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Corporate News *  Service tax penalty can’t survive when assessee acted on dept.’s own view of non-taxability: Delhi High Court. *  GST section 74 extended limitation questionable when form 26AS mismatch was already known: Karnataka High Court grants interim relief. *  CGST demand prima facie impermissible after state GST settlement under section 128A: Bombay High Court. *  Supreme Court asks GSTAT to sympathetically consider delay as taxpayers pursued remedy before wrong forum. *  Supreme Court stays Tripura High Court ruling protecting genuine buyers from ITC denial over supplier’s GST default. *  Diary entries alone can’t prove clandestine removal of goods: CESTAT quashes excise penalty on steel trader. *  Customs could investigate preferential tariff claims even before sec. 28DA: Delhi High Court. *  Customs dept. relied on fake AI generated case laws: supreme court quashes Rs. 425.28 crore penalty. *  No GST exemption in affiliation and annual registration charges for admission or conduct Of examinations: GSTAT. *  Mere invoices, cheque payments insufficient to establish genuine movement of goods: GSTAT restores Rs. 43.44 lakh ITC demand. *  Consolidated GST show cause notice covering multiple financial years is not without jurisdiction: Delhi High Court. *  Construction of independent houses on separate plots not taxable as ‘Residential Complex’ without common facilities: CESTAT. *  GST penalty exceeding statutory maximum unsustainable; Allahabad High Court quashes ? 50,000/- penalty after taxpayer filed return and paid late fee. *  GST order against standard chartered bank passed without hearing set aside by Bombay High Court. *  Retracted statements can’t be relied upon without cross-examination: CESTAT quashes gold confiscation. *  Burden to prove misclassification lies on customs department: CESTAT. *  CESTAT quashes Rs. 98 lakh excise demand on clearance of used refractory brick scrap. *  Service tax demand on irrigation works quashed: Karnataka High Court rules sale of goods component not taxable as service. *  GSTAT restores tax and penalty for transporting iron scrap without E-way bill citing intent to evade tax. *  Madras High Court stays GST recovery from directors without opportunity to show cause under section 89. *  Madras high court stays GST recovery notice against directors; finds prima facie case on applicability of section 79(1)(c). *  Procedural lapses can’t justify harsh punishment without serious customs breach: CESTAT quashes customs broker licence revocation. *  Service tax payable on land leasing and sports complex charges: CESTAT. *  Settled customs dispute can’t be reopened through Article 226 challenge to interest liability: Delhi High Court. *  Mere facilitation of customs clearance can’t establish knowledge of smuggling: Madras High Court. *  GST registration cancellation stayed: Allahabad High Court questions 99% ITC utilisation cap under rule 86B. *  Composition scheme lapses automatically on crossing Rs. 1.5 crore turnover: GSTAT. *  Gujarat High Court quashes GST cancellation orders after officer relied on non-existent AI-generated case laws. *  Importers liable for customs duty benefits availed through manipulated scrips: Delhi High Court. *  Procedural E-way bill lapse alone can’t justify penalty where genuine transaction and absence of tax evasion are established: GSTAT.
Subject News *  Documentary evidence dominates probe, further custody unwarranted: mumbai court grants bail in Rs. 22.44 crore customs duty evasion case. *  Business premises can’t remain sealed for non-participation in GST search: Allahabad High Court. *  GST pre-deposit must be refunded proportionately when taxpayer partly succeeds in appeal: Bombay High Court. *  Supreme Court grants 30 days to file GST appeal; keeps pre-deposit issue open due to deposit in parallel CGST proceedings. *  GST demand can’t exceed amount proposed in SCN: Allahabad High Court quashes Rs. 20.47 Crore order. *  Hundreds-of-crores GST demand and heavy 10% pre-deposit no ground to bypass statutory appeal: Punjab & Haryana High Court. *  Delhi High Court refuses to entertain challenge to gold confiscation due to statutory appeal remedy and unexplained delay. *  Procedural error in customs broker licence inquiry can be rectified through remand: Delhi High Court. *  GSTR-2A mismatch alone can’t justify ITC denial without invoice-wise verification; personal hearing mandatory: GSTAT. *  GST order passed without uploading personal hearing notices violates sec. 75(4): Allahabad High Court. *  TAX EVASION - Sec. 74 GST SCN quashed for not spelling out fraud, wilful misstatement or suppression: Allahabad High Court. *  STPI’s SOFTEX certification and NoC charges taxable as business support services: CESTAT. *  Suspicion can’t replace proof: CESTAT quashes penalty in alleged gold-smuggling operation. *   Limitation runs from communication of order: Madras High Court upholds rejection of delayed GST Appeals. *  Rajasthan High Court quashes GST demand over unsigned show cause notice. *  ITC recovery upheld where supplier failed to deposit GST: Rajasthan High Court. *  Customs commissioner’s empowered to make port trust liable for duty on pilfered goods: Supreme Court. *  Rectification proceedings can’t be used to challenge an uncontested GST assessment through a writ petition: Andhra Pradesh HC. *  GST proceedings against deceased proprietor unsustainable without notice to legal heir: GSTAT. *  Mere availment of ineligible self-assessed ITC doesn’t amount to suppression without evidence of fraud or wilful misstatement: GSTAT. *  Disposal of mining overburden by entity authorised by mining lease holder constitutes taxable service: CESTAT. *  Toll plaza data not mandatory for ITC refund: GSTAT. *  Disputed GST fraud allegations require investigation: Punjab and Haryana High Court makes interim bail absolute in alleged fraud and GST fraud case. *  Non-manufacturer contractor liable to deposit excess excise duty collected from buyer: CESTAT. *  GST order can’t reject taxpayer’s reply as “not satisfactory” without reasons: Madhya Pradesh High Court. *  Uncorroborated statements can’t establish alleged diversion of duty-free goods: CESTAT. *  Erection services were not liable to service tax prior to 10th september 2004: CESTAT. *  Sec. 74 GST notice must spell out statutory ingredients for invoking extended tax demand proceedings: Allahabad High Court. *  No jurisdictional bar under section 6(2)(b) in parallel CGST SGST proceedings: Delhi High Court refuses to bypass GST appeal remedy. *  Madras High Court remits GST demand for fresh adjudication after taxpayer claims it was unaware of SCN following business closure.  

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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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