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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 TREATMENT OF VARIOUS AFFORDABLE HOUSING SCHEMES POST 01.04.2019 PART-5

GST UPDATE ON TREATMENT OF VARIOUS AFFORDABLE HOUSING SCHEMES POST 01.04.2019 PART-5
GST UPDATE ON TREATMENT OF VARIOUS AFFORDABLE HOUSING SCHEMES  POST 01.04.2019 PART-5:-
 
In earlier updates, we have discussed the basic features of the new scheme introduced for the real estate sector by the government recently and the analysis of the condition of 80% procurement by registered suppliers. In the present update, we seek to discuss about the fate of various kinds of affordable housing schemes post implementation of new scheme for real estate sector w.e.f. 01.04.2019.
Prior to 01.04.2019, the notification no. 11/2017-Central Tax (Rate) dated 28.06.2017 provided concessional rate of GST being 12% with 1/3 deduction of value of land leading to effective GST rate of 8%. The various entries that provided concessional GST rate in order to achieve the objective of the government “Housing for all by 2020” which are listed as follows:-
Serial No. Description of Service Condition
3(iv) Composite supply of works contract as defined in clause (119) of section 2 of the Central Goods and Services Tax Act, 2017, supplied by way of construction, erection, commissioning, installation, completion, fitting out, repair, maintenance, renovation, or alteration of,-
(b) a civil structure or any other original works pertaining to a scheme under Jawaharlal Nehru National Urban Renewal Mission of Rajiv Awas Yojana;
(c) a civil structure or any other original works pertaining to the “ln-situ redevelopment of existing slums using land as a resource, under the Housing for All (Urban) Mission/ Pradhan Mantri Awas Yojana (Urban);
(d) a civil structure or any other original works pertaining to the “Beneficiary led individual house construction / enhancement” under the Housing for All (Urban) Mission/Pradhan Mantri Awas Yojana;
(da) a civil structure or any other original works pertaining to the “Economically Weaker Section (EWS) houses” constructed under the Affordable Housing in partnership by State or Union territory or local authority or urban development authority under the Housing for All (Urban) Mission/ Pradhan Mantri Awas Yojana (Urban);
(db) a civil structure or any other original works pertaining to the “houses constructed or acquired under the Credit Linked Subsidy Scheme for Economically Weaker Section (EWS)/ Lower Income Group (LIG)/ Middle Income Group-1 (MlG-1)/ Middle Income Group-2 (MlG-2)” under the Housing for All (Urban) Mission/ Pradhan Mantri Awas Yojana (Urban);		  
3(v) Composite supply of works contract as defined in clause (119) of section 2 of the Central Goods and Services Tax Act, 2017, supplied by way of construction, erection, commissioning, or installation of original works pertaining to,-
(b) a single residential unit otherwise than as a part of a residential complex;
(c) low-cost houses up to a carpet area of 60 square metres per house in a housing project approved by competent authority empowered under the 'Scheme of Affordable Housing in Partnership' framed by the Ministry of Housing and Urban Poverty Alleviation, Government of India;
(d) low cost houses up to a carpet area of 60 square metres per house in a housing project approved by the competent authority under- (1) the “Affordable Housing in Partnership” component of the Housing for All (Urban) Mission/Pradhan Mantri Awas Yojana; (2) any housing scheme of a State Government;
(da) low-cost houses up to a carpet area of 60 square metres per house in an affordable housing project which has been given infrastructure status vide notification of Government of India, in Ministry of Finance, Department of Economic Affairs vide F. No. 13/6/2009-INF dated the 30th March, 2017		  
3(vi) [Composite supply of works contract as defined in clause (119) of section 2 of the Central Goods and Services Tax Act, 2017, provided] 12 to the Central Government, State Government, Union Territory, [a local authority, a Governmental Authority or a Government Entity]13 by way of construction, erection, commissioning, installation, completion, fitting out, repair, maintenance, renovation, or alteration of –
(c) a residential complex predominantly meant for self-use or the use of their employees or other persons specified in paragraph 3 of the Schedule III of the Central Goods and Services Tax Act, 2017.		 Provided that where the services are supplied to a Government Entity, they should have been procured by the said entity in relation to a work entrusted to it by the Central Government, State Government, Union territory or local authority, as the case may be
 
It is submitted that the GST applicable on all the above mentioned entries was 12% with deduction of 1/3 with respect to value of land with effective rate of GST being 8%. Now, the question is that whether the concessional rate of GST enjoyed with respect to above cited entries prior to 01.04.2019 would be continued with the concessional GST rate of 1% pertaining to affordable housing post 01.04.2019 or not? In order to answer this question, reference is made to the definition of ‘affordable residential apartment’ given in the notification no. 03/2019-Central Tax (Rate) dated 29.03.2019 according to which following will be considered as ‘affordable residential apartment’:
  1. A residential apartment in a project which commences on or after 01.04.2019, or in an ongoing project in which promoter has not opted for paying GST at earlier rates, having carpet area not exceeding 60 sq meter in metropolitan cities or 90 sq meter in cities or town other than metropolitan cities and for which gross amount charged is not more than forty lakhs rupees.
  2. An apartment being constructed in an ongoing project under any of the schemes listed above in table, in respect of which promoter has not exercised option to pay central tax on construction of apartments at the old rates.
From the above definition, it is clear that only with respect to ongoing projects, the definition of ‘affordable residential apartment’ includes the various schemes as listed in the table above for the purpose of benefit of 1% GST rate with effect from 01.04.2019. However, it is to be noted that new projects commenced on or after 01.04.2019, and covered under any of the various schemes as listed in the table above will be considered for GST rate of 1% only if the criteria of 60 Sq meters in metropolitan/90 Sq meters in non-metropolitan with total consideration upto Rs. 45 Lakhs is being satisfied. The GST rates applicable can be summarised as follows:-
Serial No. Whether ongoing project? Whether project covered under any of the schemes listed in table? Whether project satisfies criteria of affordable housing (60/90 Sq meter + Rs. 45 Lakhs) post 01.04.2019? GST Rate applicable Remarks
1. Yes Yes Not Required as project is considered as affordable 1% (If the promoter does not opts to pay tax at old rates) In case of ongoing project covered by any of the various schemes as listed above, there is no need to satisfy the criteria of 60/90 sq meters + Rs. 45 Lakhs subsequently
2. No Yes Yes 1% The new project started on or after 01.04.2019 and covered by various schemes as listed in table is not considered as affordable unless it satisfies the criteria of 60/90 Sq Meters + Rs. 45 Lakhs
3. No Yes No 5% The new project covered by various schemes as listed in table does not fulfil the criteria of 60/90 Sq Meters + Rs. 45 Lakhs so will be liable to GST rate applicable to residential apartments other than affordable.
 
This is not the end of the analysis. Certain issues are pending for discussion such as what will be the GST rate applicable for contractors providing construction services to the promoter in above cases. Also, the entries listed in above table have not been omitted and are still part of the notification no. 11/2017-Central Tax (Rate) dated 28.06.2017. These open issues will be covered by us in detail in our next update.

This is solely for the educational purpose.
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