Classification of service— In the instant case, the applicant M/s. Sri bhavani developers are into constructions of residential buildings and have opted for new tax scheme as per Notification No.3/2019, dt: 29.03.2019. The applicant submitted that, in a particular case they have entered into JDA with one Mr.Sadanda Chary for construction of residential units at Moulali.
The Joint Development agreement between land Owner and Builder was entered on 7 December 2017 and subsequently supplementary development agreement was entered on 17 December 2018 on area sharing basis. And that they have started the work however that they didn't have any bookings as on 31-03-2019 and therefore they require clarification if they are falling into "other than Ongoing Projects" as per the notification No 3/19 and 4/19 and that they are left with GST@5% without ITC.
Questions raised for advance ruling are as follows—
1. Whether notification 4/2019 can be followed and GST be paid on RCM basis for the share of land lord as the project is falling under "other than On-going Projects" as it can be considered as new project?
2. Is RCM applicable to daily wages, Labour Charges and Contract Labour?
3. Whether there is any limit on the percentage of material to be used in project for Eg: cement 15%, sand 10% etc?
4. Whether Salaries, Incentives, Brokerage, Remuneration and interest on Working Capital are liable for RCM?
5. In a project of combination of affordable Flats (Carpet Area is less than 60Sq Mts), and Non affordable flats (Carpet Area is more than 60Sq Mts), can different rate of tax be adopted for different units, i.e., GST 1% in case of affordable Units and 5% in case of Non affordable units based on the Carpet area?
6. That, the customer is entering into two types of agreements at the time of selling the semi finished residential flat.
a) "SALE AGREEMENT" and
b) Completion of semi finished works called "WORK ORDER",
In such case what is the rate of tax for:
a) For SALE DEED @ 5%
b) For WORK ORDER @ 18% or 12% or 5%.
Whether they are eligible for ITC in case of 18% /12%?
What is the tax rate in case of affordable housing project in the above situation?
Held that— 1. According to the statement of relevant facts having a bearing on the questions raised by the applicant, at Para 6(c) work on the project commenced in June 2018.
The Notification No. 03/2019 makes a distinction between ‘Ongoing project’ in clause (xx) of Para 4 and ‘Other than ongoing project’ in clause (xxviii) of Para 4. Accordingly ‘Other than ongoing project’ means a project which commences on or after 01.04.2019. Therefore the project undertaken by the applicant does not fall under this definition as claimed by him in the statement of facts submitted separately on 21.12.2021.
2. RCM is not applicable to daily wages, Labour Charges and Contract Labour.
3. There is no limit on the percentage of material to be used in project for Eg: cement 15%, sand 10% etc.
4. Salaries, Incentives, Brokerage, Remuneration and interest on Working Capital are not liable for RCM.
5. In a project of combination of affordable Flats (Carpet Area is less than 60Sq Mts), and Non affordable flats (Carpet Area is more than 60Sq Mts), different rate of tax can be adopted for different units, i.e., GST 1% in case of affordable Units and 5% in case of Non affordable units based on the Carpet area.
6. If the initial contract for land and building, even if entered through (2) different un severable agreements, constitutes a single contract and hence will attract tax @0.5% for affordable housing and @2.5% for other housing under CGST & SGST respectively without ITC. However any other agreement which is beyond the scope of initial agreement and is a severable agreement vis-à-vis the initial agreement then the construction made under this contract will attract 9% tax under CGST & SGST each with ITC.