Classification of service— In the instant case, the applicant is engaged in the business of construction of residential complex.
Currently, as per Notification No, 03/2019 - Central Tax (Rate) dated 29 March 2019, the applicant is paying outward tax liability on Construction Services at the rate of 1% or 5%, as the case maybe.
Applicant submitted that apart from consideration for the main construction activity, they also recover charges for 'the ancillary services' like JDA Lease Charges, Electrification Charges, Sewage Treatment Plant Charges, Non-refundable IFMS (Interest Free Maintenance Security) and Club Membership from the residents.
The question before us is whether the Charges for the 'Ancillary Services' recovered by the applicant will be treated as consideration for 'construction services' and classified under SAC 9954 along with the main residential construction services or whether the same will be treated as consideration for independent service(s) under the respective head. And consequently, what would be the applicable GST rate on such Charges collected for the 'Ancillary Services.
In the present case, this authority find that there are more than two supplies which are independent supplies and so taxable separately, the supply of construction services of residential unit and the other supply of 'ancillary services viz. JDA Lease Charges, Electrification Charges, Sewage Treatment Plant Charges, Non-refundable IFMS and Club Membership from the residents. Ancillary Services supplied in respect of the 'other charges' are different from the service of construction of residential flats. Therefore, it is observed that the 'ancillary services' provided cannot be said to be naturally bundled and supplied in conjunction with each other in the ordinary course of business with main supply of residential flat in the subject case.
Held that— NO, 'the ancillary services' would not be considered as a 'composite supply' naturally bundled with 'Construction Services under Section 8 of CGST and RGST Act, 2017. The applicable rate of GST on 'the ancillary services' would be as per the SAC prescribed under Notification No. 11/2017 CT (R) dated 28.6.2017 and are liable to GST @ 18%. Further, the applicant has to pay GST on the entire consideration received as charges on account of 'the ancillary services', without any abatement.
As per Section 16 of the CGST and RGST Act, the applicant is eligible to take Input Tax Credit (ITC) of the GST paid on goods or services used or intended to be used in the course or furtherance of providing 'the ancillary' services' subject to the conditions as prescribed and the provisions of sub section 5 of the Section 17 of the CGST and RGST Act. 2017.