The AAR, Maharashtra in M/s Romell Real Estate Pvt. Ltd. [Advance Ruling No. GST- ARA- 69/2020-21/B-51 dated April 21, 2022] has held that recipient of works contract services cannot seek advance ruling under Section 95(a) of the Central Goods and Services Tax Act, 2017 (CGST Act), since the advance ruling is not binding on the supplier, and the supplier may not follow the ruling and In such a scenario, the advance ruling loses its relevance and applicability.
Facts:
M/s Romell Real Estate Private Limited (“the Applicant”) is engaged in certain Residential Real Estate Projects (RREP). The Applicant being a recipient of work contract services supplied by the Developer or the Contractor, had sought an advance ruling on:
- Whether Entry No. 3(v) (da) of Notification 11/2017-Central Tax (Rate) dated June 28, 2017 (“the Service Rate Notification”), applies to the works contract service received from the contractors?
- Whether the benefit of concessional rate would be available to construction of common amenities such as club house, swimming pool and amenities of like nature?
Issue:
- Whether advance ruling can be sought by the Applicant being the recipient of the works contract services?
Held:
The AAR, Maharashtra in Advance Ruling No. GST- ARA- 69/2020-21/B-51 dated April 21, 2022 held as under:
- Noted that, the questions asked are such that in these transactions, the Applicant is the recipient and not the supplier of goods or services or both.
- Observed that, under Section 95(a) of the CGST Act, only a supplier can file an application for advance ruling.
- Further observed that under Section 100(1) of CGST Act, the ruling pronounced is binding only on the Applicant and on the concerned officer or the jurisdictional officer in respect of the Applicant.
- Analysed Section 103(1) of the CGST Act and Noted that, if an application is filed by the recipient of goods or services or both on the taxability of his inward supply of goods or services and ruling is pronounced accordingly, such ruling shall be binding only on him and on the concerned officer or the jurisdictional officer of him. In no way, the ruling shall be binding on the supplier of such goods or services.
- Stated that, since the advance ruling is not binding on the supplier, and the supplier may not follow the ruling. In such a scenario, the ruling loses its relevance and applicability. Any provisions of the Law, therefore, should not be interpreted in a way which defeats the very purpose of the objective and purpose of the law provision.
- Held that the Applicant cannot seek an advance ruling and such application filed by the Applicant is not maintainable under Section 95(a) of the CGST Act.
Relevant Provision:
Section 95(a) of the CGST Act:
“95. In this Chapter, unless the context otherwise requires, ––
(a) “advance ruling” means a decision provided by the Authority or the Appellate Authority or the National Appellate Authority to an applicant on matters or on questions specified in sub-section (2) of section 97 or sub-section (1) of section 100, or of section 101C shall be inserted; in relation to the supply of goods or services or both being undertaken or proposed to be undertaken by the applicant.”
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Reg. the Q >
” Whether the benefit of concessional rate would be available to construction of common amenities such as club house, swimming pool and amenities of like nature?”
Under the scheme of any such duly approved project, the price charged to the Buyer generally comprises the price for the area of the UNIT for individual possession and enjoyment , so also of the UDI (inclusive of the common amenities like club house , etc.) for common use. In view thereof, prima facie, the referred question appears to be fallacious and patently misconceived ?!?
Any views to
To be NOTED: There were two questions (not one) raised by the recipient of services; and both have been refused to be answered for the same reasons.
KEY point: Prima facie , the basic issue as to why there should be no levy of GST at all has not been raised. Open to examine/deliberate in-depth whether that should have been done ? Not having been done, may be, in the further possible proceedings before court may have to be raised , if fits into the factual matrix !?