In re Vedant Construction (GST AAR Maharashtra)
The Maharashtra Authority for Advance Ruling (AAR) examined the GST implications of 19 EWS/LIG flats reserved for MHADA-identified beneficiaries in a residential project developed under the inclusive housing requirements prescribed under the Maharashtra Regional and Town Planning Act, 1966. The applicant contended that the sale of these flats after issuance of the Occupancy Certificate (OC) constituted a sale of immovable property outside the scope of GST, since no consideration had been received before the OC and sale agreements with MHADA-identified allottees were to be executed only after the OC. Alternatively, the applicant argued that if the transaction were treated as taxable, the value of supply should be the MHADA-prescribed administered price rather than the market value.
The Authority noted that the obligation to construct and transfer the MHADA flats arose at the inception of the project as a statutory condition for obtaining project approvals and the Commencement Certificate. In exchange for undertaking this obligation, the applicant received additional Floor Space Index (FSI) from the local authority. The Authority held that this additional FSI constituted non-monetary consideration received in respect of the construction and transfer of the MHADA flats. Since consideration was received before issuance of the OC in the form of additional FSI, the condition that the “entire consideration” be received after issuance of the completion certificate was not satisfied. Consequently, the exception under Paragraph 5(b) of Schedule II was unavailable.
