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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-2

GST UPDATE ON NOTIFICATION ISSUED FOR GST RATE ON REAL ESTATE SECTOR W.E.F. 01.04.2019 PART-2
GST UPDATE ON NOTIFICATION ISSUED FOR GST RATE ON REAL ESTATE SECTOR W.E.F. 01.04.2019 PART-2
 
In the earlier update, we had discussed the basic scheme announced vide Notification No. 03/2019-Central Tax (Rate) dated 29.03.2019. In the present update, we discuss the computations to be done as prescribed in Annexure I to the notification. Annexure I pertains to computation of input tax credit on inputs and input services attributable to the construction of residential portion in a Real Estate Project (REP) in case of ongoing project which has time of supply on or after 01.04.2019 and which is not to be taken by the developer. It also seeks to compute input tax credit attributable for construction of residential portion in REP in case where the project commences on or after 01.04.2019.  
Where % completion as on 31st March, 2019 is not zero or where there is inventory in stock Where % completion as on 31st March, 2019 is zero but invoicing has been done having time of supply before 31st March, 2019 and no  input services or inputs have been received as on 31st March, 2019
 
Te= Tc + Tr
Te means total eligible credit
Tc means ITC attributable to construction of commercial portion in REP which is calculated as follows:-
Tc = T* (Carpet area of commercial apartments in the REP/total carpet area of commercial and residential apartments in the REP)
Tr means ITC attributable to construction of residential portion in the REP which has time of supply on or before 31st March, 2019 calculated as follows:-
Tr= T * F1* F2* F3* F4
T is the total ITC availed (utilised or not) on inputs and input services used in construction of the REP from 1st July, 2017 to 31st March, 2019 including transitional credit taken on 1st July, 2017.
F1= Carpet area of residential apartments in REP/Total carpet area of commercial and residential apartments in the REP
F2= Total carpet area of residential apartment booked on or before 31st March, 2019/Total carpet area of the residential apartment in REP
F3= Such value of supply of construction of residential apartments booked on or before 31st March, 2019 which has time of supply on or before 31st March,    2019/Total value of supply of construction of residential apartments booked on or before 31st March, 2019
F4= 1/% completion of construction as on 31st March, 2019.
ALTERNATE CALCULATION OF Te
Te= Tc+T1+Tr
Tc is the ITC attributable to construction of commercial portion in the REP calculated as
Tc=T3* (carpet area of commercial apartments in the REP/total carpet area of commercial and residential apartments in the REP)
T3= T-(T1+T2)
T1= ITC attributable exclusively to construction of commercial portion in the REP
T2= ITC attributable exclusively to construction of residential portion in the REP
Tr is the ITC attributable to the construction of residential portion in the REP which has time of supply on or before 31.03.2019 and which shall be calculated as follows:-
Tr= (T3+T2) * F1*F2*F3*F4		  
Te= Tc + Tr
Te means total eligible credit
Tc means ITC attributable to construction of commercial portion in REP which is calculated as follows:-
Tc = Tn* (Carpet area of commercial apartments in the REP/total carpet area of commercial and residential apartments in the REP)
Tr means ITC attributable to construction of residential portion in the REP which has time of supply on or before 31st March, 2019 calculated as follows:-
Tr= Tn * F1* F2* F3
Tn means tax paid on such inputs and input services on which ITC is available under the CGST Act received in 2019-20 for construction of REP.
F1, F2 and F3 are the same as discussed in column no. 1.
 
Te shall be determined in the following situations as under:
 
(i) where percentage invoicing is more than the percentage completion and the difference between percentage invoicing (per cent. points) and the percentage completion (per cent. points) of construction is more than 25 per cent. points; the value of percentage invoicing shall be deemed to be percentage completion plus 25 percent points;
 
(ii) where the value of invoices issued on or prior to 31st March, 2019 exceeds the consideration actually received on or prior to 31st March, 2019 by more than 25 per cent. of consideration actually received; the value of such invoices for the purpose of determination of percentage invoicing shall be deemed to be actual consideration received plus 25 percent. of the actual consideration received; and
 
(iii) where, the value of procurement of inputs and input services prior to 1st April, 2019 exceeds the value of actual consumption of the inputs and input services used in the percentage of construction completed as on 31st March, 2019 by more than 25 percent. of value of actual consumption of inputs and input services, the jurisdictional commissioner or any other officer authorized in this regard may fix the Te based on actual per unit consumption of inputs and input services based on the documents duly certified by a chartered accountant or cost accountant submitted by the promoter in this regard, applying the accepted principles of accounting.
 
Finally, the amount of input tax credit attributable to construction of residential portion in a REP which has time of supply on or after 01.04.2019 with respect to column no. 1 will be calculated as follows:-
Tx= T-Te
If the Tx is positive, Te < T, the registered person will pay the amount equal to difference between T and Te and such amount shall form part of the output liability of the registered person and furnished in ITC-03.
If the Tx is negative, Te > T, the registered person will be eligible to take ITC on goods and services received on or after 01.04.2019 for construction of residential portion in REP to the extent of difference between Te and T.
The above computation will be explained with the help of illustration in our next update.
This is solely for the educational purpose.
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