2021-TIOL-217-AAR-GST

Puranik Builders Ltd

GST -  Applicant is engaged in the business of construction and sale of residential apartments and discharge GST for which consideration is received before receipt of Occupancy/completion certificate - Said construction services are classified under HSN 9954 and are covered at Entry 3 of Notification no. 11/2017-CTR - Inasmuch as while discharging tax, in terms of paragraph 2, value of transfer of land or undivided share of land is deemed as 1/3rd of the total value of such construction services, and the same is deducted from the total value of such services to arrive at the applicable GST liability in hands of the Company for such construction services -  Apart from consideration for the main construction activity, the Applicant also collects various other charges (electric meter installation and security deposit charges, water connection charges, municipal taxes, advance maintenance, club house maintenance, development charges, share money, application fee, entrance fee, formation of society charges, infrastructure charges, legal fees) from their customers at the time of entering into the Agreement and/or giving possession of residential apartments - Such charges are collected under the Agreement itself with their respective amounts separately identified in the Agreement - Presently, the applicant has been collecting and discharging GST at the rate of 18% on the Other charges collected from customers in respect of sale of residential apartments - Applicant believes that if the supplies are treated as composite supplies, the amounts pertaining to the other charges will be added in the total value of construction services and the 1/3rd deduction from total value will be applied - however, if not treated as composite supply, individually applicable rate of tax for each of the service head/description covered in Other charges would be 18% and in such a case the 1/3rd deduction from total value as per the notification may not be applicable - a ruling is sought thereon.   Held: When the question of payment of stamp duty under the Bombay Stamp Act, 1958 arises, the applicant treats these 'Other charges' not as a part of supply of main construction service but when question of payment of GST arises, the applicant tries to contend that the value of other charges collected is part and parcel of value of that main construction service - It is a settled legal principle that a party cannot be permitted to approbate and reprobate on the same facts and take inconsistent shifting stands -  From the terms and conditions of the sale deed agreement, it is seen that the applicant has collected the basic flat sale price separately for the supply of residential unit and the charges are collected separately for supply of different services which are called as 'other charges' - Merely because the agreement is common, it will not make it a supply of bundled services - Heading 9954, Entry no. 3 of 11/2017-CTR covers 'Construction services' - Said entry is specifically related to construction of a complex, building, civil structure or a part thereof, including a complex or building intended for sale to a buyer, wholly or partly - For the purposes of the Act, 2017, the 'Other services' provided by the applicant can be said to be classified under different SAC such as 995461, 999799, 995425, 998214, 998216 respectively -  Consideration for providing the construction services by way of construction of residential unit and the consideration for the other services (i.e. other charges collected) are considerations against separate independent services being provided by the applicant - Considering the nature of supplies in question, the services for each of the service head / description are covered under Notification 11/2017-CTR mentioned above and, therefore, the Other Charges would attract GST @18% - Thus, the 1/3rd deduction from total value as per paragraph no. 2 of the Notification (as claimed by the applicant) cannot be allowed as deduction from the Other Charges - A plain reading of the items or the list of 'Other charges' itself shows that services supplied against the said charges have no connection with land and, therefore, question of considering the 1/3rd deduction or rebate towards land cost does not arise, particularly, as the entries applicable to both of the above services are different - Held, therefore, that  “Other Charges” received will not be treated as consideration for construction services supplied  and is not classified under SAC 9954 along with the main residential construction services -  The 'Other charges' will be treated as consideration received against supply of independent service(s) of the respective heads   - Applicable rate of GST in respect of such charges/services would be as per the SAC prescribed under 11/2017-CTR and are liable to GST @18% - Applicant has to pay GST on the entire consideration without any abatement: AAR 

- Application disposed of: AAR