Chartered Accountant
Bookmark and Share
click here to subscribe our newsletter
 
 
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.  

Comments

Print   |    |  Comment

PJ/Case Laws/2010-11/1097

Service tax on deemed service of construction of complex service – seeking to tax the element of service tax – not unconstitutional.

Case:  GS Promoters v/s Union of India
 
Citation: 2011 (21) STR 100 (P&H)
 
Issue: -Service tax on deemed service of construction of complex service – seeking to tax the element of service tax – not unconstitutional.
 
Brief Facts: -Petitioner is engaged in the development and sale of residential flats and enters into agreement for construction of flats with contractors. The said flats are ultimately sold to the customers.
 
The Finance Act, 2010 added an explanation to the taxable service of construction of complex service under Section 65(zzzh) of the Finance Act by which deemed service provided by the builder to the customer even before the issuance of completion certificate was covered under tax net. The Board has also issued Circular No. 334/3/2010-TRU dated 01.07.2010 explaining the coverage of deemed service under service tax.
 
The Petitioner has filed this writ petition seeking declaration that the explanation to Section 65(zzzh) of the Finance Act, 1994 and CBEC Circular No. 334/3/2010-TRU dated 01.07.2010 are unconstitutional.
 
Petitioner’s Contention: - Petitioner contended that the explanation widened the scope of levy beyond the concept of service by including therein sale. Taxing of sale and purchase was beyond the legislative competence of the Union Legislature. If construction activity is not undertaken by a builder, then the builder cannot be considered to be a service provider in relation to service of construction activities.
 
Petitioner relied upon the judgment of the Guahati High Court in Magus Construction Pvt Ltd v/s Union of India [2008 (11) STR 225] wherein it was held that when a person provides service of construction by construction activities to himself, it could not be held that he was providing any service, in absence of service provider in relation to a service recipient.
 
Respondent’s Contention: -
 
Reasoning of Judgment: - The High Court referred to judgment given in All India Federation of Tax Practitioners and Others v/s Union of India and Others [2007 (7) STR 625] that with the enactment of the Finance Act, 1994 by which service tax was introduced, the Central Government derived its authority from the residuary Entry 97 of the Union List for levying tax on services. The legal backup was further provided by the introduction of Article 268-A in the Constitution vide the Constitution (Eighty-eighth Amendment) Act, 2003.  
 
The High Court relied upon the judgment in Hoechst Pharmaceuticals Ltd v/s State of Bihar [(1983) 4 SCC 45]. The scope of legislative entry cannot be taken to be limited by narrow interpretation but should receive a liberal construction inspired by a broad and generous spirit.
 
The judgment in M/s Shubh Timb Steels Limited v/s Union of India and Another [2010 (20) STR 737 (P&H)] was also referred wherein it was held that Activity sough to be subjected to tax has to be as per the statutory scheme and unless there is any encroachment in the field of State Legislature, the competence of the Union Legislature cannot be questioned.
 
The High Court noted that in the present case it has not been pointed out that there is any encroachment in the legislative power of the state legislature. It was only submitted that there was an element of sale which was sought to be taxed. It is not the case of the Petitioner that the levy falls under Entry 54 List-II relating to sale and purchase of goods. It was held that what is subjected to levy was element of service of construction.
 
It was held that Service whether involved or not, to be seen not only from the builder’s point of view but also that of the service recipient. The Service in relation to construction of was sought to be taxed and the same involved even when construction carried out or got carried out before construction and before sale of flat took place.
 
It was held that levy of service tax was on the service and not on the service provider and the construction service was provided even when constructed flat was sold. Taxing of such transaction was not outside the purview of Union Legislature as the same did not fall under taxing entries of State list.
 
Thus, it was held that there was no ground to declare the impugned levy to be unconstitutional.
 
Decision: - Petition dismissed.
 

************

Department News


Query

 
PRADEEP JAIN, F.C.A.

Head Office : -

Address :
"SUGYAN", H - 29, SHASTRI NAGAR, JODHPUR (RAJ.) - 342003

Phone No. :
0291 - 2439496, 0291 - 3258496

Mobile No. :
09314722236

Fax No. :0291 - 2439496


Branch Office : -

Address:
1008, 10th FLOOR, SUKH SAGAR COMPLEX,
NEAR FORTUNE LANDMARK HOTEL, USMANPURA,
ASHRAM ROAD, AHMEDABAD-380013

Phone No. :
079-32999496, 27560043

Mobile No. :
093777659496, 09377649496

E-mail :pradeep@capradeepjain.com