In re Joyville Shapoorji Housing Private Limited (GST AAR Maharashtra)
Question 1. Whether the dwelling units at Joyville, Virar qualify as low cost houses? Consequentially whether the said dwelling units are eligible for the concessional rate of 12% under Entry (v) (da) of Notification No. 11/2017 Central Tax (Rate) dated 28.6.2017 as amended by Notification No. 1/2018-Central Tax (Rate) dated 25.01.2018 with effect from 25.01.2018?
Answer:- The dwelling units measuring less than 60 sq.mtrs. will qualify as low cost houses. They are eligible for the concessional rate of 12% (8% GST after deducting value of land)under Entry (v) (da) of Notification No. 11/2017 Central Tax (Rate) dated 28.6.2017 as amended by Notification No. 1/2018-Central Tax (Rate) dated 25.01.2018 with effect from 25.01.2018 on such units.
Question 2. Whether the benefit of concessional rate would be available to common amenities such as club house, swimming pool, etc., except corpus fund subscription and share application money, as mentioned on Annexure D of the agreement for sale?
Answer:- Concessional rate of 12%, would be available only in respect of Society Formation Charges; club house development charges; Water, Electricity, Drainage, Sewerage Charges; Legal Service Charges and Documentation Charges which are collected from buyers of houses having area less than 60 sq mtrs.
Question 3. Whether the project of the Applicant at Joyville, Virar qualifies as an ‘ongoing project under Notification No. 3/2019-Central Tax (Rate) dated 29.03.2019 so as to be eligible for the concessional rate of benefit under Notification No. 11/2017-Central Tax (Rate) dated 28.06.2017?
Answer:- The project of the Applicant at Joyville, Virar qualifies as an ‘ongoing project under Notification No. 3/2019-Central Tax (Rate) dated 29.03.2019. Applicant is eligible for the concessional rate of benefit under Notification No. 11/2017-Central Tax (Rate) dated 28.06.2017, as amended, only for dwelling units measuring less than 60 sq mtrs.
Question 4. What would be the rate of Goods and Services Tax on the units at Joyville, Virar which do not qualify the criteria of ‘low cost houses’? Whether 12% or 18% tax is to be levied on those units?
Answer:- The units at Joyville, Virar which do not qualify the criteria of ‘low cost houses’ will be taxed at 18% GST.
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” respectively ] by M/s. Joyville Shapoorji Housing Private Limited, the applicant, seeking an advance ruling in respect of the following questions.
1. Whether the dwelling units at Joyville, Virar qualify as low cost houses’? Consequentially whether the said dwelling units are eligible for the concessional rate of 12% under Entry (v) (da) of Notification No.11/2017 Central Tax (Rate) dated 28.6.2017 as amended by Notification No. 1/2018-Central Tax (Rate) dated 25.01.2018 with effect from 25.01.2018?
2. Whether the benefit of concessional rate would be available to common amenities such as club house, swimming pool and amenities of like nature?
3. Whether the project of the Applicant at Joyville, Virar qualifies as an ‘ongoing project under Notification No. 3/2019-Central Tax (Rate) dated 29.03.2019 so as to be eligible for the concessional rate of benefit under Notification No. 11/2017-Central Tax (Rate) dated 28.06.2017?
4. What would be the rate of Goods and Services Tax on the units at Joyville, Virar which do not qualify the criteria of ‘low cost houses’? Whether 12% or 18% tax is to be levied on those units?
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 purpose 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 Joyville Shapoorji Housing Private Limited (Applicant), a real estate developer in India is presently involved in a residential development project under the name ‘Joyville Virar, at Palghar district of Vasai, Maharashtra (Project). The subject Project is proposed to be built in 6 phases consisting of 7 towers in total of which currently, development is in progress for 4 phases comprising of 5 towers with each phase having separate registration number under The Real Estate (Regulation and Development) Act, 2016 (“RERA”). Phase 1 consists of two towers of 308 units, out of which 264 units have a carpet area of less than 60 sq. mtrs: (i.e. 83% of the total Floor Space Index). Phases 2, 3 and 5 have all the units of carpet area less than 60 square meters. Applicant further states that as per the approval plans, the balance two phases which are yet to be launched have all units less than 60 sq. mtrs.
2.2 Applicant has submitted that, Notification 01/2018-Central Tax (Rate) dated 25.01.2018 (“Notification No 01/2018”) inserted entry (v) (da) to Notification 11/2017-Central Tax /Rate) dated 28.06.2017 (Notification No. 11/2017″), wherein a concessional rate of GST was given to projects which are ‘low cost houses’ in an affordable housing project. As per the said entry, a ‘low cost house shall be accorded the benefit of concessional rate which is in an Affordable Housing Project (“AHP’) and has been given Infrastructure status under the Notification F. No. 13/6/2009-INF dated 30.03.2017 issued by Department of Economic Affairs (“DEA Notification”).
2.3 Applicant states that since more than 50% of Floor Space Index is utilized towards construction of the dwelling units of less than 60 sq. mtrs: at Joyville Virar ((100% in Phase 2,3&5]. and 83% in Phase 1), the subject project qualifies as an AHP.
2.4 They have submitted that as on 31.03.2019, in respect of all the existing phases (Phase 1, 2, 3 & 5): (a) The Commencement Certificate has been issued for the Phases before 31.03.2019, (b) Completion Certificate or Occupancy Certificate (‘OC”) has not been issued for any Phase before 31.03.2019 and (c) Some of the units in each Phase have already been booked before 31.03.2019 and the money was received by the Applicant.
2.5 Applicant has also submitted that, Notification No. 11/2017 has been amended by Notification No. 03/2019-C.T. (Rate) dated 29.03.2019 (“Notification No.3/2019”) whereby the applicable rates of GST have been reduced for services of the residential construction sector and in respect of ongoing projects (as defined under Clause 4. (xx) of Notification No. 03/2019. An option has been given to suppliers of such services to continue payment of GST as per the erstwhile applicable rates. It further provided that suppliers, choosing to continue at the oId rates under Notification No. 11/2017 should file a form in Ann-IV to the Jurisdictional Commissioner. Applicant has filed Ann. IV for the RERA Phases 1, 2, 3, and 5 with the concerned authorities.
2.6 Applicant submits that the Government had issued Notification No. 01/2018 which extended the benefit of concessional rate of 12% GST in respect of original works’ pertaining to low cost houses up to 60 Sq. Mts. in an affordable housing project having infrastructure status. To avail the benefit of reduced rate of GST under entry (v) (da), Composite supply of works contract by way of construction, erection; commissioning or installation of original works has to be undertaken and the units must be low cost house up to carpet area of 60 Sq. mtrs. in an AHP having the infrastructure status.
2.7 THE DWELLING UNITS AT JOY LILLE VIRAR UNDER PHASES. 1,2,3 AND 5 QUALIFY AS ‘LOW COST HOUSES’ IN AN ‘AFFORDABLE HOUSING PROJECT’ AND THEREFORE IS ELIGIBLE FOR THE BENEFIT OF CONCESSIONAL RATE OF TAX UNDER ENTRY (v) (da) OF NOTIFICATION NO.11/2017 READ WITH NOTIFICATION NO.01/2018 WITH EFFECT FROM 25.01.2018
2.7.1 Applicant submits that, contract entered into with the customer, is for construction of housing units wherein there is a transfer of property in goods involved. Applicant shall transfer a dwelling unit after the materials arc incorporated and construction is completed. Therefore, considered as an AHP having Infrastructure status as per the DEA Notification. Reference has also been made to the decision of the Maharashtra AAR in another ruling, namely, The Ideal Construction (2018-VIL-149-AAR).
2.8 THE APPLICANT HAS SUBMITTED THAT THEY ARE ALSO ENTITLED TO THE BENEFIT OF CONCESSIONAL RATE TO COMMON AMENITIES SUCH AS CLUB HOUSE, SWIMMING POOL AND AMENITIES OF LIKE NATURE
2.8.1 Applicant submits that the common amenities form part of the overall construction service and are always naturally bundled when offered to customers. Therefore, such services will qualify as composite supply of works contract service. Accordingly, rate applicable to the principal supply will also be applicable to common amenities. In this regard, they have referred to the West Bengal Advance Ruling issued in the case of Bengal Peerless Housing Development Company Ltd. [2019-TIOL-137-GST) which held supply of common amenities with apartments as composite supply.
2.8.2 Applicant has also submitted that, the word ‘real estate project as defined under Clause 2(zn) of the RERA covers every amenities and common amenities which are required to be constructed, for the proper functioning of the real estate project and such amenities undoubtedly cover club house, swimming pool and other amenities of like nature. The meaning of the word project is not confined to only dwelling units, but it takes within fold its common amenities, structures and all improvements therein. On a bare perusal of Clause 2(zn), it can be said that even common amenities come within the purview of the definition of project’ and hence, the benefit under Entry (v)(da) of Notification No. 11/2017 should be made applicable for the common amenities as well since the same are ancillary supply to the principal supply of construction of dwelling units.
2.8.3 Alternatively, it is submitted that in the case of 904 units being constructed at Joyville Virar which satisfy the criteria of ‘low cost house’, the corresponding benefit of reduced rate of GST of 12% under Entry (V)(da) of Notification No. 11/2017 should be given to the common amenities like club house, swimming pool and amenities of like nature.
2.9 THE PROJECT AT JOYVILLE VIRAR QUALIFIES AS AN ONGOING PROJECT UNDER NOTIFICATION NO.03/2019
2.9.1 Applicant submits that Notification No.3/2019 has provided a right to registered suppliers to either continue to discharge GST under entry 3(v)(da) of Notification No. 11/2017 or migrate to the new rate of GST as prescribed under entry (ie) of Notification No. 3/2019. However, Notification No.3/2019 provides that registered suppliers can discharge GST at the old rates with respect to projects which were being already undertaken under Entry (v) (da) of
Notification No. 11/2017 with certain conditions. Entry (ie) of Notification No.3/2019 reads as:
