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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-3

GST UPDATE ON NOTIFICATION ISSUED FOR GST RATE ON REAL ESTATE SECTOR W.E.F. 01.04.2019 PART-3
GST UPDATE ON NOTIFICATION ISSUED FOR GST RATE ON REAL ESTATE SECTOR W.E.F. 01.04.2019 PART-3
 
In the earlier update, we had discussed the provisions contained in Annexure I for 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. In the present update, we explain the provision with the help of an illustration.
 
Sl. No   Details of a REP (Res + Com)    
       
1 No. of apartments in the project   100 Units
2 No. of residential apartments in the project   75 Units
3 Carpet area of the residential apartment   70 Sqm
4 Total carpet area of the residential apartments C2 * C3 5250 Sqm
5 value of each residential apartment   0.60 Crore
6 Total value of the residential apartments C2 * C5 45.00 Crore
7 No. of commercial apartments in the project   25 Units
8 Carpet area of the commercial apartment   30 Sqm
9 Total carpet area of the commercial apartments C7 * C8 750 Sqm
10 Total carpet area of the project (Resi + Com) C4 + C9 6000 Sqm
11 Percentage completion (Pc) as on 31.03.2019 [as declared to RERA or
determined by chertered engineer]		    
20%		  
12 No of residential apartments booked before transition   40 Units
13 Total carpet area of the residential apartments booked before transition C12 * C3 2800 Sqm
14 Value of booked residential apartments C5 * C12 24 Crore
15  
Percentage invoicing of booked residential apartments on or before 31.03.2019		    
60%		  
16 Total value of supply of residential apartments having t.o.s. prior to transition C14 * C15 14.4 Crore
17 ITC to be reversed on transition, Tx= T- Te      
18 Eligible ITC (Te)= Tc + Tr      
19 T (*see notes below)   1 Crore
20 Tc= T x (carpet area of commercial apartments in the REP/ total carpet area of
commercial and residential apartments in the REP)		 C19 * (C9/ C10) 0.125 Crore
21 Tr= T x F1 x F2 x F3 x F4      
22 F1 C4 / C10 0.875  
23 F2 C13 / C4 0.533  
24 F3 C16 / C14 0.600  
25 F4 1/ C11 5  
26 Tr= T x F1 x F2 x F3 x F4 C19 * C22 * C23 * C24 * C25 1.400 Crore
27 Eligible ITC (Te)=Tc + Tr C26 + C20 1.525 Crore
28 ITC to be reversed/ taken on transition, Tx= T- Te C19 - C27 -0.525 Crore
 
29 Tx after application of cap on % invoicing vis-a-vis Pc      
30 % completion   20%  
31 % invoicing   60%  
32 % invoicing after application of cap(Pc + 25%) C11+25% 45%  
33 Total value of supply of residential apartments having t.o.s. prior to transition C14*C32 10.80 Crore
34 F3 after application of cap C33/C14 0.45  
35 Tr= T x F1 x F2 x F3 x F4 (after application of cap) C19 * C22 * C23 * C34 * C25 1.05 Crore
36 Eligible ITC (Te)=Tc + Tr (after application of cap) C20 + C35 1.18 Crore
37 ITC to be reversed / taken on transition, Tx= T- Te (after application of cap) C19 - C36 -0.18 Crore
 
38 Tx after application of cap on % invoicing vis-a-vis Pc and payment realisation      
39 % invoicing after application of cap(Pc + 25%)   45%  
40 Total value of supply of residential apartments having t.o.s. prior to transition C33 10.80 Crore
41 Consideration received   8.00 Crore
42 Total value of supply of residential apartments having t.o.s. prior to transition
after application of cap vis-a-vis consideration received		 8 cr + 25% of 8 Cr 10.00 Crore
43 F3 after application of both the caps C42 / C14 0.42  
44 Tr= T x F1 x F2 x F3 x F4 (after application of both the caps) C19 * C22 * C23 * C43 * C25 0.97  
45 Eligible ITC (Te)=Tc + Tr (after application of both the caps) C20 + C44 1.10  
46 ITC to be reversed / taken on transition, Tx= T- Te (after application of both the
caps)		  
C19 - C45		  
-0.10		 Crore
           
 
The calculation is self explanatory as per the provisions discussed in our earlier update. However, one point that is worth observing is that paragraph 3 of the notification starts with non-obstante clause wherein it overrides the provisions contained in paragraph no. 2 of the notification. The final computation as per paragraph no. 2 of the notification is mentioned at serial no. 28 of the table. However, the situations prescribed at paragraph no. 3(i) and 3(ii) are also illustrated in the above example. The value of Tx in situation 3(i) is mentioned at serial no. 37 of the table while that covered by situation 3(ii) is mentioned at serial no. 46 of the table. If we discuss the computation covering situation no. 3(i) wherein the percentage invoicing (60%) is more than percentage completion (20%), it is found that the % of invoicing is to be taken as (20%+25%)= 45%. This will result in re-computation of F3 and Tx to be -0.18 Crores meaning that the developer promoter is eligible to avail the credit of 18 Lakhs in situation no. 3(i). Similarly, F3 is individually re-computed in situation 3(ii) with Tx as -0.10 Crores, it means that the developer promoter is eligible to avail the credit of Rs. 10 Lakhs in situation no. 3(ii). Now, the illustration of the notification assumes that the situation 3(i) and 3(ii) are mutually exclusive but it is possible that the developer is covered by both the situations. Accordingly, it is not clear as to the situation that is to have precedence while computing the value of Tx. Moreover, it is also not suggested that which Tx is to be considered finally by the developer promoter if he is covered by both situations 3(i) and 3(ii). The revenue authorities will definitely insist for the Tx with the lowest value as in the present case, the Tx indicates availment of credit by the developer promoter whereas the assessee will chose the Tx with highest value. A suitable clarification is expected by the government so that unnecessary dispute is avoided in future.   
This is solely for the educational purpose.
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