Rate of tax (service)— In the instant case, the applicant submits that they enter into two agreements with the customers who want to have an apartment in their project. Firstly, an agreement for sale of undivided share of the land is executed between the company and the customer in which a particular number of undivided shares are agreed to be sold to the customer based on the square feet of the apartment proposed to be purchased by the customer. 

Along with the said agreement, another agreement for constructing the apartment is also executed between the company and the customer entrusting the work of constructing the apartment to the company. The value of the undivided share of the land is shown in the agreement for sale. A registered sale is executed in favour of the customer showing the said value of undivided share as the land cost and stamp duty is paid. Also, cost of construction of the proposed apartment as valued by a valuer is also to be shown as per the amendment of 2007 and stamp duty for the said amount is also shown in the sale deed and the same is paid along with the value of undivided share of land. No GST is collected or paid in respect of the value of undivided share of land.

Held that— The applicant has exercised the option of paying tax at the rate as specified in Item (if) of Sl. No. 3 of Notification No. 11/2017 Central Tax (Rate) dated 28.06.2017 as amended by Notification No.03/2019 Central Tax (Rate) dated 29.03.2019. Accordingly, the applicant is liable to pay GST at the rate of 18% [9% - CGST + 9% - SGST] in respect of the services of construction of residential apartments supplied by them.

The provisions of section 13 of the CGST Act, 2017 will apply to the determination of the time of supply. The provisions of Section 15 of the CGST Act, 2017 read with Para 2 of Notification No. 11/2017 Central Tax (Rate) dated 28.06.2017 will apply for determining the taxable value of the services supplied for the period from 01.07.2017 onwards and accordingly one-third of the total amount charged for the supply shall be deemed to be the value of land or undivided share of land involved in the supply.

The activity of the applicant qualifies to be classified as a supply of service.