The West Bengal Authority for Advance Ruling (AAR) has delivered a decision regarding the GST classification of a construction project by M/s SRIPSK Developers LLP. The project in question, sanctioned by the Kolkata Municipal Corporation (KMC) as a Service Apartment complex, was registered under the Real Estate (Regulation and Development) Act (RERA) as a residential project. This discrepancy arose because RERA does not have a distinct category for Service Apartments. The land deed for the property explicitly restricts its use to commercial activities, prohibiting residential occupation.
The main issue was whether the project should be classified as residential or commercial construction for GST purposes. The AAR ruled that Service Apartments differ from traditional residential apartments as they provide lodging similar to hotels, intended for commercial use. The authority emphasized that the KMC's classification as a commercial establishment should take precedence over the RERA registration. The AAR further noted that KMC, as the competent authority, has the jurisdiction to determine the nature of the project for taxation purposes.
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As a result, the AAR concluded that the project, named "Palladina," should be treated as the construction of commercial buildings under Heading 9954 of Notification No. 11/2017–CT (Rate). This decision clarifies that the GST rate applicable will be based on its commercial classification, aligning with the municipal authority's sanction and the land use restrictions.
Order Date: 17 October 2025
Case Title: M/s SRIPSK Developers LLP
Facts
- The project was sanctioned by the Kolkata Municipal Corporation (KMC) as a Service Apartment complex, though registered under RERA as a residential project due to lack of a separate “Service Apartment” category.
- The land deed restricted the property’s use solely to commercial activities, explicitly prohibiting residential occupation.
- The applicant sought clarity on whether the project should be treated as construction of a residential building or construction of a commercial building under Notification No. 11/2017–CT (Rate), as amended by Notification No. 03/2019–CT (Rate).
Issue
- Whether a “Service Apartment” project, sanctioned as commercial by the municipal authority but registered under RERA as residential, is to be classified as residential or commercial construction for the purpose of GST rate applicability?
Order
- The Authority held that Service Apartments are distinct from traditional residential apartments, as they offer short- and long-term lodging with facilities similar to hotels and are intended for commercial use.
- The land use restriction and KMC’s sanction plan clearly identify the project as a commercial establishment, which prevails over the RERA registration.
- The AAR noted that KMC, being the competent authority under the Real Estate (Regulation and Development) Act, 2016, has the jurisdiction to determine the nature of the project for taxation purposes.
- Consequently, the project “Palladina” was held to fall under “construction of commercial buildings” under Heading 9954 of Notification No. 11/2017–CT (Rate).
