Page 142 - GSTL_16 April 2020_Vol 35_Part 3

356 GST LAW TIMES [ Vol. 35
By virtue of this agreement, the appellant has been granted the right
to design, finance, develop, a township project, comprising of resi-
dential apartments, commercial complexes, etc. in the land owned
by MADC. As per the agreement, the appellant had been permitted
only to grant long-term lease of the residential apartments and
commercial buildings and the same cannot be sold outright in fa-
vour of the buyers. The land in which the construction is undertak-
en is a leasehold land, which cannot be transferred. In pursuance of
thereof, the appellant intend to grant long-term lease of the residen-
tial apartments being constructed and a sample “Agreement for
Lease” proposed to be entered with prospective lessees is placed at
Page Nos. 58 to 88 of this appeal. It may be observed that the identi-
fied apartment unit in the residential complex is proposed to be
given on long-term lease for 99 years, expiring on 21-6-2105, against
payment of lease consideration by the lessee to the appellant. It may
be noted that what is proposed to be given on lease is the identified
apartment, as mentioned in Schedule C of the agreement. It may be
further noted that the said “Agreements for Lease” would be en-
tered into, as and when prospective lessees approach the appellant,
during the state of construction of the complex, which fact is also
noted in clause 1.3 of the agreement. The lease consideration is also
payable in various installments as mentioned in Schedule D to the
agreement, at various stages of construction.
(D) Based on the above facts, the appellant has filed an application for
advance ruling before the Maharashtra Authority for Advance Rul-
ing (hereinafter referred to as the AAR), seeking a ruling as to
whether the activity of granting long-term lease of the residential
apartments would amount to “transfer of immovable property” and
hence not liable to GST? If not, what is the appropriate classification
and applicable GST rate for the said activity? The appellant pleaded
that the activity would amount to transfer of immovable property
and hence not liable to GST levy at all. In the alternative, it was also
claimed by the appellant that the activity is classifiable under Ser-
vice Accounting Code 9972 11, as “Rental and leasing services in-
volving own or leased residential property” and as per S. No. 12 of
Notification 12/2017-Central Tax (Rate), dated 28-6-2017, “Services
by way of renting of residential dwelling for use as residence” is ex-
empted from payment of GST. During the hearing, the AAR re-
quired the appellant to produce the details of normal sale value of
apartments in the area near to the appellant’s project and the lease
amounts charged by the appellant, which was also furnished by the
appellant. Copy of the application filed by the appellant before the
AAR and various written submissions filed before the authority are
placed at Page Nos. 89 to 97 of this appeal.
(E) The department was also represented before the AAR and written
and oral submissions were made by the department also. The de-
partment claimed that the activity of the appellant is in the nature of
works contract for construction of the apartment for the prospective
lessee.

GST LAW TIMES  16th April 2020  262