether registration of project under Pradhan Mantri Awas Yojana is required? This issue is with respect to the affordable housing projects to be undertaken by the applicant in Kolhapur. The applicant has submitted that on the land already in possession with them, they are proposing to construct units which will be of upto 30 square meters [Economically Weaker Section (EWS) houses] or upto 60 sq.mtrs [Lower Income Group (LIG) houses]. Notification No. 11/2017-Central Tax (Rate) dated 28.062017, 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 servi
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n of existing slum dwellers using land as a resource through private participation under the Housing for All (Urban) Mission/ Pradhan Mantri Awas Yojana, only for existing slum dwellers; (d) a civil structure or any other original works pertaining to the Beneficiary led individual house construction / enhancement under the Housing for All (Urban) Mission/ Pradhan Mantri Awas Yojana; (e) ………………………………………………………………….; or (f) ………………………………………………………………….; 6 -] (v) 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 ins
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y housing scheme of a State Government; (e) ………………………………………………………………….; or (f) ………………………………………………………………….; Notification No. 1/ 2018-Central Tax (Rate) dated 25.01.2018 has made amendments to Sr. No. 3, column no. 3, item no. iv & v the above Notfn No 11/2017 as follows:- In the said notification, (i) in the Table, – (a) against serial number 3, in colunm (3), – (A) in item (iv),- (I) for sub-item (c), the following sub-item shall be substituted, namely: – '(c) a civil structure or any other original works pertaining to the In-situ redevelopment of existing slums using land as a resource, under the Housing for All (Urban) Mission/ Prad
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; (B) in item (v), (l) in sub-item (a), for the word excluding (Il) 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 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; According to sub item (da) of item iv, a civil structure or any other original works pertaining to the Economically Weaker Section (EWS) houses constructed under the Affordable Housing in partnership by State or Union territory or local authority or urban development authority under the Housing for All (Urban) Mission/Pradhan Mantri Awas Yojana (Urban) would attract a tax rate of 12%. This clause will not be applicable to the applicant because the same envisages partnership by State or Union territory or local authority or urban development authority. Acc
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ken 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 included Affordable Housing under the column Infrastructure sub sector against the category of Social and Commercial Infrastructure and has further defined Affordable Housing 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 and 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% GST after deducting value of land) to services by way of construction of low cost houses up to a carpet
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h case, he should not recover any GST payable on the flats from the buyers. He can recover GST from the buyers of flats only if he recalibrates the cost of the flat after factoring in the full ITC available in the GST regime and reduces the ex-GST price of flats. The GST Council has also mentioned that the builders/developers are expected to follow the principles laid down under Section 171 of the GST 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 3
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ove 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 (Whether the housing project qualifies as affordable housing project or not, shall be determined by the applicant as per the definition of affordable housing given in the above mentioned notification.) The benefit of reduced rate would be available to them only in the cases of supply effected after 25.012018 i.e. the date on which Notification 1/2018-Central Tax (Rate) was issued. Q No. 2. What is the rate of tax to be levied by. the supplier (who is registered under GST) from whom we intend to receive composite works contract service (Inward Supply of Composite works contract)? Will it be 12% or 18%? At the time of hearing it was communicated to them that this question can only be raised by the supplier and not by them and they agreed to the same and the question is therefore not answered in this case. Q No. 3. Ad
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. As a result, the builder or developer will not be required to pay GST on the construction service of flats etc. in cash but would have enough ITC (input tax credits) in his books to pay the output GST, in which case, he should not recover any GST payable on the flats from the buyers. He can recover GST from the buyers of flats only if he recalibrates the cost of the flat after factoring in the full ITC available in the GST regime and reduces the ex-GST price of flats. The applicant will be eligible for ITC subject to fulfilment of conditions as prescribed under the GST Act. 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-01/2018-19/B-109 Mumbai, dt. 05.09.2018 For reasons as discussed in the body of the order, the questions are answered thus – Question 1. What is the rate of tax to be levied on the sale of Flats/ U
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