In re Pioneer Associates (GST AAR West Bengal)
Whether the definition of ‘affordable residential apartment’ is applicable in respect of flats (having carpet area of 60 sqm and value up to Rs. 45 lacs) of an ongoing projects and tax can be collected @ 8% on all advances received after 01.04.2019.
The definition of “affordable residential apartment” is not applicable in respect of flats having carpet area not exceeding 60 square meter in metropolitan cities or 90 square meter in cities or towns other than metropolitan cities and for which the gross amount charged is not more than forty five lakhs rupees, in an ongoing project in respect of which the promoter has exercised option to pay tax at old GST rates.
Where a promoter exercises option in Annexure-IV to pay tax at the rate as specified for item (ie) or (if) against serial number 3 of the Notification No. 03/2019-Central Tax (Rate) dated 29.03.2019, there is no scope to pay tax at a reduced rate of 1% or 5% (effective rate), as the case may.
FULL TEXT OF THE ORDER OF AUTHORITY OF ADVANCE RULING, WEST BENGAL
1.1 At the outset, we would like to make it clear that the provisions of the Central Goods and Services Tax Act, 2017 (the CGST Act, for short) and the West Bengal Goods and Services Tax Act, 2017 (the WBGST Act, for short) have the same provisions in like matter except for certain provisions. Therefore, unless a mention is specifically made to such dissimilar provisions, a reference to the CGST Act would also mean reference to the corresponding similar provisions in the WBGST Act. Further to the earlier, henceforth for the purposes of these proceedings, the expression „GST Act‟ would mean the CGST Act and the WBGST Act both.
1.2 The applicant is stated to be engaged in the business of construction of residential flats within the Khardah Municipal area in the district of North 24 Paraganas, West Bengal.
1.3 The applicant submits that he has some ongoing projects construction of which had started before 01.04.2019 and the applicant has opted to pay tax at old GST rates in respect of such ongoing projects.
1.4 The applicant submits further that the definition of „affordable residential apartment‟ has been changed w.e.f. 01.04.2019 vide Notification No. 03/2019-Central Tax (Rate) dated 29.03.2019.
1.5 The applicant has made this application under sub-section (1) of section 97 of the GST Act and the rules made there under raising following questions vide serial number 14 of the application in FORM GST ARA-01:
Whether this new definition is applicable in respect of flats (having carpet area of 60 sqm and value up to Rs. 45 lacs) of ongoing projects and collect tax @ 8% on all advances received after 01.04.2019 where:
(i) 1st booking money received after 01.04.2019; and
(ii) 1st booking money received before 01.04.2019
1.6 The aforesaid question on which the advance ruling is sought for is found to be covered under clause (b) of sub-section (2) of section 97 of the GST Act.
1.7 The applicant states that the question raised in the Application has neither been decided by nor is pending before any authority under any provision of the GST Act.
1.8 The officer concerned from the Revenue has raised no objection to the admission of the Application.
1.9 The Application is, therefore, admitted.
2. Submission of the applicant
2.1 In course of personal hearing, the authorised representative of the applicant has submitted (i) a detailed written submission, (ii) photocopy of receipted documents in support of submission of Annexure-IV before the JCCT, Commercial Tax, Barrackpore Jurisdiction Office in respect of 11 (eleven) projects, (iii) declaration by the applicant towards non-receipt of completion certificate in
respect of 06(six) projects out of aforesaid 11(eleven) projects, (iv) certificate of commencement, project-wise carpet area certificate and project-wise first application for booking of flats along with copy of money receipt in respect of said 06(six) projects.
2.2 The applicant, vide the written submission, has contended that prior to 01.04.2019, the “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.
2.3 Accordingly, a housing project using at least 50% of the Floor Area Ratio (FAR)/ Floor Space Index (FSI) for dwelling units with area of not more than 60 square meters has been given the infrastructure status by the Government of India and therefore would be eligible for the benefit of reduced rate of 12% (effectively 8% after availing 1/3rd deduction towards value of land) with effect from 25.01.2018.
2.4 However, from 01.04.2019, the definition of “affordable housing” has been changed. The new definition of Affordable Housing under Notification No. 03/2019-Central Tax (Rate) dated 29.03.2019 reads as” a residential apartment in a project which commences on or after 1st April, 2019, or in an ongoing project in respect of which the promoter has not exercised option in the prescribed form to pay central tax on construction of apartments at the rates as specified for item (ie) or (if) against serial number 3, as the case may be, having carpet area not exceeding 60 square meter in metropolitan cities or 90 square meter in cities or towns other than metropolitan cities and for which the gross amount charged is not more than forty five lakhs rupees.‟
2.5 Further, the term „ongoing project‟, according to the said Notification shall mean a project which meets all the following conditions, namely-
(a) commencement certificate in respect of the project, where required to be issued by the competent authority, has been issued on or before 31st March, 2019, and it is certified by any of the following that construction of the project has started on or before 31st March, 2019: –
(i) an architect registered with the Council of Architecture constituted under the Architects Act, 1972 (20 of 1972); or
(ii) a chartered engineer registered with the Institution of Engineers (India); or
(iii) a licensed surveyor of the respective local body of the city or town or village or development or planning authority.
(b) where commencement certificate in respect of the project, is not required to be issued by the competent authority, it is certified by any of the authorities specified in subclause (a) above that construction of the project has started on or before the 31st March, 2019;
(c) completion certificate has not been issued or first occupation of the project has not taken place on or before the 31st March, 2019;
(d) apartments being constructed under the project have been, partly or wholly, booked on or before the 31st March, 2019.
2.6 The applicant argues that if any of the four conditions, as stated above, is not satisfied, the ongoing project will be treated as new project and the new definition of „affordable housing‟ will be applicable.
2.7 Thus the applicant is of the view that in respect of his projects where booking money is received after 01.04.2019, the new definition of affordable housing will be applicable. The applicant further submits that as the 1st booking money is received after 01.04.2019, the project will be treated as new project and consequently the GST rate will be 1% or 5% (after availing 1/3rd deduction towards value of land) respectively.
2.8 Furthermore, the applicant has contended that as he has exercised option to pay GST at the rate specified for item (ie) and (if) in respect of „ongoing projects‟ within the due date, the old definition of affordable housing is applicable in respect of flats of the ongoing projects. Therefore, the applicant can collect tax @ 8% on all flats having carpet area up to 60 sqm as specified in subitem (da) of item (v) under entry serial number 3 of the Notification No.01/2018-Central Tax (Rate) dated 25.01.2018.
2.9 In support of his contention, the applicant has placed his reliance on an Advance Ruling pronounced by the Maharashtra Authority for Advance Ruling in the case of Prajapati Developers [Order No. GST-ARA-02/2018-2019/B-58 Mumbai dated 03.07.2018] where the AAR held that the construction services provided by the applicant qualifies for the reduced CGST rate of 6% vide the entry serial number as referred in the immediate preceding para.
3. Submission of the Revenue
3.1 The concerned officer from the revenue has furnished a written submission stating as under:
