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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 POS FOR RENTING OF IMMOVABLE PROPERTY

GST UPDATE ON POS FOR RENTING OF IMMOVABLE PROPERTY
GST UPDATE ON APPLICABILITY OF GST WHERE BOTH SUPPLIER AND RECIPIENT OF RENTING OF IMMOVABLE PROPERTY SERVICE ARE LOCATED OUTSIDE INDIA AND PROPERTY IS SITUATED IN INDIA
 
The provisions for determining place of supply are given in chapter V of IGST Act, 2017 which covers section 10 to 14 of IGST Act. Section 12 determines the place of supply of services where the location of supplier of services and the location of the recipient of services is in India. Thus, section 12 will apply only where the location of supplier aswell as the recipient is in India. Similarly, section 13 determines the place of supply of services where the location of the supplier of services or the location of the recipient of services is outside India. Thus, this section prescribes the provisions for determiningthe place of supply in case where either the location of supplier or the location of recipient of service is outside India. This section uses the word "or", therefore, there arises a question as to which section will apply in case location of both recipient of service as well as supplier of service is outside India. This update is about the issue whether the provisions of section 13 can be applied where both location of supplier and recipient are outside India.
 
 
In case of renting of immovable property service, the place of supply is the place where the immovable property is situated. This provision is given in both section 12 (applicable where location of supplier of service and location of recipient of service is in India) and in section 13 (applicable where location of supplier of service OR location of recipient of service is in India). In the given case where both supplier and recipient of renting service are located outside India, section 12 is outrightly not applicable. Further, the section 13 uses the word "OR" which if literally interpreted will mean that it will apply only if one out of supplier and recipient are located outside India. It does not specifically mentions that it will also apply if location of supplier as well as the recipient is outside India.
 
 
On the given case, there are divergent views of experts, one being that the given case is outside the purview of GST as both the supplier and recipient are outside . In this regard, there is another view which states that in this case, the section 13 will not apply at all as this transaction is out of purview of GST law. In this regard, it is worthwhile to mention here that CGST will be levied if transaction falls in charging section 9 of CGST Act, 2017 and IGST will be levied if the transaction falls in purview of charging section 5 of IGST Act, 2017.

 
Section 9 of CGST Act, 2017; there shall be levied a tax called the central goods and services tax on all intra-State supplies of goods or services or both..." Likewise,charging section 5 of IGST Act, 2017 states that "there shall be levied a tax called the integrated goods and services tax on all inter-State supplies of goods or services or both.." Therefore, to fall in the provisions of CGST Act and IGST Act; there has to beeither intra-state or inter-state supply.
 
 
To determine whether a transaction is intra-state or interstate, provisions of section 7 to 9 of IGST Act, 2017 are applicable. The provisions of section 7 are applicable to determine the "inter-state supply". The relevant provisions from this section as applicable in case of renting of immovable property service are produced as follows:-
 
Section 7(3):-
 
 
(3) Subject to the provisions of section 12, supply of services, where the location of the supplier and the place of supply are in––
 
(a) two different States;
 
(b) two different Union territories; or (c) a State and a Union territory,
shall be treated as a supply of services in the course of inter-State trade or commerce.
 
 
This section is not applicable in the given case as the two different states here means "states located in India". Since both the service provider and recipient are located outside India, this clause does not apply here.
 
Section 7(4):-
 
 
(4) Supply of services imported into the territory of India shall be treated to be a supply of services in the course of inter-State trade or commerce.
 
 
This section is also not applicable as under section 2(11) of IGST Act, 2017, import of service is there if the service provider is located outside India, service recipient is located in India and place of supply is in India. In the given case, both service provider and recipient are located outside India, therefore, this clause is not applicable.
 
Section 7(5):-

(5) Supply of goods or services or both,––
 
(a) when the supplier is located in India and the place of supply is outside India; (b) to or by a Special Economic Zone developer or a Special Economic Zone unit; or
 
(c) in the taxable territory, not being an intra-State supply and not covered elsewhere in this section,
 
shall be treated to be a supply of goods or services or both in the course of inter-State trade or commerce.
 
 
The given case will fall under the residual clause (c) of section 7(5). Accordingly, the supply of service will be treated as inter-state supply and provisions of IGST Act, 2017 will apply.
 
 
So, it is ample clear that the IGST Act will apply in the given case even if the supplier of service and recipient of service are located outside India.
 
In view of above discussion, it is clear that the intention of government is clear to levy the tax in cases where the place of supply is in India. Accordingly, we can say that the section 13 of IGST Act can be liberally interpreted to include the given case also. Therefore, holding this view, the provider of renting service will be required to get himself registered in India.
 
Now, interestingly, since the supplier will get registered in India, the location of supplier and place of supply will be in the same state; accordingly, the case will come out of purview of section 13 and will fall in section 12 of IGST Act, 2017. Accordingly, the CGST and SGST will be payable.
 
Again, there is another view that in case of immovable property, it cannot be said that merely because immovable property is situated, it cannot be said that there is some fixed establishment as there are no human and other resources and as such it cannot be termed as place of business. If this view is accepted, there will be problem as to where the registration is to be taken. Thus, by accepting this view, though the transaction falls in purview of charging section but the subsequent sections fail. Therefore, again there is confusion on the issue of registration in the given case.
 
The above discussion clearly indicates that there is lot of anomaly in the given situation and it is surely to attract the litigation. Though it is a rare phenomenon, yet, if there are any such cases, the litigation is inbuilt.
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