In re Shapoorji Pallonji and Company Private Limited (GST AAR Maharashtra)
Question 1. Whether the Applicant being the Contractor at Joyville, Virar will be eligible for concessional rate of Goods and Service under Entry (v) (da) of Notification No. 11/2017-Central Tax (Rate) dated 28.06.2017 as amended by Notification No.01/2018-Central Tax (Rate) with effect from 25.01.2018 and discharge Goods and Services Tax at the rate of 12%?
Answer:- Yes. The applicant will be eligible for concessional rate of Goods and Service under Entry (v) (da) of Notification No. 11/2017-Central Tax (Rate) dated 28.06.2017 as amended by Notification No.01/2018-Central Tax (Rate) with effect from 25.01.2018 and discharge Goods and Services Tax at the rate of 12%, in respect of Affordable Housing only, as discussed above.
Question 2. Whether the building completion and finishing services be regarded as a separate service or would it be a composite supply of works contract service as covered under entry (v) (da) of Notification No. 11/2017 to avail the benefit of reduced rate of tax?
Answer:- Building completion and finishing services will not be regarded as a separate services.
In view of the discussions made above, such building completion and finishing services will be a part of composite supply of works contract services with the principal supply of building construction, covered under entry (v)(da) of Notification No. 11/2017 and eligible to avail the benefit of reduced rate of tax @12% GST only in respect of dwelling units having an area of less than 60 sq mtrs.
Question 3. What would be the appropriate rate of Goods and Services Tax on works contract services provided for the construction of the units and common areas and amenities on pro-rata basis which do not qualify the criteria of low cost houses’?
Answer:- The rate of GST will be 18% on works contract services provided for the construction of the units, common areas and amenities on pro-rata basis which do not qualify the criteria of low cost houses.
FULL TEXT OF ORDER OF AUTHORITY OF ADVANCE RULING, MAHARASHTRA
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 Services Tax Act, 2017 [hereinafter referred to as “the CGST Act and MGST Act”] by M/s. Shapoorji Pallonji and Company Private Limited, the applicant, seeking an advance ruling in respect of the following questions.
1. Whether the Applicant, being the Contractor at Joyville, Virar, will be eligible for concessional rate of Goods and Service under Entry (v) (da) of Notification No. 11/2017-Central Tax (Rate) dated 28.06.2017 as amended by Notification No.01/2018-Central Tax (Rate) with effect from 25.01.2018 and discharge Goods and Services Tax at the rate of 12%?
2. Whether the building completion and finishing services be regarded as a separate service or would it be a composite supply of works contract service as covered under entry V(da) of Notification No. 11/2017 to avail the benefit of reduced rate of tax?
3. What would be the appropriate rate of Goods and Services Tax on works contract services provided for the construction of the units and common areas and amenities on pro-rata basis which do not qualify the criteria of low cost houses’?
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 any dissimilar 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, the expression ‘GST Act’ would mean CGST Act and MGST Act.
2. FACTS AND CONTENTION – AS PER THE APPLICANT
The submissions of the applicant made vide letter 19.07.2019 is as under:-
2.1 The present Application filed by Shapoorji Pallonji and Company Private Limited (Applicant) is in respect of the Civil Construction Contract entered into with Joyville Shapoorji and Housing Private Limited (Developer) for its ongoing project which comprises of four RERA phases having five towers under the name Joyville Virar’ situated at Palghar, Vasai, Maharashtra (Project).
2.2 The Developer vide Term Sheet dated 16.11.2015 appointed Applicant as the Contractor for the construction. Pursuant to the entering of the term sheet, the Developer and the Applicant also propose to enter into a detailed construction contract wherein the scope of the proposed work, the timelines, the contract value and other relevant conditions were agreed to.
2.3 The Project comprises of 7 residential buildings having approximately 1360 apartments (FSI utilization of 63,166 Sq. Mtrs) of carpet area less than 60sq. mtrs except 44 apartments where RERA carpet area would be more than 60 sq. mtrs (FSI Utilization of 2,927 sq. mtrs). Construction of 5 towers is in progress and construction of remaining 2 towers would start in due course.
2.3 Applicant has stated that any ‘Affordable Housing Project (AHP) which has been given infrastructure status under Notification No: 13/6/2009-INF dt. 30.03.2017 issued by Department of Economic Affairs (DEA Notification) is eligible to GST at the concessional rate of 12% under entry (v)(da) of Notification 11/2017-C.T. (Rate) dated 28.11.2017 (“Notification No. 11/2017“) read with Notification 1/2018-C.T. (Rate) dated 25.01.2018 (“Notification No. 1/2018″). Further, Central Government vide Notification No.03/2019-C.T. (Rate) dated 29.03.2019 (“Notification No.03/2019”) has inserted a clause to state that construction of an apartment in an ‘ongoing project under the aforesaid Notification would be eligible to GST at a concessional rate if the promoter exercises the option to pay central tax after fulfilling the conditions mentioned therein.
2.4 Notification No. 11/2017 issued on 28.06.2017 specifies the rate of construction services. Notification No. 11/2017 was thereafter amended by Notification No.1/2018 with effect from 25.01.2018 and a new entry (da) under item (v) to Chapter 99 was inserted wherein specific benefit of reduced rate of GST with respect to ‘low cost housing’ was introduced. It read as;
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