Works Contract — Appellant 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?
Held that-Appelleate authority agree with the findings and order of the Advance ruling authority who observed that in the subject case, there is a composite supply of works contract for construction of flat, which is intended to be handed over to the buyer, but the transaction is projected as if it is a lease transaction. The AAR also observed that the entire consideration would be received before issue of Completion Certificate for the project, which does not generally happen in a lease transaction. The AAR also observed that there is not much difference in the price charged for an outright sale of similar apartments in the area and the lease premium payable. Accordingly, the AAR has held that the activity would be in the nature of “works contract” as defined under Section 2 (119) of the Act and fall under SAC 9954 and attract GST @ 18%.—Nagpur Integrated Township Pvt. Ltd., In Re… [2019] 17 TAXLOK.COM 127 (AAAR-Maharashtra)