AAAR: No GST Exemption On MoHUA for the Commercial Sale Built-up Areas

The Delhi Bench of Appellate Authority for Advance Ruling (AAAR) stated that the Ministry of Housing and Urban Affairs (MoHUA), does not exempt from Goods and Service Tax (GST) on the sale of commercial built-up areas.

The petitioner, NBCC India Ltd is a Government of India company whose operation is a project management consultancy, real estate development, and EPC contracts. They would sign a memorandum of understanding on the date 25.10.2016 with the Ministry of Housing and Urban Affairs (MoHUA), Government of India, wherein MoHUA has appointed the Appellant as the executing agency for the redevelopment of colonies who have “General Pool Residential Accommodation” (GPRA) and “Government Pool Office Accommodation” (GPOA).

Beneath the same arrangement, the petitioner needed to arrange the construction of dwelling units and office spaces, commercial space, and supporting infrastructure. The petitioner seeks an advance ruling as to whether the MoHUA, Government of India would be levied to pay the GST on the sale of commercial built-up space, or not.

PK Sahu on the grounds of the petitioner argued that the activities of the construction and sale thereof were get waived from the tax beneath Notification No. 12/2017- Central Tax (Rate) being in relation to the operation assigned to Municipality under Article 243 W of the Constitution. According to them, DAAR would falsely summon the revision which come into force from the date 26/07/2018 in the stated notification without appreciating that the same revision was forthcoming in nature and doesn’t applicable to the petitioners of the transactions that took place before the same date.

The Division bench of Mallika Arya (Centre Member) and S.B Deepak Kumar (state Member) ruled that the MoHUA Government of India was not exempted from the GST paid on the sale of commercial built-up space since the same does not refer to any operation entrusted to the municipality under Article 243 W of the Constitution. Therefore, the exemption under S. No 4 of Notification No. 12/2017- Central Tax (Rate) and parallel notifications under SGST and IGST were not admissible.

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Under Articles 243P and 243Q of the Constitution, the bench sees that, MoHUA, Government of India was not a Municipality. Since these services were furnished to the business entities, exemption under S. No. 6 of the said Notification was also not permissible.