Levy of GST — Construction service—Determination of date of completion of construction work of property—In the instant application the applicant has sought advance ruling in respect of the following question:
1.Which date should be considered as the date of completion of the property?
2.Whether the applicant is liable to pay GST on any amount received as consideration towards sale of completed offices, after the date of completion, where part of the consideration was received prior to the date of completion as determined in question (a) above?
3.Whether the applicant is liable to pay GST on the consideration received as consideration towards the sale of completed offices, where the entire consideration is received after the date of completion of construction as determined in question number (a) above?
Held that—In the instant case, therefore, the crucial aspect which decides the tax liability is the date of completion certificate or first occupation, whichever is earlier, issued by a competent authority.
The bye-law clearly provides that the building or any part of the building, can’t be occupied unless occupancy certificate has been granted. In other words, the building or part thereof can be occupied only after its completion and the necessary Occupancy Certificate is obtained from BBMP, the competent authority. Therefore, the fact that the building is occupied (apparently in violation of law) does not mean its complete.
It is thus clear that the occupancy certificate which is a legal requirement, would act like a completion certificate and hence the date of such occupancy certificate would be deemed to be the date of completion.
In view of the above, the date of Occupancy Certificate issued by the Bruhat Bengaluru Mahanagara Palike, competent authority in the instant ease, shall be considered as the date of completion of the property and if the entire amount Of consideration has been received after such date of completion, then that would not be treated as a taxable service, If any part of the consideration is received before such date, then the transaction would be treated as a supply of service as per clause 5 of schedule II to the GST Act and attracts the levy of GST.
Entry No.5 of Schedule II of CGST Act 2017, specifies that the “Completion certificate” (Occupancy Certificate) is mandatory. Further the word “wherever required”, clearly stipulates that the said certificate is essentially required to be obtained, if the competent authority issues such certificate in the name of “Completion Certificate” or “Occupancy Certificate”.
In the instant case the competent authority i.e. B.B.M.P., Bengaluru issues the completion certificate in the name of “Occupancy Certificate” and hence the date of occupancy certificate need to be considered.
Ruling—(a) The date of Occupancy Certificate issued by the competent authority, i.e. Bruhat Bengaluru Mahanagara Palike should be treated as the date of completion of the construction.
(b) If any part of the consideration is received before such date of completion, then the transaction would be considered as the supply of services in terms of entry 5 of Schedule II to the GST Acts, and liable for GST.
(c) If the entire consideration is received after the date of completion, then the transaction would not be liable to GST. — Bindu Ventures, In Re —[2018] 7 TAXLOK.COM 001 (AAR-Karnataka)