In re Shivam Developer (GST AAR Gujarat)
Applicant have not submitted sufficient documents to decide the Ruling on the question sought for, therefore we are not inclined to pronounce the Ruling in absence of proper documents. We are of the view that the ruling can be pronounced on the basis of proper documents in support of the questions and not on simple facts and assumptions. Hence application is not maintainable in view of the above discussion.
FULL TEXT OF THE ORDER OF AUTHORITY FOR ADVANCE RULING, GUJARAT
M/s Shivam Developer (for the sake of brevity referred as the applicant”) is a partnership firm and is engaged in the business of construction & development of real estate project. The applicant has started a new project namely -Shivvay Landmark” duly registered under the provisions of RERA 2016 which consists of construction of shops, duplexes & flats. As per the approved layout plan & commencement certificate issued by the competent authority (Vadodara Municipal Corporation), total carpet area of all the units in the project is 7406.99 Square Meters. Type wise summary of carpet area of the project is as under:
|
Sr. No. |
Type | Total No. of Units | Total Carpet Area (in Sq. Mt.) | Percentage to total Carpet Area |
| 1 | Shops | 32 | 776.59 | 10.49% |
| 2 | Duplexes | 20 | 1707.04 | 23.05% |
| 3 | Flats | 78 | 4923.36 | 66.46% |
| Total | 130 | 7406.99 | 100.00% |
2. The applicant has submitted that carpet area of each shop is less than 90 square meter, carpet area of each duplex is less than 90 square meter and proposed selling price of each duplex is more than rupees 45 lakh. It is submitted that the carpet area of each apart’ less than 90 square meter and proposed selling price of each apartment is less than rupees 45 lakh.
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3. The applicant submits that the carpet area of commercial apartment (shops) is less than 15% of the total carpet area of the project. It falls under the definition of “Residential Real Estate Project”. As per the notification no. 03/2019-Central (Rate) dated on 29/03/2019 vide entry no. (ib) the said commercial apartments (shops) are chargeable to tax @5%. Duplexes will be chargeable to tax @ 5% vide entry no. 9(ia) as it does not satisfy the definition of “affordable residential apartments”.
4. It is submitted that the applicant is of the view that construction of residential flats will attracts GST @ 1% as per entry No. (i) of notification no. 03/2019-Central (Rate) dated on 29/03/2019 irrespective of the fact these flats are part of the same residential real estate project which consists of construction of commercial apartments (Shops) as well as construction of residential duplexes which does not fulfills definition of “Affordable residential apartment” based on the following facts & legal provisions :
a. In the above notification the term “affordable residential apartment” has been defined as a residential apartment in a project which commences on or after 01/04/2019 or in an ongoing 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 no.3, as the case may be, having carpet area not exceeding 60 square meters in metropolitan cities and 90 square meters in cities or town other than metropolitan cities and for which the gross amount charged is not more than forty five lakhs rupees.
b. As per entry no. (i) of the above notification, applicable rate of tax is 1% in case of construction of affordable residential apartments by a promoter in a Residential Real Estate Project.
c. Hence if any apartment/flat/duplex/unit in a project which fulfills the definition of “affordable residential apartments” will be chargeable to tax @ I% irrespective of the fact that other units of the same projects are non-affordable residential apartments which are chargeable to tax @ 5%. There is no bar in the provision for charging different tax rates in the same project which consists of affordable residential apartments & non-affordable residential apartments. The said notification has started the wording with “construction of affordable residential apartments by a promoter in a residential real estate project….” It has used the word “in a residential real estate project” Literal interpretation of this wording is that if any one or more unit in the project fulfills the definition of “affordable residential apartment” than it will be chargeable to tax at the rate as prescribed under entry no. (i) of the notification no. 03/2019-Central (Rate) dated on 29/03/2019 i.e. @ 1%.
5. The applicant has submitted that as per para 5(b) of schedule-II of the Act, any services provided by a builder in relation to construction of a complex or building intended for sale to a buyer, wholly or partly, except, where the entire consideration has been received after issuance of completion certificate, where required, by the competent authority or after its firs occupation, whichever is earlier shall be treated as “supply of services” & it shall be taxable at the rates as prescribed.
6. The applicant submits that as per Notification No. 11/2017-CT (Rate) dated 28-6-2017 as amended by notification no. 03/2019-Central (Rate) dated on 29/03/2019 w.e.f. 01/04/2019, effective rate of GST applicable on construction of residential apartments by promoters in a real estate project are as under:
