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Corporate News *  Missing seized records must be considered while testing ITC claim; duplicate GST demands ordered corrected: Delhi High Court. *  GST appeal can’t be rejected without addressing taxpayer’s grounds: Allahabad High Court. *  Surplus IGST credit can offset CGST, SGST shortfall: GSTAT. *  GST refund can’t be denied when cancelled airfares are returned with tax: GSTAT. *  3 Hearing notices issued within 2 minutes: Gujarat High Court flags portal flaw, seeks report. *  GSTR-9, GSTR-9C filing for FY 2025-26 enabled; pending GSTR-1 and GSTR-3B must be filed first. *  Dupattas are exempt fabrics, can’t be taxed as fibres at 4%: Madras High Court. *  Full transitional credit allowed on capital goods received after GST rollout: GSTAT denies Rs. 6.99 lakh export duty credit. *  GST return mismatch alone can’t justify fraud proceedings: GSTAT orders fresh adjudication under section 73. *  Supplier found non-existent later can’t alone justify input tax credit denial: GSTAT. *  GST interest stops once tax reaches government account, can’t run until return filing: GSTAT. *  Cancelled flat booking- GST refund can’t be denied without excluding COVID period from limitation: GSTAT. *  India notifies rules of origin for India–New Zealand FTA. *  Incomplete E-bike kits classifiable as complete vehicles, but not eligible for CKD duty concession: CESTAT. *  Same GST rate on main input and output can’t by itself bar inverted duty refund: GSTAT. *  Unjust enrichment doesn’t apply to customs refunds from assessments finalised before July 13, 2006: Gujarat High Court. *  CENVAT credit can’t be denied solely because plant And machinery are embedded in earth: Karnataka High Court. *  DFIA exports ineligible for RoDTEP benefits; customs directs repayment with applicable interest. *  Second E-Way bill alone doesn’t prove another supply: GSTAT. *  Bail denied in Rs. 1.19 crore fake GST refund case over risk of accused absconding again: Punjab and Haryana High Court. *  GST registration can be restored after revocation deadline if outstanding dues are paid: Gauhati High Court. *  Multiple GST proceedings over same suppliers: Calcutta High Court directs dept. to share findings for adjudication. *  E-Governance portal services not OIDAR, fixed deposit interest not taxable: CESTAT. *  Rs. 500 Stamp duty required on authority letters for CAs, CMA and GST practitioners in Pune GST division.  *  Rs. 1.10 crore GST refund must be paid in cash after business closure: Allahabad High Court. *  Godown rent attracts 18% GST even when used exclusively for exempt agricultural warehousing: AAR. *  GST portal launches "Multi-State Registration" facility: one master TRN for registration applications across multiple States/UTs. *  RoDTEP scheme extended till 31st December, 2026.  *  Mere disagreement with order can’t override Rs. 20 lakh appeal limit: GSTAT. *  Customs interest can’t be backdated before confiscation liability is determined; nearly 8 year period excluded: Delhi High Court.
Subject News *  GST summons: anticipatory bail maintainable without arrest order, but relief denied in evasion case: Allahabad High Court. *  GST Appeal can’t be decided without hearing taxpayer’s objections to fresh evidence: Allahabad High Court. *  GST ITC can’t be reversed merely because supplier grants discount without reducing tax liability: GSTAT. *  Mere quoting of GST provision is not a valid charge: GSTAT quashes ITC denial. *  Personal hearing mandatory before adverse GST order, even without taxpayer’s request: Rajasthan High Court. *  Parallel bail pleas without full disclosure amount to abuse of process Rs. 43.08 crore GST case sent for fresh hearing: Supreme Court. *  GST refund based on unchallenged advance ruling can’t be recovered using later circular: GSTAT. *  Payment of GST alone doesn’t end interest and penalty liability when tax and interest remain unpaid beyond 30 days of notice: GSTAT. *  GST demand over builders’ 80% procurement rule requires reasoned adjudication: GSTAT. *  Eligible ITC doesn’t automatically entitle taxpayers to compensation cess refund on domestic sales: GSTAT. *  GST confiscation order passed before reply deadline invalid: GSTAT. *  GST interest can’t be retained after tax refund on delayed export receipts: Punjab & Haryana High Court. *  GST appeal can’t be dismissed over pre-deposit shortfall without opportunity To respond: Bombay High Court. *  DGGI SCN can’t be challenged before reply and adjudication:Chhattisgarh High Court. *  GST input tax credit can’t be denied solely due to supplier’s retrospective registration cancellation: GSTAT. *  GST notice must explain fraud allegations; merely repeating section 74 Is not enough:  Himachal Pradesh High Court. *  Audit detection alone can’t justify GST fraud penalty; specific suppression must be proved: GSTAT. *  GST order uploaded only under ‘Additional Notices’ tab without separate intimation set aside: Calcutta High Court. *  Service Tax appeal can’t be rejected for missing pre-deposit proof when payment is already recorded: CESTAT. *  SGST dept. can’t hear appeal against CGST order: Calcutta High Court. *  Mere dispatch of tax order can’t prove service or make appeal time-barred: CESTAT. *  Dealer incentives can’t be taxed merely on ledger entries: CESTAT. *  DGFT orders quashed for failure to supply DRI letter relied upon in SCN: Bombay High Court. *  GST penalty u/s 122(1A) can’t apply to Pre-2021 transactions; unregistered beneficiaries also covered: Delhi High Court. *  Expired E-way bill caused by wrong PIN code can’t justify GST penalty without intent to evade tax: GSTAT. *  Used railway rails can’t be taxed as track material without proof they are fit for reuse: CESTAT. *  Earlier DGGI notice doesn’t bar separate GST demand on different issue: Delhi High Court. *  ITC dispute involves no question of law: GSTAT directs appeal to Vice-President. *  Earlier DGGI notice doesn’t bar separate GST demand On different issue: Delhi High Court. *  No E-way bill required for interstate goods movement in november 2017: GSTAT quashes detention and penalty.  

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GST UPDATE ON NOTIFICATION ISSUED FOR GST RATE ON REAL ESTATE SECTOR W.E.F. 01.04.2019 PART-1

GST UPDATE ON NOTIFICATION ISSUED FOR GST RATE ON REAL ESTATE SECTOR W.E.F. 01.04.2019 PART-1
The much awaited notifications with respect to GST Council’s decision as regards prescribing new GST rates for real estate sector being 1% without ITC for affordable residential housing and 5% without ITC for non-affordable residential housing have been released by the Government yesterday. The Government has issued around 14 notifications [CGST (Rate) and IGST (Rate)] making substantial changes in the GST rates applicable for real estate sector thereby giving “amendment bonanza” to the real estate sector on the beginning of new financial year. As we all know that the real estate sector is always surrounded by immense litigation and the substantial amendments made by the government increase their complexities thereby adding fuel to the fire of litigation that will be really difficult to extinguish. The present update seeks to highlight the key points of the new GST rates introduced by the government and the conditions stated therein.
  1. The notification removes the confusion as regards deduction of 1/3 rd value pertaining to portion of land as stated in paragraph no. 2 of the notification. It was pointed out in our earlier update that deduction in share of land is not being provided in the Press Release. However, the GST rates specified in the Notification No. 03/2019-Central Tax (Rate) dated 29.03.2019 and Notification No. 03/2019-IGST (Rate) dated 29.03.2019 specifically mentions that the deduction stated in paragraph no. 2 of the notification would be applicable.
  2. A new procedural compliance has been introduced wherein the developers referred in the notification as ‘developer-promoter’ is required to ensure that 80% of the value of input and input services (other than services by way of grant of development rights, FSI, electricity, high speed diesel, motor spirit, natural gas) used in supplying the services should be received by the registered supplier. Earlier, there was confusion that if the limit of 80% is not adhered to, whether reverse charge mechanism would be applicable for all inputs/input services or only for the shortfall. This notification states that the developer is required to pay GST at the rate of 18% on all inputs/input services except cement and capital goods under reverse charge mechanism on the shortfall in the purchases made from registered supplier. With respect to cement and capital goods, the GST rates as applicable to the said goods would be relevant. It is also prescribed that the developer is required to ensure on monthly basis that the shortfall is being paid under reverse charge mechanism with respect to purchases of cement. As regards other inputs/input services, the developer is required to make good the shortfall of 80% on annual basis, latest by 30 June of the quarter ending the financial year. The tax payments on the shortfall are required to be reported by the developer in the prescribed form electronically on the common portal thereby leading to increased compliance. Not only this, the input tax credit not availed shall be reported every month as ineligible credit in GSTR-3B [Row No. 4(D)(2)].
  3. The developer has one time option to pay GST at the old rates of 12%/18% by filing Form at Annexure IV by 10th May, 2019 for the ongoing projects.
  4. This notification also seeks to clear the confusion as regards valuation of flats given by the developer to the landowner in lieu of transfer of development rights. It is stated that the value of such flats shall be the total amount charged for similar apartments in the project from independent buyers nearest to the date on which such development right is transferred to the promoter less the value of transfer of land if any as prescribed in paragraph 2 of the notification. It is worth noting that the provision allows deduction of value of land even if flats are given to landowner.
  5. This notification also seeks to clear the dispute as regards inclusion of the value of other charges charged by the developer such as preferential location charges, development charges, parking charges, common facility charges etc. and states that these charges would form part of the gross amount of consideration. This has the effect that GST will be payable on the said charges at the GST rate applicable to constructed flats sold by the developer.       
  6. The notification specifies that the credit of input tax charged on goods and services used in supplying the service should not been taken except to the extent as prescribed in Annexure I in case of Real Estate Project (REP) and in Annexure II in case of Residential Real Estate Project (RREP). The details of the Annexures will be discussed in our next update.
 This is solely for the educational purpose.
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