A Practical Guide to GST on Real Estate Industry by Bloomsbury India Professional

GST on Real Estate Industry

CA. Madhukar N Hiregange, B.Com., FCA, DISA CA. Virender Chauhan, B.Com., FCA, LLB CA. Sudhir V S, B.Com., FCA CA. Roopa Nayak, B.Com., FCA

Bloomsbury r Professional India

A Practical Guide to

Contents at a glance Dedication and Acknowledgment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . v About the authors. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . vii Preface . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ix Table of contents. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . xv Table of cases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . xlix PART 1

Introduction and Overview of GST: Understanding the Industry, GST Overview as relevant to provisions on real estate industry Chapter 1

Introduction to Industry andÂ GST . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.1

Chapter 2

Overview of GST. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.1 PART 2

GST impact analysis on real estate developers: Developers, Joint Development, contractors and Other income Chapter 3

GST on Complex Developers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.1

Chapter 4

Development of Land into Plots . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.1

Chapter 5

GST for Contractors. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.1

Chapter 6

GST on Joint Development Agreements. . . . . . . . . . . . . . . . . . . . . . . 6.1

Chapter 7

GST implication on other incomes of Real Estate Developers. . . . . . 7.1 PART 3

Detailed operational law containing classification, registration, tax credits, documentation, payments etc. Chapter 8

Classification and Exemption . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.1

Chapter 9

Input Tax Credit. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.1

Chapter 10

Anti-Profiteering . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.1

Chapter 11

Registration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.1

Chapter 12

Payment and Returns. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.1

Chapter 13

Law and Procedure for movement of goods . . . . . . . . . . . . . . . . . . . 13.1

Chapter 14

Record keeping and Documentation along with specimen formats. . 14.1

xiii

A Practical Guide to GST on Real Estate Industry

PART 4

Detailed procedural law containing assessment, audit, advance ruling, appeals, penalties, demands etc. Chapter 15

Assessment, Audit and Review. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15.1

Chapter 16

Demands and Recovery. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16.1

Chapter 17

Advance Ruling. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17.1

Chapter 18

Appeals and Revision . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18.1

Chapter 19

Offences and Penalties. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19.1 PART 5

Tax planning avenues, GST and RERA, Transitional provisions Chapter 20

Tax Planning Avenues in Real Estate Sector. . . . . . . . . . . . . . . . . . . 20.1

Chapter 21

GST and RERA. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21.1

Chapter 22

Transitional Provisions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22.1 PART 6

Disputes and department actions, [focussing on possible dispute area & resolution] Chapter 23

Disputes Mitigation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23.1

Chapter 24

Departmental Actions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24.1 PART 7

Role of Professionals from GST audit and tax planning perspective. Chapter 25

Professional Services in Real Estate Sector. . . . . . . . . . . . . . . . . . . . 25.1 PART 8

Miscellaneous: 220+ FAQs and filled forms Chapter 26

Frequently Asked Question’s. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26.1

Chapter 27

Filled Forms. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27.1 APPENDICES CONTAINING FAQS RELEASED BY CBIC

Appendix 1

FAQs on Real Estate, dated 7 May 2019. . . . . . . . . . . . . . . . . . . App-1.1

Appendix 2

FAQs (Part II) on Real Estate, dated 14 May 2019. . . . . . . . . . . App-2.1

xiv

Table of contents Dedication and Acknowledgment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . v About the authors. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . vii Preface . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ix Contents at a glance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . xiii Table of cases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . xlix PART 1

Introduction and Overview of GST: Understanding the Industry, GST Overview as relevant to provisions on real estate industry Chapter 1 Introduction to Industry and GST. . . . . . . . . . . . . . . . . . . . . . . . . . 1.1 1.1 Real estate sector in general . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.2 1.1.1 Coverage. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.2 1.1.2 Drivers for growth of real estate sector . . . . . . . . . . . . . . . . . . . . . 1.3 1.2 Role of real estate in the Indian economy. . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.4 1.2.1 Developments in the recent past. . . . . . . . . . . . . . . . . . . . . . . . . . . 1.4 1.2.2 Expectations from the sector (as a whole). . . . . . . . . . . . . . . . . . . 1.5 1.3 A brief history of taxation on real estate sector. . . . . . . . . . . . . . . . . . . . . . . . 1.5 1.4 Types of Sectors, Statistics, and Contribution to GDP. . . . . . . . . . . . . . . . . . 1.6 1.4.1 Residential segment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.6 1.4.2 Commercial segment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.7 1.4.3 Retail segment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.8 1.4.4 Hospitality segment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.8 1.4.5 SEZ’s segment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.9 1.5 Challenges in the growth of real estate. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.9 1.5.1 Obtaining Construction permit and approvals. . . . . . . . . . . . . . . . 1.9 1.5.2 Lack of funding/high cost of capital . . . . . . . . . . . . . . . . . . . . . . . 1.9 1.5.3 Delayed projects. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.10 1.5.4 Insufficient focus on sustainable real estate. . . . . . . . . . . . . . . . . 1.10 1.6 Government initiatives for real estate vide Budget 2019 (July). . . . . . . . . . 1.10 1.6.1 Deduction of interest for affordable housing. . . . . . . . . . . . . . . . 1.10 1.6.2 Alignment of definition of affordable housing with GST Acts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.10 1.6.3 Measures to incentivize affordable housing and real estate. . . . . 1.10 1.6.4 Special package for real estate sector. . . . . . . . . . . . . . . . . . . . . . 1.11 1.7 Journey of GST. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.11 1.8 Existing Indian indirect tax regime. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.12

A Practical Guide to GST on Real Estate Industry

1.9

Fundamentals of GST. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.9.1 Need for GST. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.9.2 What does not fall within the ambit of GST?. . . . . . . . . . . . . . . . 1.10 Challengesâ&#x20AC;&#x201C;Navigating the uncharted territory. . . . . . . . . . . . . . . . . . . . . . . 1.11 Treatment of inter-State and International trade. . . . . . . . . . . . . . . . . . . . . . 1.12 Conclusion. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

1.12 1.12 1.12 1.14 1.15 1.16

Overview of GST. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.1 Chapter 2 2.1 Levy of GST. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.2 2.1.1 Specific issues in GST levy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.5 2.2 Reverse Charge Mechanism. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.6 2.3 Classification. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.7 2.4 Exemptions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.8 2.4.1 Exemptions to realty sector . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.8 2.5 Time of Supply . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.9 2.5.1 Time of supply in case of goods. . . . . . . . . . . . . . . . . . . . . . . . . . 2.10 2.5.1.1 Continuous supply of goods. . . . . . . . . . . . . . . . . . 2.10 2.5.1.2 Goods sent on approval. . . . . . . . . . . . . . . . . . . . . . 2.10 2.5.1.3 Goods sent for Job-work. . . . . . . . . . . . . . . . . . . . . 2.11 Time of supply in case of services. . . . . . . . . . . . . . . . . . . . . . . . 2.11 2.5.2 Continuous supply of services. . . . . . . . . . . . . . . . . 2.11 2.5.2.1 Time of supply in case of change in rate of tax. . . . . . . . . . . . . . 2.12 2.5.3 2.5.4 Time of supply provisions-specific to real estate sector. . . . . . . . 2.12 2.6 Valuation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.14 2.6.1 Value of supply involving transfer of land. . . . . . . . . . . . . . . . . . 2.15 2.6.2 Valuation of flats given in consideration against JDAÂ Model . . . 2.15 2.6.2.1 Valuation under JDA entered prior to March 2019 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.16 2.6.2.2 Valuation under JDA entered post April 2019. . . . . 2.16 2.6.2.3 Value of development rights under JDA transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.16 2.6.3 Value of supply in case of post sales discount. . . . . . . . . . . . . . . 2.16 2.7 Input Tax Credit. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.17 2.7.1 ITC Seamless credit available . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.17 2.7.2 Primary conditions for eligibility of claim of ITC. . . . . . . . . . . . 2.17 2.7.3 Ineligible credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.18 ITC post 1st Apr 2019 (New scheme of taxation @1%/ 2.7.4 5% in case of residential accommodations). . . . . . . . . . . . . . . . . 2.19 2.8 Place of Supply. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.19 2.9 Tax Collection at Source by E-Commerce Operator (ECO). . . . . . . . . . . . . 2.20 2.10 Tax Deduction at Source: Specified Recipients . . . . . . . . . . . . . . . . . . . . . . 2.21 2.11 Demand of tax, interest and penalties. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.22 xvi

Table of contents

2.11.1 2.11.2 2.11.3 2.11.4

Proper officer to issue SCN . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.22 Time limit for issuing SCN . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.22 Reply to SCN. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.23 Works contract cannot be vivisected-debatable issueextended period not applicable. . . . . . . . . . . . . . . . . . . . . . . . . . . 2.23 2.12 Appeals and Revision. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.23 2.13 Alternative to litigation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.25 2.13.1 Litigation a costly affair. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.25 2.13.2 Provisional assessment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.25 2.13.3 Advance ruling. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.26 2.13.4 New Amnesty Scheme-Sabka Vishwas (Legal Dispute Resolution) Scheme. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.26 2.14 Transition provisions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.27 2.14.1 Migration of existing tax payers. . . . . . . . . . . . . . . . . . . . . . . . . . 2.27 2.14.2 Carry forward of CENVAT by those registered earlier under central excise or service tax as well as ITC under VAT. . . 2.27 2.14.3 Balance of capital goods CENVAT credit . . . . . . . . . . . . . . . . . . 2.27 2.14.4 Credit on stocks. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.27 2.14.5 Provisions relating to carry forward of other transitional credits.2.28 2.14.6 Carry forward of credit on supplies attracting VAT and Service Tax. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.28 2.15 Other Miscellaneous Provisions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.28 2.16 Conclusion. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.29 PART 2

GST impact analysis on real estate developers: Developers, Joint Development, contractors and Other income Chapter 3 GST on Complex Developers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.1 Introduction. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.2 Analysis of Entries in Schedule II. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.2.1 Para 5(b) of Schedule II. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.2.1.1 Meaning of “construction”, “building”, “civil structure”, “complex”. . . . . . . . . . . . . . . . . . . 3.2.1.2 Analysis of para 5(b) of Schedule II . . . . . . . . . . . . . 3.2.2 Entry 6(a) of Schedule II. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Definition of works contract . . . . . . . . . . . . . . . . . . . 3.2.2.1 3.2.2.2 Analysis of entry 6(a) of Schedule II. . . . . . . . . . . . . 3.3 Rates of GST. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.3.1 Rates of GST for the period 01.07.2017 to 31.03.2019. . . . . . . . . 3.3.2 Specified projects. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.3.2.1 Projects/schemes of Government. . . . . . . . . . . . . . . .

3.1 3.2 3.3 3.3 3.4 3.5 3.6 3.6 3.6 3.7 3.7 3.7 3.7 xvii

A Practical Guide to GST on Real Estate Industry

3.3.2.2

Single residential unit not as a part of a residential complex . . . . . . . . . . . . . . . . . . . . . . . . . . 3.9 3.3.3 Taxability from 01.04.2019 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.10 3.3.4 Terminologies used in the above paras. . . . . . . . . . . . . . . . . . . . . 3.11 3.3.4.1 Apartment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.11 3.3.4.2 Promoter. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.11 Real estate project (REP). . . . . . . . . . . . . . . . . . . . . 3.12 3.3.4.3 3.3.4.4 Residential Real Estate Project (RREP) . . . . . . . . . 3.12 3.3.4.5 Ongoing projects. . . . . . . . . . . . . . . . . . . . . . . . . . . 3.12 3.3.4.6 Competent Authority. . . . . . . . . . . . . . . . . . . . . . . . 3.13 3.3.4.7 Commencement Certificate. . . . . . . . . . . . . . . . . . . 3.13 3.3.4.8 Apartment booked on or before the 31st March, 2019. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.13 3.3.4.9 One-time option for ongoing projects. . . . . . . . . . . 3.13 3.3.5 Tax rate applicable on different kinds of projects . . . . . . . . . . . . 3.14 3.3.5.1 Ongoing project: RREP and residential apartments in REP. . . . . . . . . . . . . . . . . . . . . . . . . . 3.14 3.3.5.2 New projects (commencing post 01.04.2019). . . . . 3.14 3.4 Credit eligibility to the developer in case of shift from old scheme to new scheme and for new projects. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.17 3.4.1 Ongoing projects . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.17 3.4.2 New projects. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.17 3.4.3 Reverse charge in the hands of a developer. . . . . . . . . . . . . . . . . 3.17 3.4.4 Conditions - New scheme . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.18 3.4.5 Snapshot of New rates vs Old rates. . . . . . . . . . . . . . . . . . . . . . . 3.19 3.5 Models of Complex Development . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.20 3.5.1 Own projects . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.20 3.5.2 Joint Development Projects. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.20 3.5.3 Partnerships/SPV. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.20 3.5.4 Tabular representation of different models for sale of complex to end buyers and GST implications. . . . . . . . . . . . . . . 3.21 3.6 Valuation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.22 3.6.1 Valuation for the construction services provided to end buyer. . . . . 3.22 3.6.2 Discussion on deduction for land value - Is it possible? . . . . . . . 3.22 3.6.3 Valuation when parties are related to each other. . . . . . . . . . . . . 3.24 3.7 Time of supply. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.24 Place of supply . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.25 3.8 3.9 Issues and solutions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.26 3.9.1 Whether GST could be paid only on the construction value of flats while excluding the land value from tax net?. . . . . 3.26 3.9.2 Whether the construction of residential quarters done for the employees of the factory in private sector is liable to GST? . . . . . . 3.26 xviii

Table of contents

3.9.3

3.8.3 When there are 10 units in a compound but each has a separate plan sanction in the name of each owner of site/land. Is construction of such unit done as works contract with material and labour procured by contractor, liable to GST?. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.9.4 Whether agreement to sell units in commercial complex in course of construction works, is it liable to GST?. . . . . . . . . . 3.10 Relevant Decisions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.10.1 Value of land may not taxable: Delhi High Court. . . . . . . . . . . . 3.10.2 Agreement to sell immovable property is a works contract: SC. . . . 3.10.3 Construction of residential unit is not a works contract: SC. . . . 3.10.4 Material supplied on FOC basis-not to form part of gross amount: SC. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.11 Conclusion. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

3.26 3.26 3.27 3.27 3.27 3.27 3.28 3.28

Chapter 4 Development of Land into Plots. . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.1 4.1 Introduction. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.2 4.2 Sale of land-meaning. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.4 4.2.1 Meaning of the term “Sale”. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.4 4.2.2 Meaning of the term “Land” . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.5 4.2.3 Meaning of “Immovable property” . . . . . . . . . . . . . . . . . . . . . . . . 4.6 4.2.4 Meaning of “Benefit to arise from land”. . . . . . . . . . . . . . . . . . . . 4.6 4.2.5 Scope of land v immovable property. . . . . . . . . . . . . . . . . . . . . . . 4.7 4.2.6 Analysis of “sale of land”. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.7 4.3 Sale of land–GST implications. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.8 4.3.1 Levy of tax. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.8 4.3.2 Goods or services defined . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.8 4.3.3 Para-5 of Schedule III . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.8 4.3.4 Meaning of building. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.9 4.3.5 Schedule II of CGST Act. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.9 4.4 Sale of land-through third party . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.9 4.4.1 Agreement to sell. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.10 4.4.2 Sale deed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.10 4.5 Development of land into plots-GST Implications. . . . . . . . . . . . . . . . . . . . 4.11 Various Models of Development of land into plots. . . . . . . . . . . . . . . . . . . . 4.14 4.6 4.6.1 Discussion on different models . . . . . . . . . . . . . . . . . . . . . . . . . . 4.14 Own projects . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.14 4.6.1.1 4.6.1.2 Joint development projects . . . . . . . . . . . . . . . . . . . 4.14 4.6.1.3 Co-operative society model. . . . . . . . . . . . . . . . . . . 4.15 4.6.1.4 Partnerships/SPV. . . . . . . . . . . . . . . . . . . . . . . . . . . 4.15 4.6.1.5 Hybrid model. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.15 xix

A Practical Guide to GST on Real Estate Industry

4.6.2

GST implications in different models . . . . . . . . . . . . . . . . . . . . . 4.6.2.1 Own project. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.6.2.2 Joint development agreement (JDA). . . . . . . . . . . . 4.6.2.3 Cooperative society model. . . . . . . . . . . . . . . . . . . . 4.7 Sale of Developed Plots-GST implications-in GST Era. . . . . . . . . . . . . . . . 4.8 Valuation in the hands of landowner, developer and end-user. . . . . . . . . . . When TDR transferred prior to April 2019 . . . . . . . . . . . . . . . . . 4.8.1 4.8.2 When TDR transferred post April 2019. . . . . . . . . . . . . . . . . . . . 4.9 Time of supply-Post and Pre-1-4-2019 Era. . . . . . . . . . . . . . . . . . . . . . . . . . 4.10 Place of supply . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.11 Input Tax credit. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.12 Registration with RERA. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.13 GST collected from landowner-under JDA-implications. . . . . . . . . . . . . . . 4.14 Issues. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.14.1 Whether it is correct to structure agreement by fixing the land cost and absorbing the development charges?. . . . . . . . . . . 4.14.2 What is the GST implication when the agreement to sell land is entered for Rs.100Lakhs during the development stage and the sale deed is also done for Rs. 100 Lakhs? . . . . . . . 4.14.3 Whether the input tax credit availed has to be reversed in relation to plots sold after completion? . . . . . . . . . . . . . . . . . . . . 4.14.4 What is the applicability of the new scheme (after 01.04.2019) on the sale of plots (developed or in the stage of development)?. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.14.5 When joint development agreement (JDA) entered on or before 31.03.2019 and the supplementary agreement entered on or after 01.04.2019, for construction services provided by the developer, whether the time of supply to pay GST liability shall be in terms of NN-04/2018 ibid or as per NN-06/2019-Central Tax (Rate) dated 29.03.2019?. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.15 Relevant Decisions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.15.1 Alokik Township Corporation v CCEx & ST, Jaipur-I . . . . . . . . 4.15.2 Narne Construction (P) Ltd. v UOI. . . . . . . . . . . . . . . . . . . . . . . 4.15.3 MGF Developments Ltd. v CCE. . . . . . . . . . . . . . . . . . . . . . . . . 4.16 Conclusion. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

4.15 4.15 4.16 4.17 4.18 4.20 4.20 4.21 4.21 4.23 4.23 4.24 4.25 4.26 4.26

4.26 4.26

4.26

4.27 4.27 4.27 4.27 4.28 4.28

GST for Contractors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Chapter 5 5.1 Introduction. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.2 Meaning of “contractor” and “sub-contractor”. . . . . . . . . . . . . . . . . . . . . . . . 5.2.1 As per the Advanced Law Lexicon . . . . . . . . . . . . . . . . . . . . . . . . 5.2.2 As per the Black’s Law dictionary. . . . . . . . . . . . . . . . . . . . . . . . . xx

5.1 5.2 5.3 5.3 5.3

Table of contents

5.3

Common issues faced by contractors and sub-contractor and suggested course of action under GST . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.4 5.3.1 Unorganised sector. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.4 5.3.2 Technology driven taxation regime. . . . . . . . . . . . . . . . . . . . . . . . 5.4 5.3.3 GST compliances done by accountants with no/less knowledge of GST laws and procedures. . . . . . . . . . . . . . . . . . . . 5.5 Non-maintenance of records under GST. . . . . . . . . . . . . . . . . . . . 5.5 5.3.4 5.3.5 Non-maintenance of documentation prescribed under GST: It is seen that majority of contractors are not issuing tax invoices or any other documents in respect of supplies made by them. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.5 5.3.6 Supporting workings of the data submitted in GST returns not available. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.6 5.3.7 Non-generation of e-way bill. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.6 5.3.8 Non-payment to vendors within 180 days. . . . . . . . . . . . . . . . . . . 5.6 5.4 Implication of common non-compliances by the contractors under GST. . . . 5.7 5.4.1 Non filing of GST returns. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.7 5.4.2 Non-registration and non-maintenance of records at place of business of contractor. . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.7 5.4.3 Non-reconciliation between financials and GST returns. . . . . . . . 5.7 5.4.4 Departmental Audit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.7 5.4.5 Verification of transition credit. . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.8 5.5 GST levy on contractors/sub-contractors . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.8 5.5.1 Charging provision. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.8 5.5.2 Registration under GST. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.8 5.5.3 Whether contractors could opt for composition scheme? . . . . . . . 5.9 5.6 Implication-New scheme for Residential Construction . . . . . . . . . . . . . . . . 5.10 5.7 The effective rate of taxation for the contractors . . . . . . . . . . . . . . . . . . . . . 5.10 5.8 Tax exemptions relevant to contractors. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.10 5.9 Valuation under GST. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.11 5.10 Valuation when the contractor and his client are related persons. . . . . . . . . 5.11 5.11 Time of Supply . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.11 5.12 Place of Supply. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.11 5.13 Input tax credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.11 5.14 Issues. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.11 5.15 Relevant Decision. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.14 5.16 Conclusion. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.15 Chapter 6 GST on Joint Development Agreements . . . . . . . . . . . . . . . . . . . . . 6.1 Background. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.2 Flats allotted to land owners. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.3 Build-Operate-Transfer (BOT) basis. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

6.1 6.2 6.2 6.4 xxi

A Practical Guide to GST on Real Estate Industry

6.4

Revenue sharing arrangement between developer and landowner (Joint Venture of one type) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.6 6.5 Taxability of Transfer of Development Rights (TDR) . . . . . . . . . . . . . . . . . . 6.6 6.6 Taxability of security deposit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.7 6.7 Relevance of completion certificate for the landowner share. . . . . . . . . . . . . 6.8 6.8 Time of supply in case of joint development agreements for construction activity done for land owner. . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.8 6.9 Valuation for flats handed over to landowners . . . . . . . . . . . . . . . . . . . . . . . 6.10 6.10 Rate of Tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.12 6.11 Transaction of transfer of land/development rights by landowner to developer after 1.04.2019. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.13 6.11.1 Rate of tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.13 6.11.2 Time of supply (ToS). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.14 6.11.3 Valuation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.14 6.12 Illustration for GST implications on developer in respect of landowner share under JDA entered post April 2019. . . . . . . . . . . . . . . . . . 6.14 6.13 Whether GST can be collected by developer from landowner?. . . . . . . . . . 6.15 6.14 Issues. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.15 6.15 Conclusion. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.16 Chapter 7 GST implication on other incomes of Real Estate Developers. . . . 7.1 7.1 Background. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.2 7.2 Other incomes of a real estate developer. . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.3 7.2.1 Renting of Immovable Property. . . . . . . . . . . . . . . . . . . . . . . . . . . 7.3 7.2.1.1 Analysis of the term “renting”. . . . . . . . . . . . . . . . . . 7.3 7.2.1.2 Analysis of the term “immovable property”. . . . . . . 7.4 7.2.1.3 Various models of renting out of immoveable property. . . . . . . . . . . . . . . . . . . . . . . . . 7.5 7.2.1.4 Renting for commercial use. . . . . . . . . . . . . . . . . . . . 7.7 7.2.1.5 Renting of Commercial cum residential use units for single price. . . . . . . . . . . . . . . . . . . . . . . . . 7.8 7.2.1.6 Renting of premises for residential use. . . . . . . . . . 7.10 7.2.1.7 Exemption under GST for accommodation in hotels/clubs/other lodging accommodation. . . . . 7.12 7.2.1.8 Renting the fully furnished residential units to tenants along with other amenities. . . . . . . . . . . 7.13 Leasing of land. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.14 7.2.2 7.2.3 Maintenance charges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.15 7.2.4 Booking Cancellation charges:. . . . . . . . . . . . . . . . . . . . . . . . . . . 7.15 7.2.5 Commission on sale of landlord’s share of units. . . . . . . . . . . . . 7.16 7.2.6 Commission from financiers for enabling loans . . . . . . . . . . . . . 7.16 7.2.7 Design/Technical Consultancy. . . . . . . . . . . . . . . . . . . . . . . . . . . 7.16 xxii

Table of contents

7.2.8 Supply of goods and installation/erection service. . . . . . . . . . . . 7.2.9 Manpower supply/contract staffing services . . . . . . . . . . . . . . . . 7.2.10 Club house membership to developer . . . . . . . . . . . . . . . . . . . . . 7.2.11 Manufacture and supply of goods by the developer. . . . . . . . . . 7.2.12 Corpus fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.2.13 Running of service apartments. . . . . . . . . . . . . . . . . . . . . . . . . . . Running of PG accommodation. . . . . . . . . . . . . . . . . . . . . . . . . . 7.2.14 7.2.15 Sale of running project. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.2.16 Unclaimed advances. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.3 Supply of construction and allied services . . . . . . . . . . . . . . . . . . . . . . . . . . 7.3.1 GST implication when construction and other facilities are offered by the developer. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.3.2 What is not forming a part of composite supply of construction service? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.3.2.1 Maintenance received in advance . . . . . . . . . . . . . . 7.3.2.2 Refundable deposit. . . . . . . . . . . . . . . . . . . . . . . . . 7.3.3 GST implications as under in various scenarios . . . . . . . . . . . . . 7.3.3.1 When refundable deposit is not returned back. . . . . 7.3.3.2 When refundable deposit is adjusted towards additional costs. . . . . . . . . . . . . . . . . . . . . . 7.3.3.3 When refundable deposit is adjusted towards maintenance. . . . . . . . . . . . . . . . . . . . . . . . 7.3.3.4 Interest on refundable deposit utilized partly for maintenance:. . . . . . . . . . . . . . . . . . . . . . . . . . . 7.3.4 Registration fee and stamp duty. . . . . . . . . . . . . . . . . . . . . . . . . . 7.4 Other aspects. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.4.1 Valuation under GST. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.4.2 Time of Supply. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.4.3 Place of supply. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.4.4 Input Tax Credit. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.5 Issues. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.5.1 Whether one-third abatement for value of land would be eligible if single price collected towards construction and allied services including preferential location, floor rise, directional advantage, access to common area and facilities?. . . 7.5.2 Whether Rs.Â 7500/- pm per member GST exemption maybe claimed by the developer company in respect of maintenance charges collected from the end buyers of residential flats?. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.5.3 What would be the GST implication on the renting of residential property for say 11 months?. . . . . . . . . . . . . . . . . . . .

7.17 7.17 7.17 7.19 7.20 7.21 7.21 7.21 7.22 7.23 7.23 7.25 7.25 7.25 7.25 7.25 7.26 7.26 7.26 7.26 7.26 7.26 7.27 7.27 7.27 7.28

7.28

7.28 7.28 xxiii

A Practical Guide to GST on Real Estate Industry

7.5.4

Whether accommodation in PG, hostels, furnished flats for temporary stay of say 3-5 days is exempted under GST? . . . 7.29 7.6 Relevant Decision. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.29 7.7 Conclusion. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.29 PART 3

Detailed operational law containing classification, registration, tax credits, documentation, payments etc. Chapter 8 Classification and Exemption. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.1 8.1 Classification under GST. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.2 8.1.1 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.2 8.1.2 Procedure of classification. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.2 8.1.2.1 Steps of classification. . . . . . . . . . . . . . . . . . . . . . . . . 8.2 8.1.2.2 Parameters of classification laid down by SC. . . . . . 8.3 8.1.3 Determination of type of supply. . . . . . . . . . . . . . . . . . . . . . . . . . . 8.3 8.1.3.1 Composite supply. . . . . . . . . . . . . . . . . . . . . . . . . . . 8.3 8.1.3.2 Bundled Services. . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.4 8.1.3.3 Illustrations for composite supplies in real estate . . . 8.4 8.1.3.4 Factors to be considered to determine composite supply. . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.4 8.1.3.5 Mixed Supply. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.5 8.1.3.6 Factors to be considered to determine mixed supply. . . 8.5 8.1.3.7 Non-Composite Supply. . . . . . . . . . . . . . . . . . . . . . . 8.6 8.1.4 Classification of goods. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.6 8.1.4.1 Understanding of Business/Dictionary/ Technological changes. . . . . . . . . . . . . . . . . . . . . . . . 8.6 Classification based on Customs Tariff Act. . . . . . . . 8.7 8.1.4.2 8.1.4.3 Understanding Harmonized System of Nomenclature (HSN). . . . . . . . . . . . . . . . . . . . . . . . . 8.7 8.1.4.4 Rules for Interpretation . . . . . . . . . . . . . . . . . . . . . . . 8.8 8.1.4.5 Other rules for interpretationâ&#x20AC;&#x201C;non-statutory principles evolved out of Judicial decisions . . . . . . 8.11 Other factors for determining classification of goods. . 8.13 8.1.4.6 8.1.5 Services classification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.13 8.1.6 Impact of wrong classification. . . . . . . . . . . . . . . . . . . . . . . . . . . 8.14 8.2 Exemptions under GST. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.15 8.2.1 Power to grant exemption from tax. . . . . . . . . . . . . . . . . . . . . . . 8.15 8.2.2 Mandatory availment of exemption. . . . . . . . . . . . . . . . . . . . . . . 8.15 8.2.3 Exemption by special order on a case to case basis. . . . . . . . . . . 8.16 8.2.4 Powers to insert explanation after issue of notification or special order. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.16 xxiv

Table of contents

8.2.5 8.2.6 8.2.7 8.2.8

Procedure to avail exemption. . . . . . . . . . . . . . . . . . . . . . . . . . . . Specific exemptions for the Real Estate Sector. . . . . . . . . . . . . . Effective date of notification . . . . . . . . . . . . . . . . . . . . . . . . . . . . Exemptions notifications issued under CGST/IGST whether applies to SGST/UTGST and vice-versa. . . . . . . . . . . . 8.2.9 Rate of tax, claims for exemption and tax paid. . . . . . . . . . . . . . Rates for Goods. . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.2.9.1 8.2.9.2 Rates for Services . . . . . . . . . . . . . . . . . . . . . . . . . . 8.2.9.3 Rates under Composition. . . . . . . . . . . . . . . . . . . . . 8.2.10 Classification and practical solutions in real estate sector. . . . . . 8.2.11 Practical caution in classification/exemptions. . . . . . . . . . . . . . . 8.3 HSN Codes & GST Rates of Real Estate Services – Chapter 99. . . . . . . . . 8.3.1 HSN rates applicable for real estate sector. . . . . . . . . . . . . . . . . . 8.3.2 Notes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.3.3 Relevant Definitions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.4 Conclusion. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

8.16 8.17 8.17 8.17 8.18 8.18 8.18 8.18 8.19 8.22 8.23 8.23 8.40 8.40 8.41

Chapter 9 Input Tax Credit. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.1 9.1 Introduction. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.3 9.2 Eligibility and conditions for availing input tax credit. . . . . . . . . . . . . . . . . . 9.4 9.2.1 Eligibility for claiming input tax credit. . . . . . . . . . . . . . . . . . . . . 9.4 9.2.2 Conditions for claiming input tax credit . . . . . . . . . . . . . . . . . . . . 9.5 9.2.3 Other aspects relating to claim of input tax credit. . . . . . . . . . . . . 9.7 9.2.4 Documentary requirements for claiming input tax credit [Rule 36]. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.9 9.2.5 Time limit for taking input tax credit [Section 16(4)]. . . . . . . . . 9.10 9.2.6 Manner of utilizing input tax credit. . . . . . . . . . . . . . . . . . . . . . . 9.10 9.3 Apportionment & reversal of input tax credit [Section 17 read with rule 42 & 43]. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.11 Restriction on credit for non-business purpose [Section 17(1)]. . . . 9.11 9.3.1 Restriction on credit for exempt supplies [Section 17(2)]. . . . . . 9.11 9.3.2 Value of exempt supply [Section 17(3)]. . . . . . . . . . . . . . . . . . . . 9.12 9.3.3 9.3.4 Manner of determination of input tax credit in respect of inputs or input services and reversal thereof [Rule 42]. . . . . . . . 9.12 9.3.5 Manner of determination of input tax credit in respect of capital goods and reversal thereof [Rule 43]. . . . . . . . . . . . . . . . 9.13 Blocked Credits. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.13 9.4 9.5 Availability of credit in special circumstances [Section 18]. . . . . . . . . . . . . 9.19 9.5.1 List of various special circumstances and credit eligibility. . . . . 9.19 9.5.2 Restriction on input tax credit for invoice older than 1 year [Section 18(2)]. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.20 9.6 Manner of claiming credit [Rule 40]. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.20 xxv

A Practical Guide to GST on Real Estate Industry

9.7

Transfer of input tax credit in case of change in constitution of business [Section 18(3) r/w Rule 41] . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.7.1 Manner of transfer of credit on sale, merger, amalgamation, lease or transfer of a business (Rule 41)-. . . . . . 9.8 Transfer of credit on obtaining separate registration for multiple places of business [Section 25(2) read with rule 41A]. . . . . . . . . . . . . . . . . Payment of input tax credit in case regular taxpayer switching 9.9 to composition scheme or supplies become wholly exempt [Section 18(4) r/w Rule 44]. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.9.1 Manner of reversal of credit where regular taxpayer opts for composition scheme or supplies become wholly exempt (Rule 44). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.10 Reversal of credit on opting new tax structure for real estate. . . . . . . . . . . . 9.11 Payment of input tax credit on supply of capital goods [Section 18(6)]. . . . 9.11.1 Tax on transaction value on supply of capital goods as scrap. . . 9.11.2 Manner of claiming credit in special circumstances [Rule 40]. . . . . 9.11.3 Manner of reversal of credit under special circumstances [Rule 44]. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.12 Input tax credit in respect of inputs and capital goods sent for jobwork [Section 19 read with section 143 and rule 45]. . . . . . . . . . . . . . . . . . 9.12.1 Conditions and restriction in respect of inputs and capital goods sent to the job worker [Rule 45] . . . . . . . . . . . . . . . . . . . . 9.13 Manner of distribution of credit by Input Service Distributor [Section 20 r/w Rule 36]. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.13.1 Conditions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.14 Procedure for distribution of input tax credit by Input Service Distributor . . . . 9.15 Manner of recovery of credit distributed in excess [Section 21] . . . . . . . . . 9.16 Issues and Comments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.17 Relevant decisions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.18 Conclusion. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.19 Annexures. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Annexure 1: Relevant Statutory provisions. . . . . . . . . . . . . . . . . . . . . . . . . Annexure 2: Reversal as per Rule 42 of the CGST Rules, 2017 on or after 01-Apr-2019. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Annexure 3: Reversal as per Rule 43 of the CGST Rules, 2017 on or after 01-Apr-2019. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Annexure 4: ITC Reversal in case of ongoing projects which underwent transition as on 01-Apr-2019 - Real Estate Project (REP) other than Residential Real Estate Project (RREP). . . . . . . . . . . . . . . . . . . . Annexure 5: ITC Reversal in case of ongoing projects which underwent transition as on 01-Apr-2019 – Residential Real Estate Project (RREP). . . . . . . xxvi

9.21 9.22 9.23

9.23

9.23 9.25 9.25 9.26 9.26 9.26 9.27 9.28 9.29 9.29 9.30 9.34 9.35 9.35 9.36 9.36 9.36 9.39 9.45

9.50 9.59

Table of contents

Chapter 10 Anti-Profiteering . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.1 10.1 Introduction. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.2 10.2 International experiences. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.3 10.3 Need for Anti-profiteering measure. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.4 10.4 Effect on new Scheme of taxation for residential accommodations. . . . . . . 10.4 10.5 Anti-profiteering measure [Section 171]. . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.7 10.6 Relevant Anti-Profiteering Rules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.7 10.6.1 Constitution of the Authority [Rule 122]. . . . . . . . . . . . . . . . . . . 10.7 10.6.2 Constitution of the Standing Committee and Screening Committees [Rule 123] . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.8 10.6.3 Power to determine the methodology and procedure [Rule 126]. . . 10.8 10.6.4 Duties of the Authority [Rule 127]. . . . . . . . . . . . . . . . . . . . . . . . 10.9 10.6.5 Examination of application by the Standing Committee and Screening Committee [Rule 128] . . . . . . . . . . . . . . . . . . . . 10.10 10.6.6 Initiation and conduct of proceedings [Rule 129]. . . . . . . . . . . 10.10 10.6.7 Confidentiality of information [Rule 130]. . . . . . . . . . . . . . . . . 10.11 10.6.8 Cooperation with other agencies or statutory authorities [Rule 131]. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.12 10.6.9 Power to summon persons [Rule 132]. . . . . . . . . . . . . . . . . . . . 10.12 10.6.10 Order of the Authority [Rule 133]. . . . . . . . . . . . . . . . . . . . . . . 10.12 10.6.11 Decision to be taken by the majority [Rule 134]. . . . . . . . . . . . 10.13 10.6.12 Compliance by the registered person [Rule 135]. . . . . . . . . . . . 10.13 10.6.13 Monitoring of the order [Rule 136]. . . . . . . . . . . . . . . . . . . . . . 10.13 10.6.14 Tenure of Authority [Rule 137] . . . . . . . . . . . . . . . . . . . . . . . . . 10.13 10.7 Process of application made against supplier. . . . . . . . . . . . . . . . . . . . . . . 10.14 10.8 Legal View . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.14 10.8.1 Comparison of tax incidence under erstwhile law & Goods & Service Tax Law. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.14 10.8.2 Vague provision - Impossible to comply. . . . . . . . . . . . . . . . . . 10.15 10.8.3 How to calculate the Anti-profiteering in the absence of any specific mechanism?. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.15 10.8.4 Provisions of Anti-profiteering override principles of Indian Contract Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.16 10.8.5 Excessive delegation & vulnerable to be struck down as unconstitutional . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.17 10.8.6 No appellate remedy. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.17 10.9 Conclusion. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.18 10.9.1 Issues in anti-profiteering provisions which could get clarity over time. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.18 10.9.2 Suggestions to improve anti-profiteering provisions. . . . . . . . . 10.19 10.10 Relevant statutory provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.20 Annexure: Anti-Profiteering Application Form (APAF - 1). . . . . . . . . . . . . . . . . . . 10.22 xxvii

A Practical Guide to GST on Real Estate Industry

Chapter 11 Registration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.1 11.1 Significance of registration. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.3 11.2 Advantages of registration. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.3 11.3 Persons liable for registration. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.4 11.3.1 Threshold limit for registration . . . . . . . . . . . . . . . . . . . . . . . . . . 11.4 11.3.2 Inclusion & Exclusion in Aggregate Turnover. . . . . . . . . . . . . . . 11.4 11.3.3 Special Category States. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.6 11.3.4 Liability of registration in case of transfer of business . . . . . . . . 11.6 11.4 Persons not liable for registration. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.6 11.4.1 Engaged Exclusively in Exempt Supplies. . . . . . . . . . . . . . . . . . 11.6 11.4.2 Agriculturist. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.6 11.4.3 Notified category of persons . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.7 11.5 Compulsory registration irrespective of threshold limit. . . . . . . . . . . . . . . . 11.8 11.6 Inter-State movement not treated as supply . . . . . . . . . . . . . . . . . . . . . . . . . 11.8 11.7 Procedure for applying registration. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.9 11.7.1 Application in FORM GST REG-01. . . . . . . . . . . . . . . . . . . . . . 11.9 11.7.2 Supply from the territorial waters . . . . . . . . . . . . . . . . . . . . . . . 11.10 11.7.3 Details to be furnished. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.10 11.7.4 Verification of details. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.10 11.7.5 Acknowledgement in FORM GST REG-02 . . . . . . . . . . . . . . . 11.10 11.7.6 Verification by proper officer. . . . . . . . . . . . . . . . . . . . . . . . . . . 11.10 11.7.7 Intimation of deficiency in FORM GST REG-03 . . . . . . . . . . . 11.11 11.7.8 Furnishing clarification in FORM GST REG-04. . . . . . . . . . . . 11.11 11.7.9 Granting registration in FORM GST REG-06. . . . . . . . . . . . . . 11.11 11.7.10 Effective date of registration . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.11 11.7.11 Deemed registration. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.11 11.7.12 Furnishing of Bank Account Details . . . . . . . . . . . . . . . . . . . . . 11.11 11.7.13 Format of registration number (GSTIN) . . . . . . . . . . . . . . . . . . 11.11 11.8 Procedure for Voluntary Registration. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.12 11.8.1 Tax to be paid by voluntary registrants . . . . . . . . . . . . . . . . . . . 11.12 11.8.2 Cancellation of voluntary registrants. . . . . . . . . . . . . . . . . . . . . 11.12 11.9 Separate Registration for multiple places of business within the same State. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.12 11.9.1 Conditions for separate registration. . . . . . . . . . . . . . . . . . . . . . 11.12 11.9.2 Application in FORM GST REG-01. . . . . . . . . . . . . . . . . . . . . 11.12 11.9.3 Transfer of credit on obtaining separate registration for multiple places of business within a State. . . . . . . . . . . . . . . . . 11.13 11.10 Concept of distinct persons. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.13 11.11 Works Contractor: Single or Multiple Registrations. . . . . . . . . . . . . . . . . . 11.13 11.12 Suo-moto registration by proper officer . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.14 11.12.1 Grounds of registration. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.14 xxviii

Table of contents

11.13

11.14

11.15

11.16

11.17

11.12.2 Order of temporary registration. . . . . . . . . . . . . . . . . . . . . . . . . 11.12.3 Time period for filing application for registration. . . . . . . . . . . Amendment of registration. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.13.1 Legal position. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.13.2 Procedure for amendment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Cancellation or Suspension of registration. . . . . . . . . . . . . . . . . . . . . . . . . 11.14.1 Legal position. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.14.2 Procedure for cancellation of registration . . . . . . . . . . . . . . . . . 11.14.3 Application for cancellation. . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.14.4 Furnishing final return. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.14.5 SCN in FORM GST REG-17. . . . . . . . . . . . . . . . . . . . . . . . . . . 11.14.6 Reply to SCN. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.14.7 Order of cancellation of registration . . . . . . . . . . . . . . . . . . . . . 11.14.8 Proceedings to be dropped. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.14.9 Cancellation on death of registered person [proprietor]. . . . . . . Revocation of cancellation of registration. . . . . . . . . . . . . . . . . . . . . . . . . 11.15.1 Legal position. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.15.2 Procedure of revocation of cancellation of registration. . . . . . . 11.15.2.1 Filing of returns and payment of due amount. . . . 11.15.2.2 Order of revocation . . . . . . . . . . . . . . . . . . . . . . . . 11.15.2.3 Order of rejection. . . . . . . . . . . . . . . . . . . . . . . . . . 11.15.2.4 SCN in FORM GST REG-23 . . . . . . . . . . . . . . . . 11.15.2.5 Reply to SCN. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.15.2.6 Time-period for disposing application. . . . . . . . . . Miscellaneous provisions relating to registration. . . . . . . . . . . . . . . . . . . . 11.16.1 Display of registration certificate and GSTIN on name board. . . . 11.16.2 Physical verification of business premises. . . . . . . . . . . . . . . . . 11.16.3 Method of authentication. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Relevant statutory provisions for registration under GST. . . . . . . . . . . . . .

11.14 11.14 11.15 11.15 11.15 11.17 11.17 11.19 11.19 11.19 11.20 11.20 11.20 11.20 11.20 11.20 11.20 11.21 11.21 11.21 11.21 11.21 11.21 11.21 11.22 11.22 11.22 11.22 11.23

Chapter 12 Payment and Returns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.1 12.1 Payment under GST . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.1 12.1.1 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.1 12.1.2 Electronic Ledgers. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.2 12.1.2.1 Electronic liability register. . . . . . . . . . . . . . . . . . . . 12.2 12.1.2.2 Electronic Cash Ledger. . . . . . . . . . . . . . . . . . . . . . 12.3 Electronic Credit Ledger. . . . . . . . . . . . . . . . . . . . . 12.6 12.1.2.3 12.1.3 Manner of utilisation of credit [section 49 (5)] . . . . . . . . . . . . . . 12.8 12.1.4 Change in the order of utilisation [section 49A] . . . . . . . . . . . . . 12.9 12.1.5 Power to change order of utilisation, vested with the government [section 49B] . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.9 12.1.6 Order of discharging liability. . . . . . . . . . . . . . . . . . . . . . . . . . . 12.11 xxix

A Practical Guide to GST on Real Estate Industry

12.1.7

Levy of Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.1.7.1 Interest on delayed payment of tax . . . . . . . . . . . . 12.1.7.2 Interest on excess claim of input tax credit. . . . . . 12.1.7.3 Whether interest arises on mere reflection of a wrong input tax credit in electronic credit ledger. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Interest to be paid on gross amount or net amount. . . 12.1.7.4 12.2 Returns under GST. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.2.1 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.2.2 Types of returns/ statements for the realty sector (atÂ present). . . . . 12.2.3 Proposed GST returns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.2.3.1 Components of New returns . . . . . . . . . . . . . . . . . 12.2.3.2 Applicability of new returns, based on the aggregate turnover. . . . . . . . . . . . . . . . . . . . . . . . . 12.2.3.3 Applicability of new returns, based on the type of supply. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.2.3.4 Synopsis of new returns. . . . . . . . . . . . . . . . . . . . . 12.2.4 GST Annual Return . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.3 Annexures. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Annexure I: Relevant statutory provisions for payment under GST. . . . . . Annexure II: Relevant statutory provisions for returns under GST . . . . . .

12.11 12.11 12.11

12.11 12.12 12.14 12.14 12.14 12.17 12.17 12.18 12.19 12.20 12.21 12.21 12.21 12.22

Chapter 13 Law and Procedure for movement of goods . . . . . . . . . . . . . . . . . 13.1 13.1 Cross Charge. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.3 13.1.1 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.3 13.1.2 Valuation of cross-charge. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.6 13.1.3 Cross-charge to SEZ. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.8 13.1.4 Basis of cross-charge. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.9 13.1.5 Cross charge v ISD. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.9 13.1.6 Cross-charge enables optimum utilization of input tax credit. . 13.10 13.1.7 Restriction on ITC. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.10 13.1.8 Illustrations of cross charge. . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.11 13.1.8.1 Centralized functions expenses. . . . . . . . . . . . . . . 13.11 Important Aspects . . . . . . . . . . . . . . . . . . . . . . . . . 13.11 13.1.8.2 13.2 Inventory Records. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.12 13.2.1 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.12 How to maintain inventory records. . . . . . . . . . . . . . . . . . . . . . 13.12 13.2.2 13.2.2.1 Inventory ledger. . . . . . . . . . . . . . . . . . . . . . . . . . . 13.12 13.2.2.2 Bin card. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.13 13.2.2.3 Stock identification card . . . . . . . . . . . . . . . . . . . . 13.13 13.2.2.4 Material received note/Goods receipt note (GRN). . 13.13 13.2.2.5 Material requisition slips. . . . . . . . . . . . . . . . . . . . 13.13 xxx

Table of contents

13.3

13.2.2.6 Material returning slip. . . . . . . . . . . . . . . . . . . . . . 13.2.2.7 Material transfer note. . . . . . . . . . . . . . . . . . . . . . . 13.2.2.8 Damage/shortage/excess record. . . . . . . . . . . . . . . 13.2.2.9 Daily receipt voucher. . . . . . . . . . . . . . . . . . . . . . . 13.2.2.10 Package slip. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . E-way Bill. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.3.1 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.3.2 Benefits of E-way bill. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.3.3 Applicability of E-way bill provisions on Real Estate, i.e. service sector . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.3.4 When e-way bill is required?. . . . . . . . . . . . . . . . . . . . . . . . . . . 13.3.5 Reasons for movement of goods . . . . . . . . . . . . . . . . . . . . . . . . 13.3.6 Place of delivery v Place of supply . . . . . . . . . . . . . . . . . . . . . . 13.3.7 Meaning of consignment value . . . . . . . . . . . . . . . . . . . . . . . . . 13.3.8 Compulsory e-way bill in certain cases. . . . . . . . . . . . . . . . . . . 13.3.9 Who can generate e-way bill? . . . . . . . . . . . . . . . . . . . . . . . . . . 13.3.10 E-way Bill by a registered person . . . . . . . . . . . . . . . . . . . . . . . 13.3.11 E-way Bill by a transporter . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.3.12 E-way bill by un-registered person . . . . . . . . . . . . . . . . . . . . . . 13.3.13 E-way bill in case of movement of goods by railways or air or vessel. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.3.14 No requirement to fill part-B if movement of goods for further transportation is within 50 Km between the place of the transporter and consignor or consignee. . . . . . . . . . . . . . 13.3.15 Generation of e-way bill number. . . . . . . . . . . . . . . . . . . . . . . . 13.3.16 Change in conveyance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.3.17 Assignment of e-way bill number . . . . . . . . . . . . . . . . . . . . . . . 13.3.18 E-way bill in case of multiple consignments in one conveyance. . 13.3.19 Assistance in filing Form GSTR-1. . . . . . . . . . . . . . . . . . . . . . . 13.3.20 Cancellation of e-way bill . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.3.21 Validity of e-way bill. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.3.22 Extension of validity period. . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.3.23 Meaning of relevant date. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.3.24 Acceptance or rejection by supplier or recipient. . . . . . . . . . . . 13.3.25 E-way bill in case of Bill to Ship to Model. . . . . . . . . . . . . . . . 13.3.26 E-way bill in case of “Bill from Dispatch from” Model . . . . . . 13.3.27 E-way bill in case of goods rejected by consignee. . . . . . . . . . . 13.3.28 E-way bill in case of import and export. . . . . . . . . . . . . . . . . . . 13.3.29 E-way bill facility through SMS . . . . . . . . . . . . . . . . . . . . . . . . 13.3.30 Goods may not be seized merely on account of technical breaches . . 13.3.31 Penalty for non-filing of e-way bill . . . . . . . . . . . . . . . . . . . . . . 13.3.32 E-way bill not required in certain cases. . . . . . . . . . . . . . . . . . .

13.13 13.13 13.13 13.14 13.14 13.14 13.14 13.14 13.15 13.16 13.16 13.17 13.17 13.18 13.18 13.19 13.19 13.20 13.20

13.21 13.21 13.21 13.21 13.22 13.22 13.23 13.23 13.23 13.24 13.24 13.24 13.25 13.26 13.27 13.27 13.28 13.28 13.29 xxxi

A Practical Guide to GST on Real Estate Industry

13.3.33

Documents and devices to be carried by a person-incharge of a conveyance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.3.34 Electronic form of E-way bill not allowable for goods transported through rail/air/vessel. . . . . . . . . . . . . . . . . . . . . . . 13.3.35 Bill of Entry details required for generating E-way bill. . . . . . . 13.3.36 Form GST INV-1 to be filed in lieu of a tax invoice. . . . . . . . . 13.3.37 Mapping of E-way bill to the Radio Frequency Identification Device . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.3.38 Power to exempt certain transporters to carry E-way bill . . . . . 13.3.39 Verification of documents and conveyances . . . . . . . . . . . . . . . 13.3.40 Verification through Radio Frequency Identification Device Readers. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.3.41 Inspection and verification of goods . . . . . . . . . . . . . . . . . . . . . 13.3.41.1 Time limits for filing of summary report/ final report. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.3.41.2 Extension of time limits. . . . . . . . . . . . . . . . . . . . . 13.3.41.3 No further physical verification in same state. . . . 13.3.42 Facility for uploading information regarding detention of vehicle . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.3.43 Restriction on furnishing of information in Part-A of Form GST EWB-01. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.3.44 Power with Commissioner to grant permission. . . . . . . . . . . . . 13.3.45 Judicial authorities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.3.45.1 E-way bill downloaded before the seizure order-seizure order assailed: Allahabad High Court . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.3.45.2 (E-way bill (Part-B), vehicle number not mentioned â&#x20AC;&#x201C; penalty can be levied under sectionÂ 68 and 122 of CGST Act on transporter.. . 13.3.45.3 E-way bill (Part-B), vehicle number not mentioned- not a ground for seizure of goods: Allahabad High Court. . . . . . . . . . . . . . . . 13.3.45.4 Goods supplied after seven days from the date of invoice cannot be ground for seizure of goods: Allahabad High Court . . . . . . . . . . . . . . 13.3.45.5 E-way bill (Part-B) not filled-goods released subject to furnishing of security not in cash: Allahabad High Court . . . . . . . . . . . . . . . . . . . . . . 13.3.45.6 Goods cannot be seized on account of delay in submitting e-way bill: Allahabad High Court. . 13.4 Conclusion. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . xxxii

13.30 13.30 13.30 13.30 13.31 13.31 13.31 13.31 13.31 13.31 13.31 13.32 13.32 13.32 13.32 13.33

13.33

13.34 13.34 13.34

Table of contents

Chapter 14

Record keeping and Documentation along with specimen formats . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14.1 14.1 Introduction. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14.2 14.2 Accounts and records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14.3 14.2.1 Production or manufacture of goods . . . . . . . . . . . . . . . . . . . . . . 14.3 14.2.2 Inward supply of goods or services or both. . . . . . . . . . . . . . . . . 14.4 14.2.3 Outward supply of goods or services or both. . . . . . . . . . . . . . . . 14.5 14.2.4 Input tax credit availed and output tax paid. . . . . . . . . . . . . . . . . 14.5 14.2.5 Other records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14.6 14.2.6 Electronic records. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14.7 14.2.7 Consequence if the records are found at any other place. . . . . . . 14.8 14.2.8 Restriction on deletion of records . . . . . . . . . . . . . . . . . . . . . . . . 14.8 14.2.9 Consequence if the goods are found at any other place. . . . . . . . 14.9 14.2.10 Special instructions for the work contractors. . . . . . . . . . . . . . . . 14.9 14.2.11 Records to be produced on demand. . . . . . . . . . . . . . . . . . . . . . . 14.9 14.2.12 Consequence of failure to keep records. . . . . . . . . . . . . . . . . . . 14.10 14.2.13 Relaxation by the Commissioner. . . . . . . . . . . . . . . . . . . . . . . . 14.10 14.2.14 Period of retention of accounts. . . . . . . . . . . . . . . . . . . . . . . . . . 14.10 14.3 Inventory Records. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14.11 14.4 GST Audit. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14.11 14.5 Performa for different types of records. . . . . . . . . . . . . . . . . . . . . . . . . . . . 14.11 14.5.1 Inward supply (purchase register) . . . . . . . . . . . . . . . . . . . . . . . 14.11 14.5.2 Outward Supply. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14.12 14.5.3 Statement of advances received and adjusted . . . . . . . . . . . . . . 14.13 14.6 Documentation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14.13 14.6.1 How to raise a proper Invoice?. . . . . . . . . . . . . . . . . . . . . . . . . 14.13 14.6.2 Additional points in case of exports and supply to SEZ . . . . . . 14.15 14.6.3 Time limit for issue of invoice. . . . . . . . . . . . . . . . . . . . . . . . . . 14.15 14.6.4 Manner of issuing invoice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14.16 14.6.5 Self-Invoice in case of RCM Supplies. . . . . . . . . . . . . . . . . . . . 14.16 14.6.6 Bill of Supply. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14.17 14.6.7 Receipt Voucher: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14.18 14.6.8 Refund voucher . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14.19 14.6.9 Payment voucher . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14.19 14.6.10 Revised Tax Invoice. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14.20 14.6.11 Credit and Debit Notes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14.21 14.6.12 Tax invoice in special cases. . . . . . . . . . . . . . . . . . . . . . . . . . . . 14.22 14.6.13 The goods transported without invoice . . . . . . . . . . . . . . . . . . . 14.23 14.6.14 Tax Invoice or Bill of Supply to accompany transport of goods . . 14.24 14.7 E-Way Bill. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14.24 14.8 Accounting Standards. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14.24 xxxiii

A Practical Guide to GST on Real Estate Industry

14.8.1

AS 7 Construction Contracts. . . . . . . . . . . . . . . . . . . . . . . . . . . 14.8.1.1 Types of Construction Contracts. . . . . . . . . . . . . . 14.8.1.2 Percentage Completion Method. . . . . . . . . . . . . . . 14.8.1.3 Uncollectable Contract Revenue. . . . . . . . . . . . . . 14.8.1.4 Ways of determining the stage of completion. . . . 14.8.1.5 Contract Revenue and Costs . . . . . . . . . . . . . . . . . Changes in Estimates. . . . . . . . . . . . . . . . . . . . . . . 14.8.1.6 14.8.1.7 Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14.8.2 Applicability of IND AS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14.8.3 Ind AS 11 Construction Contracts. . . . . . . . . . . . . . . . . . . . . . . 14.8.3.1 Scope. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14.8.3.2 Major differences between AS 7 and IND AS 11 are listed below. . . . . . . . . . . . . . . . . . . . . . 14.8.3.3 Relevance of AS 7/ IND AS 11 in accordance with GST. . . . . . . . . . . . . . . . . . . . . . . 14.8.3.4 Guidance Note on Accounting for Real Estate Transactions. . . . . . . . . . . . . . . . . . . . . . . . Accounting for Real Estate Transactions. . . . . . . . 14.8.3.5 14.8.3.6 Application of Percentage completion method. . . 14.8.3.7 Sale of plots of land without any development - Revenue from sale of land or plots should be recognized when all the conditions as specified below are satisfied. . . . . . 14.8.3.8 Sale of developed plots . . . . . . . . . . . . . . . . . . . . . 14.8.3.9 Transferable Development Rights. . . . . . . . . . . . . 14.9 Conclusion. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

14.24 14.24 14.25 14.25 14.26 14.26 14.26 14.26 14.27 14.27 14.28 14.28 14.28 14.29 14.29 14.30

14.30 14.30 14.31 14.31

PART 4

Detailed procedural law containing assessment, audit, advance ruling, appeals, penalties, demands etc. Chapter 15 Assessment, Audit and Review. . . . . . . . . . . . . . . . . . . . . . . . . . . . 15.1 Assessments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15.1.1 Registered and filing returns . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15.1.2 Not registered. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15.1.3 Registered-no returns filed. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15.1.4 Summary assessment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15.1.5 Areas to be checked in assessment of residential real estate sector. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15.1.6 Judicial pronouncements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15.2 Audit. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15.2.1 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . xxxiv

15.1 15.2 15.2 15.4 15.5 15.5 15.6 15.7 15.9 15.9

Table of contents

15.2.2 15.2.3 15.2.4 15.2.5 15.2.6

Evidence Law and Audit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15.11 Regulatory Authorities for Audits in India. . . . . . . . . . . . . . . . . 15.12 Importance of audit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15.13 Specific to industry/ auditee. . . . . . . . . . . . . . . . . . . . . . . . . . . . 15.14 Audit under GST Act. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15.16 15.2.6.1 Audit by CA/CMA. . . . . . . . . . . . . . . . . . . . . . . . . 15.16 Departmental audit. . . . . . . . . . . . . . . . . . . . . . . . . 15.16 15.2.6.2 15.2.6.3 Special audit. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15.16 15.2.7 Statutory Audit/ Certification in GST. . . . . . . . . . . . . . . . . . . . . 15.18 15.2.8 Management reviews in GST. . . . . . . . . . . . . . . . . . . . . . . . . . . 15.19 15.2.8.1 Complete health check reviews. . . . . . . . . . . . . . . 15.19 15.2.8.2 Area-specific reviews. . . . . . . . . . . . . . . . . . . . . . . 15.20 15.2.8.3 Due diligence reviews. . . . . . . . . . . . . . . . . . . . . . 15.22 15.2.8.4 Systems and processes reviews. . . . . . . . . . . . . . . 15.22 15.2.8.5 IT/ERP systems review. . . . . . . . . . . . . . . . . . . . . 15.22 15.2.8.6 Follow up review. . . . . . . . . . . . . . . . . . . . . . . . . . 15.22 15.2.8.7 Investigative review. . . . . . . . . . . . . . . . . . . . . . . . 15.23 15.2.9 How to get ready for audit?. . . . . . . . . . . . . . . . . . . . . . . . . . . . 15.23 15.2.10 Documentation under GST audit. . . . . . . . . . . . . . . . . . . . . . . . 15.24 15.3 Importance of review in indirect tax compliance regime. . . . . . . . . . . . . . 15.27 15.3.1 Background . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15.27 15.3.2 Importance of reviews. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15.28 15.3.3 Types of Review. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15.31 15.3.3.1 Compliance Reviews. . . . . . . . . . . . . . . . . . . . . . . 15.31 15.3.3.2 Complete Diagnostic Reviews. . . . . . . . . . . . . . . . 15.32 15.3.3.3 Concurrent Reviews. . . . . . . . . . . . . . . . . . . . . . . . 15.32 15.3.3.4 Input Tax Credit Reviews . . . . . . . . . . . . . . . . . . . 15.32 15.3.3.5 ERP/ System Reviews. . . . . . . . . . . . . . . . . . . . . . 15.33 15.3.3.6 Process/ SOP Reviews. . . . . . . . . . . . . . . . . . . . . . 15.33 15.3.3.7 Vendor Assessment Reviews based on FORM GSTR-2A. . . . . . . . . . . . . . . . . . . . . . . . . . 15.33 15.3.3.8 Valuation Review. . . . . . . . . . . . . . . . . . . . . . . . . . 15.34 15.3.3.9 Tax Efficiency Reviews. . . . . . . . . . . . . . . . . . . . . 15.34 15.3.3.10 Contract Reviews. . . . . . . . . . . . . . . . . . . . . . . . . . 15.34 15.3.3.11 Interim Review for Final Audit (FORM GSTR-9C).15.34 15.3.3.12 Review of Real Estate Division. . . . . . . . . . . . . . . 15.35 15.4 Relevant statutory provisions for assessment under GST. . . . . . . . . . . . . . 15.35 15.5 Relevant statutory provisions for audit under GST. . . . . . . . . . . . . . . . . . . 15.37 15.6 Conclusion. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15.37

xxxv

A Practical Guide to GST on Real Estate Industry

Chapter 16 Demands and Recovery. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16.1 16.1 Introduction. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16.1 16.2 Demands and Recovery. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16.2 16.2.1 Determination of tax not paid/short paid or erroneously refunded or input tax credit wrongly availed/utilized (Sections 73 to 75). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16.2 16.2.1.1 Issuance of the show cause notice. . . . . . . . . . . . . . 16.3 16.2.1.2 The determination as to the existence of the ingredients namely fraud or any wilful misstatement or suppression of facts to evade tax. . . . 16.3 16.2.1.3 Who is the proper officer?. . . . . . . . . . . . . . . . . . . . 16.9 16.2.1.4 Issuance of order . . . . . . . . . . . . . . . . . . . . . . . . . . . 16.9 16.2.1.5 Time limits for issuance of SCN and adjudication . . 16.10 16.2.1.6 Closure of proceedings . . . . . . . . . . . . . . . . . . . . . 16.12 16.2.1.7 Other points to be noted. . . . . . . . . . . . . . . . . . . . . 16.13 16.2.2 Tax collected but not paid to the Government or wrongfully collected and paid to the Government (Sections 76 to 77). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16.14 16.2.2.1 Tax collected but not paid to the Government (Section 76). . . . . . . . . . . . . . . . . . . . 16.14 16.2.2.2 Tax wrongly collected and paid to Government (section 77 of CGST Act and 19 of IGST Act). . . . . . . . . . . . . . . . . . . . . . . . . . . 16.17 16.2.3 Recovery proceedings (sections 78 to 84). . . . . . . . . . . . . . . . . 16.17 16.2.3.1 Modes of the recovery. . . . . . . . . . . . . . . . . . . . . . 16.17 16.2.3.2 Option for payment of arrears in installments (Section 80). . . . . . . . . . . . . . . . . . . . 16.22 16.2.3.3 Transfer of property to be void in certain cases (Section 81) . . . . . . . . . . . . . . . . . . . . . . . . . 16.23 16.2.3.4 Tax to be the first charge on property (Section 82). . 16.23 16.2.3.5 Provisional attachment to protect revenue in certain cases (Section 83). . . . . . . . . . . . . . . . . . . 16.23 16.2.3.6 Continuation and validation of certain recovery proceedings (Section 84). . . . . . . . . . . . 16.24 16.3 Reference to relevant provisions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16.25 Chapter 17 Advance Ruling . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17.1 Introduction. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17.2 What is Advance ruling?. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17.3 Who can apply?. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17.4 What are the matters/ questions on which the advance ruling can be sought? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . xxxvi

17.1 17.1 17.2 17.2 17.2

Table of contents

17.5 17.6 17.7 17.8 17.9 17.10

Benefits of Advance Ruling. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17.2 Disadvantages of Advance Ruling . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17.3 When is advance ruling preferable? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17.3 Procedure – filing of ‘advance ruling’ application . . . . . . . . . . . . . . . . . . . . 17.3 Appeal Remedy. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17.7 Procedure – filing of Appeal to the Appellate Authority for Advance Ruling . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17.8 17.11 Other points to be noted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17.9 17.12 Few decisions under the erstwhile laws that may be relevant under GST also . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17.9 17.13 Advance Rulings in the context of Real Estate. . . . . . . . . . . . . . . . . . . . . . 17.10

Chapter 18 Appeals and Revision. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18.1 18.1 Introduction. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18.2 18.2 Appeal before the appellate authority – First Appeal. . . . . . . . . . . . . . . . . . 18.3 18.2.1 Appeal by taxpayer [Section 107(1)]. . . . . . . . . . . . . . . . . . . . . . 18.3 18.2.2 Appealable orders. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18.3 18.2.3 Non-appealable orders [Section 121]. . . . . . . . . . . . . . . . . . . . . . 18.3 18.2.4 Appeal by department [Section 107(2), (3)] . . . . . . . . . . . . . . . . 18.4 18.2.4.1 Few judicial precedents in this context are as under . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18.4 18.2.5 Limitation period[Section 107(1)(2)(4)] . . . . . . . . . . . . . . . . . . . 18.4 18.2.5.1 Few judicial precedents in this context are as under . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18.5 18.2.6 Procedure for filing an Appeal [Rule 108]. . . . . . . . . . . . . . . . . . 18.5 18.2.7 Opportunity of being heard [Section 107(8)&(9)]. . . . . . . . . . . . 18.6 18.2.8 Additional grounds of appeal [Section 107(10)]. . . . . . . . . . . . . 18.6 18.2.8.1 Few judicial precedents in this context are as under . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18.7 18.2.9 Appellate order [Section 107(11)&(12)] . . . . . . . . . . . . . . . . . . . 18.7 18.2.10 No set aside/ remand powers to the first Appellate Authority [Section 107(11)]. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18.8 18.2.11 No enhancement unless opportunity of being heard is provided to the appellant and order passed within limitation period [Provisos to section 107(11)]. . . . . . . . . . . . . . 18.8 18.2.12 Disposal of appeal [Section 107(13)]. . . . . . . . . . . . . . . . . . . . . . 18.8 18.3 Revision by the Commissioner [Section 108]. . . . . . . . . . . . . . . . . . . . . . . . 18.8 18.4 Constitution of the Appellate Tribunal [Section 109]. . . . . . . . . . . . . . . . . . 18.9 18.5 Appeal to the Appellate Tribunal [Section 112] . . . . . . . . . . . . . . . . . . . . . 18.13 18.5.1 Appeal by any person [Section 112(1), (2)]. . . . . . . . . . . . . . . . 18.13 18.5.2 Appeal by the department [Section 112(3), (4)]. . . . . . . . . . . . . 18.13 xxxvii

A Practical Guide to GST on Real Estate Industry

18.5.3 18.5.4

Filing cross-objections [Section 112(5)] . . . . . . . . . . . . . . . . . . Limitation period of filing appeal before the Appellate Tribunal [Section 112(1), (3), (6)]. . . . . . . . . . . . . . . . . . . . . . . 18.5.5 Some judicial precedents. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18.5.6 Procedure for filing an Appeal [Rule 110]. . . . . . . . . . . . . . . . . 18.5.7 Concept of Pre-deposit. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Orders of Appellate Tribunal [Section 113]. . . . . . . . . . . . . . . . 18.5.8 18.5.9 Adjournment of Appeal [Section 113(2)]. . . . . . . . . . . . . . . . . . 18.5.10 Disposal of Appeal [Section 113(4)] . . . . . . . . . . . . . . . . . . . . . 18.5.11 Production of additional evidences before the Appellate Authority or Tribunal[Rule 112] . . . . . . . . . . . . . . . . . . . . . . . . 18.6 Rectification of mistake apparent on record [Section 113(3)]. . . . . . . . . . . 18.7 Appeal to High Court [Section 117]. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18.7.1 Procedure for filing an Appeal before High Court [Rule 114]. . . . 18.8 Appeal to Supreme Court [Section 118]. . . . . . . . . . . . . . . . . . . . . . . . . . . 18.9 Preparation of synopsis for hearing at any stage. . . . . . . . . . . . . . . . . . . . . 18.10 Legal Maxims which could be used in appeal . . . . . . . . . . . . . . . . . . . . . . 18.11 Relevant statutory provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

18.13 18.14 18.14 18.14 18.15 18.16 18.17 18.17 18.17 18.18 18.18 18.19 18.19 18.20 18.22 18.24

Chapter 19 Offences and Penalties. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19.1 19.1 Introduction. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19.5 19.2 Offence v. Default. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19.6 19.3 Penalty Provisions—whether mandatory? . . . . . . . . . . . . . . . . . . . . . . . . . . 19.6 19.4 Principles of natural justice. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19.7 19.4.1 Violation of Article 21. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19.7 19.4.2 Prevent miscarriage of justice . . . . . . . . . . . . . . . . . . . . . . . . . . . 19.8 19.4.3 Conscious disregard of obligation. . . . . . . . . . . . . . . . . . . . . . . . 19.8 19.4.4 Explanation of both sides. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19.8 19.4.5 Omission of the Legislature. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19.9 19.4.6 Post Decisional hearing not valid. . . . . . . . . . . . . . . . . . . . . . . . . 19.9 19.4.7 Default should be established. . . . . . . . . . . . . . . . . . . . . . . . . . . . 19.9 19.4.8 Excludes chances of arbitrariness. . . . . . . . . . . . . . . . . . . . . . . 19.10 19.4.9 Cross examination to be allowed. . . . . . . . . . . . . . . . . . . . . . . . 19.10 19.4.10 Violation of article 14 of the Constitution. . . . . . . . . . . . . . . . . 19.10 19.4.11 Option must be excluded by law . . . . . . . . . . . . . . . . . . . . . . . . 19.11 19.4.12 Penalty on the basis of audit report not valid. . . . . . . . . . . . . . . 19.11 19.4.13 Satisfaction necessary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19.12 19.4.14 Opportunity must be reasonable. . . . . . . . . . . . . . . . . . . . . . . . . 19.12 19.4.15 Judicial hierarchy is binding . . . . . . . . . . . . . . . . . . . . . . . . . . . 19.12 19.5 Penalty in case of various types of offences [Section 122]. . . . . . . . . . . . . 19.13 19.6 Penalty in case of tax not paid/ short paid or erroneously refunded or input tax credit wrongly availed or utilized . . . . . . . . . . . . . . . . . . . . . . 19.14 xxxviii

Table of contents

19.7 19.8 19.9 19.10 19.11

Penalty for persons involved in commitment of offence. . . . . . . . . . . . . . . Penalty for failure to furnish information return [Section 123] . . . . . . . . . Fine for failure to furnish statistics [Section 124]. . . . . . . . . . . . . . . . . . . . General Penalty [Section125]. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . General disciplines related to penalty [Section 126]. . . . . . . . . . . . . . . . . . 19.11.1 No penalty for minor breaches. . . . . . . . . . . . . . . . . . . . . . . . . . 19.11.2 Penalty should commensurate with degree and severity of the breach. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19.11.3 Principle of Natural Justice . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19.11.4 Proper officer shall explain nature of breach. . . . . . . . . . . . . . . 19.11.5 Suo-moto disclosure of offence by defaulter. . . . . . . . . . . . . . . 19.11.6 Non applicability of section 126 - where penalty is fixed. . . . . 19.11.7 More than one meaning. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19.11.8 Section 126(6) making section 126(1) redundant . . . . . . . . . . . 19.12 Power to impose penalty in certain cases [Section 127]. . . . . . . . . . . . . . . 19.13 Power to waive penalty or fee or both [Section 128] . . . . . . . . . . . . . . . . . 19.14 Other Penalty Cases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19.14.1 By mistake two bills were made . . . . . . . . . . . . . . . . . . . . . . . . 19.14.2 Tax not charged on bills. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19.14.3 Authorised Representative (CA) made payment late. . . . . . . . . 19.14.4 Books Rejected. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19.14.5 Deliberateness to be proved. . . . . . . . . . . . . . . . . . . . . . . . . . . . 19.14.6 Not getting registered. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19.14.7 Attachment not valid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19.14.8 Mens rea not proved. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19.14.9 Mens rea not to be seen . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19.14.10 No penalty merely-exemption disallowed. . . . . . . . . . . . . . . . . 19.14.11 Unauthorized purchases against ‘C’ Forms-Imposition of Penalty-mens rea necessary. . . . . . . . . . . . . . . . . . . . . . . . . . . . 19.14.12 Penalty imposed based on suspicion that Entry Form ST38 being partly left blank could be misused-deleted by Haryana Tax Tribunal-Chandigarh. . . . . . . . . . . . . . . . . . . . . . . 19.14.13 Address and TIN not mentioned on GR:. . . . . . . . . . . . . . . . . . 19.14.14 Wrong claim of ITC. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19.14.15 Totalling Error . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19.14.16 Monthly returns not filed. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19.14.17 Wrong TIN mentioned on return . . . . . . . . . . . . . . . . . . . . . . . . 19.14.18 Description of Items not given in return . . . . . . . . . . . . . . . . . . 19.14.19 Registration application filed late. . . . . . . . . . . . . . . . . . . . . . . . 19.14.20 Purchase figures not given in return. . . . . . . . . . . . . . . . . . . . . . 19.14.21 Registration application filed late. . . . . . . . . . . . . . . . . . . . . . . .

19.15 19.16 19.16 19.17 19.17 19.17 19.17 19.17 19.17 19.18 19.18 19.18 19.18 19.18 19.19 19.19 19.19 19.19 19.20 19.20 19.20 19.20 19.21 19.21 19.21 19.22 19.22

19.22 19.23 19.23 19.23 19.23 19.24 19.24 19.24 19.24 19.25 xxxix

A Practical Guide to GST on Real Estate Industry

19.14.22 19.14.23 19.14.24 19.14.25 19.14.26 19.14.27 19.14.28 19.14.29 19.14.30 19.14.31 19.14.32 19.14.33 19.14.34 19.14.35 19.14.36

Wrong Claim of ITC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Registration application filed late. . . . . . . . . . . . . . . . . . . . . . . . Penalty on purchases omitted. . . . . . . . . . . . . . . . . . . . . . . . . . . Penalty for late registration . . . . . . . . . . . . . . . . . . . . . . . . . . . . Goods carried without proper documents—Penalty reduced. . . Penalty for technical breach. . . . . . . . . . . . . . . . . . . . . . . . . . . . Penalty for statutory breach. . . . . . . . . . . . . . . . . . . . . . . . . . . . Penalty for late filing of return-held invalid. . . . . . . . . . . . . . . . Late filing of registration application. . . . . . . . . . . . . . . . . . . . . Late filing of Audit Report & Non-maintenance of Stock Records. . . Penalty for late filing of audit report . . . . . . . . . . . . . . . . . . . . . Deficiency in Tax Invoice rectified—ITC allowed . . . . . . . . . . Books not produced on visit—Penalty deleted . . . . . . . . . . . . . Branches not reported in RC—Penalty deleted. . . . . . . . . . . . . Late deposit of taxes/ Late Returns by 24 days—No Reasonable Cause for Default-Penalties u/ss. 86(9) & 86(12) sustained by Delhi Tribunal. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19.14.37 Revised Returns—After Notice for Audit—No tax effect—Penalties u/s. 86(10) deleted by Delhi Tribunal . . . . . . 19.14.38 The dealer could not justify labour charges claimed— Court upheld Rule 3 and penalty u/s. 86(12) but deleted penalty u/s. 86(10). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19.14.39 Penalty u/s. 86(10) deleted on filing valid revised return—Delhi VAT Tribunal. . . . . . . . . . . . . . . . . . . . . . . . . . . . 19.14.40 Non-maintenance of stock register—No tax effect—No penalty—Delhi Tribunal. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19.14.41 Assessment of tax set-aside, penalty cannot survive— Delhi VAT Tribunal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19.14.42 Falsification of accounts—Not proved—No penalty— Delhi Tribunal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19.14.43 Stock records not properly maintained-no tax deficiency-no penalty-Delhi Tribunal. . . . . . . . . . . . . . . . . . . . . 19.14.44 Technical mistake-penalty not automatic-hence deletedDelhi Tribunal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19.14.45 No assessment of tax-no assessment of penalty. . . . . . . . . . . . . 19.15 Detention, seizure and release of goods and conveyances in transit [Section 129]. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19.15.1 Reason of detention or seizure of goods and conveyance in transit. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19.15.2 Release of goods and conveyance. . . . . . . . . . . . . . . . . . . . . . . 19.15.3 Judicial Authorities on section 129 . . . . . . . . . . . . . . . . . . . . . . xl

19.25 19.25 19.26 19.26 19.26 19.26 19.27 19.27 19.27 19.27 19.28 19.28 19.28 19.28

19.29 19.29

19.29 19.30 19.30 19.30 19.31 19.31 19.31 19.31 19.32 19.32 19.32 19.34

Table of contents

19.16 Confiscation of goods or conveyances and levy of penalty [Section 130]. 19.35 19.16.1 Cases where goods are liable for confiscation. . . . . . . . . . . . . . 19.35 19.16.2 Option to pay fine in lieu of confiscation. . . . . . . . . . . . . . . . . . 19.35 19.16.3 Fine is in addition to tax and penalty. . . . . . . . . . . . . . . . . . . . . 19.36 19.16.4 Opportunity of being heard . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19.36 19.16.5 Title of confiscated goods vest with Government . . . . . . . . . . . 19.36 19.16.6 Proper officer to hold possession of confiscated goods. . . . . . . 19.36 19.16.7 Disposal of confiscated goods or conveyance after specified period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19.36 19.17 Confiscation or penalty not to interfere with other punishments [Section 131]. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19.37 19.18 Punishment for certain offences [Section 132]. . . . . . . . . . . . . . . . . . . . . . 19.38 19.19 Liability of officers and certain other persons [Section 133] . . . . . . . . . . . 19.40 19.19.1 Liability of officers responsible for collection of statistics, service provider in respect of common portal etc.. . . 19.40 19.19.2 No liability in certain circumstances. . . . . . . . . . . . . . . . . . . . . 19.41 19.19.3 Sanction by Government/ Commissioner to be sought. . . . . . . 19.41 19.20 Cognizance of offences [Section 134]. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19.41 19.21 Presumption of culpable mental state [Section 135]. . . . . . . . . . . . . . . . . . 19.41 19.21.1 Presumption of culpable state of mind by Courts . . . . . . . . . . . 19.41 19.21.2 Meaning of ‘culpable mental state’. . . . . . . . . . . . . . . . . . . . . . 19.41 19.22 Relevancy of statements under certain circumstances [Section 136]. . . . . 19.42 19.22.1 Relevancy of Statements of persons who cannot be examined as a witness before the Court. . . . . . . . . . . . . . . . . . . 19.42 19.22.2 Relevancy of Statements of persons who can be examined as a witness before the Court. . . . . . . . . . . . . . . . . . . 19.43 19.23 Offences by companies [Section 137]. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19.44 19.24 Compounding of offences [Section 138]. . . . . . . . . . . . . . . . . . . . . . . . . . . 19.45 19.24.1 Non-applicability of compounding provisions in certain cases.19.45 19.24.2 Compounding shall not affect proceedings under any other law. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19.46 19.24.3 Compounding to be allowed after payment of tax, interest and penalty. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19.46 19.24.4 Minimum and Maximum amount of compounding. . . . . . . . . . 19.46 19.24.5 No other proceeding to be initiated under this Act post compounding. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19.46 19.24.6 Procedure for compounding of offences . . . . . . . . . . . . . . . . . . 19.46 19.25 Judicial Rulings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19.49 19.25.1 Submission of forged document. . . . . . . . . . . . . . . . . . . . . . . . . 19.49 19.25.2 Non-maintenance of proper books-whether offence . . . . . . . . . 19.49 19.25.3 Secrets books of accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19.49 xli

A Practical Guide to GST on Real Estate Industry

19.25.4 Returns filed at wrong place. . . . . . . . . . . . . . . . . . . . . . . . . . . . 19.25.5 Reasonable opportunity of being heard-not given. . . . . . . . . . . 19.25.6 Assault of a sales tax officer. . . . . . . . . . . . . . . . . . . . . . . . . . . . 19.25.7 Partner who signed the return. . . . . . . . . . . . . . . . . . . . . . . . . . . 19.25.8 Levy of penalty set aside by the Tribunal . . . . . . . . . . . . . . . . . 19.26 Relevant statutory provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

19.49 19.49 19.50 19.50 19.50 19.50

PART 5

Tax planning avenues, GST and RERA, Transitional provisions Chapter 20 Tax Planning Avenues in Real Estate Sector. . . . . . . . . . . . . . . . . 20.1 20.1 Introduction. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20.2 20.1.1 Essence of tax planning. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20.2 20.1.2 Significance of drafting in agreements and contracts. . . . . . . . . . 20.2 20.1.3 Tax planning Avenues. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20.3 20.2 Scope of tax planning. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20.3 20.2.1 Under Constitution of India. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20.3 20.2.2 Under GST Laws. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20.6 20.3 Important definitions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20.9 20.3.1 Business. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20.9 20.3.2 Composite supply. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20.9 20.3.3 Consideration. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20.10 20.3.4 Continuous supply of services. . . . . . . . . . . . . . . . . . . . . . . . . . 20.10 20.3.5 Fixed establishments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20.10 20.3.6 Goods and services. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20.10 20.3.7 Capital goods. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20.11 20.3.8 Location of supplier of services. . . . . . . . . . . . . . . . . . . . . . . . . 20.11 Concept of supply. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20.11 20.3.9 20.4 Important Legal Maxims. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20.12 20.4.1 Ratio Decidendi. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20.12 20.4.2 Per Incuriam. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20.12 20.4.3 Lex non cogittad impossiblia, Impostentia excusat legem. . . . . 20.13 20.4.4 Nemo punitur pro alieno delicto. . . . . . . . . . . . . . . . . . . . . . . . . 20.13 20.4.5 Contemporanea exposition est optims et fortissimo in lege. . . . 20.13 20.4.6 Cuilibet in arte sua perito est credenduni. . . . . . . . . . . . . . . . . . 20.13 20.4.7 Delegatus non potest delegare. . . . . . . . . . . . . . . . . . . . . . . . . . 20.13 20.4.8 Generalia specialibus derogant. . . . . . . . . . . . . . . . . . . . . . . . . . 20.13 20.4.9 Audi alteram partem. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20.13 20.4.10 Vigilantibus et non dormientibus jura subviunt. . . . . . . . . . . . . 20.13 20.5 Reverse charge mechanism. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20.14 20.6 Time of Supply . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20.15 xlii

Table of contents

20.7 Place of supply . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20.8 Classification. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20.9 Claim of exemption. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20.10 Valuation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20.11 Input Tax Credits. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

20.15 20.16 20.16 20.17 20.18

Chapter 21 GST and RERA. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21.1 21.1 Background. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21.2 21.2 Relevant aspects of RERA for real estate sector. . . . . . . . . . . . . . . . . . . . . . 21.3 21.3 Relevant definitions under RERA. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21.4 21.4 RERA and GST implications . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21.6 21.5 Issues. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21.7 21.6 Understanding of RERA for those covered by it. . . . . . . . . . . . . . . . . . . . . . 21.8 21.6.1 RERA brings much needed reforms. . . . . . . . . . . . . . . . . . . . . . . 21.8 21.6.2 The website provides end to end solution by making the law available online. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21.8 21.6.3 The web portal makes retrieval of information and restitution feasible to the public. . . . . . . . . . . . . . . . . . . . . . . . . . 21.8 21.6.4 The law opens the door to meet contemporary needs by scrapping the old and irrelevant laws. . . . . . . . . . . . . . . . . . . . . . 21.8 21.6.5 The Act protects the interest of the consumer . . . . . . . . . . . . . . . 21.9 21.6.6 Binding requirement for a promoter to get registered. . . . . . . . . 21.9 21.6.7 Amount to be deposited in a separate bank account for the purpose of construction alone.. . . . . . . . . . . . . . . . . . . . . . . . 21.9 21.6.8 Real Estate Agent cannot carry out proceedings without obtaining registration. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21.9 21.6.9 RERA elucidates the functions and duties of the promoter. . . . . 21.9 21.6.10 Disclosure requirements including advertisement published to be met . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21.10 21.6.11 The promoter is obligated to disclose mentioned information to the allottee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21.10 21.6.12 An apartment shall not be mortgaged or created a charge upon after the agreement for sale is executed . . . . . . . . . . . . . . 21.10 21.6.13 It is the onus of the promoter to compensate anyone affected by false/incorrect advertisement broadcasted by the promoter. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21.11 21.6.14 Promoter can demand not more than 10% of total cost of the apartment before entering into a written agreement as per the law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21.11 21.6.15 Information and details with respect to the agreement for sale is to be provided by the promoter to the allottee. . . . . . . . . 21.11 xliii

A Practical Guide to GST on Real Estate Industry

21.6.16

The promoter is obligated to compensate the allottee in case any structural defects are found in the building. . . . . . . . . 21.6.17 Obligations that the promoter has to meet in case of transfer of Real Estate project to third party . . . . . . . . . . . . . . . 21.6.18 Promoter has to insure the project as mentioned in the law. . . . 21.6.19 The promoter is under an obligation to compensate the allottee if the allottee suffers any loss due to flawed title of land. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21.7 Frequently Asked Questions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21.8 Conclusion. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

21.11 21.12 21.12

21.12 21.12 21.12

Chapter 22 Transitional Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22.1 22.1 Introduction. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22.3 22.2 Transitional credit provision. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22.3 22.3 Carry forward of closing balance of CENVAT credit/input tax credit of VAT carried forward in the return allowed as input tax credit [Section 140(1)]. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22.4 22.4 Availment of unavailed CENVAT credit on capital goods [Section 140(2)] . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22.5 22.5 Carry forward of closing stock credit [Section 140(3)] . . . . . . . . . . . . . . . . 22.8 22.6 Other provisions for transition credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22.10 22.6.1 Carry forward of tax credit by a registered person, who was engaged in the manufacture of taxable as well as exempted goods or provision of taxable as well as exempted service but which are liable to tax under GST [Section 140(4)]. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22.10 22.6.2 Tax credit in respect of inputs or input services received on or after the appointed day but the duty or tax in respect of which has been paid by the supplier under the erstwhile law [Section 140(5)]. . . . . . . . . . . . . . . . . . . . . . . . . . 22.10 22.6.3 Carry forward of tax credit by a registered person, who was either paying tax at a fixed rate or paying a fixed amount in lieu of the tax payable under the erstwhile law [Section 140(6)]. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22.11 Tax credit on account of any services received prior to 22.6.4 the appointed day by an ISD [Section 140(7)]. . . . . . . . . . . . . . 22.12 Carry forward of tax credit in case of service provider 22.6.5 registered on centralized basis [Section 140(8)] . . . . . . . . . . . . 22.14 22.6.6 Reclaiming CENVAT credit reversed due to nonpayment of consideration [Section 140(9)]. . . . . . . . . . . . . . . . 22.14 22.6.7 Transition credit of service tax/ VAT paid on closing stock of units/ work in progress to extent of supplies done post appointed date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22.15 xliv

Table of contents

22.6.8

Transition credit pertaining to immoveable property based on sub-contractor invoices. . . . . . . . . . . . . . . . . . . . . . . . 22.15 22.6.9 I Transition credit and ‘C’ Form issues . . . . . . . . . . . . . . . . . . . 22.17 22.6.10 Payment of tax on ongoing project after 1st April, 2019. . . . . . 22.17 22.7 Issues & Comments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22.23 22.7.1 Whether the credit of VAT paid pertaining to procurement of materials can be directly carry forward via FORM GST TRAN-1 by the developer?. . . . . . . . . . . . . . . 22.23 22.7.2 Whether transition credit can be availed based on the unutilized portion of sub-contractors deduction by developer?. . . 22.23 22.7.3 Whether the credit of stocks can be carry forward by developer when the duty paid invoices are dated earlier to June 2016?. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22.23 22.7.4 Whether the credit could be carried forward on Krishi Kalyan Cess, Education Cess and Secondary and Higher Education Cess?. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22.23 22.7.5 Whether credit of excess taxes paid under earlier laws can be carried forward to GST via FORM GST TRAN-1?. . . . 22.24 22.8 Relevant Decisions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22.24 22.8.1 ITC of NCCF permissible even if not part of VAT return: Telangana High Court . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22.24 22.8.2 Transitional credit on capital goods in transit on appointed day- disallowed: Gujarat High Court . . . . . . . . . . . . 22.25 22.8.3 Condition of 12 months in section 140(3)(iv) unconstitutional: Gujarat High Court. . . . . . . . . . . . . . . . . . . . . 22.25 22.8.4 Permission to fill FORM GSTR-3B manually where credit was not reflecting in credit ledger: Delhi High Court . . . 22.25 22.8.5 Amendment of FORM GST TRAN-1 allowed subject to bona fides of the claim made: Maharashtra High Court. . . . . . . 22.25 22.8.6 Time limit provided in rule 117 for rectification of FORM GST TRAN-1 upheld: Ahmdabad High Court. . . . . . . 22.26 22.9 Conclusion. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22.26 22.10 Relevant Statutory Provisions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22.26 PART 6

Disputes and department actions, [focussing on possible dispute area & resolution] Chapter 23 Disputes Mitigation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23.1 Introduction. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23.2 Genesis for disputes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23.3 Issues faced by taxpayers & resolution. . . . . . . . . . . . . . . . . . . . . . . . . . . . .

23.1 23.1 23.2 23.3 xlv

A Practical Guide to GST on Real Estate Industry

23.4 Common errors. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23.5 23.5 System errors. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23.10 23.6 Compliance errors. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23.14 23.7 Conclusion. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23.15 23.8 Way forward for dispute avoidance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23.16 Chapter 24 Departmental Actions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24.1 24.1 Introduction. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24.2 24.2 Issues/challenges related to taxation of real estate segment. . . . . . . . . . . . . 24.3 24.2.1 Unorganized sector. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24.3 24.2.2 Lack of awareness about GST provisions and procedures. . . . . . 24.3 24.2.3 Non-maintenance of necessary records/documents. . . . . . . . . . . 24.4 24.2.4 Low compliance/non-compliance under GST. . . . . . . . . . . . . . . 24.4 24.2.5 Issues faced by organized sector players. . . . . . . . . . . . . . . . . . . 24.4 24.3 Reasons for departmental actions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24.4 24.3.1 Chronic non-filing of Forms GSTR-3B (Annex-II)/ GSTR1 (Annex-I). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24.5 24.3.2 Disclosure of taxable supplies in Form GSTR-1 (Annex-I) without making payment of taxes in Form GSTR-3B (Annex-II). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24.5 24.3.3 Mismatch between input tax credit as per Form GSTR-3B and Form GSTR-2A/non-payment of tax by vendors. . . . . . . . . . . . 24.5 24.3.4 Verification of transition credit. . . . . . . . . . . . . . . . . . . . . . . . . . . 24.5 24.3.5 Other Reasons . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24.6 24.3.5.1 Data sharing by Income Tax and other departments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24.6 24.3.5.2 Departmental enquiry/investigation/audit of the customer of developer. . . . . . . . . . . . . . . . . . . . 24.6 24.3.5.3 GST notice sent to the customers of the developer. . . 24.6 24.4 Options for departmental action against taxpayers. . . . . . . . . . . . . . . . . . . . 24.7 24.4.1 Power to inspect, search and seizure. . . . . . . . . . . . . . . . . . . . . . 24.7 24.4.2 Search and seizure. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24.8 24.4.3 Other aspects . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24.9 24.4.4 Inspection of goods in movement . . . . . . . . . . . . . . . . . . . . . . . . 24.9 24.4.5 Power to issue summons to give evidence. . . . . . . . . . . . . . . . . 24.10 24.4.6 Salient features of summons provisions. . . . . . . . . . . . . . . . . . . 24.10 24.5 Departmental interaction. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24.11 Correspondence with department. . . . . . . . . . . . . . . . . . . . . . . . 24.11 24.5.1 Few modes of communication. . . . . . . . . . . . . . . . . . . . . . . . . . 24.11 24.5.2 24.5.2.1 Email . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24.11 24.5.2.2 Telephone. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24.12 24.5.2.3 Letters from department. . . . . . . . . . . . . . . . . . . . . 24.13 xlvi

Table of contents

24.5.2.4 Letter to department. . . . . . . . . . . . . . . . . . . . . . . . 24.5.2.5 Visits by department . . . . . . . . . . . . . . . . . . . . . . . 24.5.2.6 Response to summons. . . . . . . . . . . . . . . . . . . . . . 24.5.3 Precautions to be taken while giving statements during summons. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24.5.4 Other important points in summons-. . . . . . . . . . . . . . . . . . . . . 24.5.5 Search. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24.5.6 The procedure to deal with the officers who come for search is as follows. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24.5.7 Message sent over mobile as SMS. . . . . . . . . . . . . . . . . . . . . . . 24.6 Other Aspects . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24.6.1 Collection of information from the taxpayer. . . . . . . . . . . . . . . 24.6.2 Obligation upon the proper officer. . . . . . . . . . . . . . . . . . . . . . . 24.6.3 How to deal with inspection during movement?. . . . . . . . . . . . 24.7 Conclusion. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

24.13 24.14 24.15 24.17 24.18 24.19 24.20 24.20 24.20 24.20 24.21 24.21 24.21

PART 7

Role of Professionals from GST audit and tax planning perspective. Chapter 25 Professional Services in Real Estate Sector. . . . . . . . . . . . . . . . . . 25.1 25.1 Background. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25.1 25.2 Professional’s Role. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25.4 25.3 Professional Advantage. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25.7 25.4 Types of Services. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25.9 25.4.1 Review, Audit and Certification Services. . . . . . . . . . . . . . . . . . . 25.9 25.4.2 Consultancy and Advisory Services. . . . . . . . . . . . . . . . . . . . . . 25.10 Assistance and Compliance Services. . . . . . . . . . . . . . . . . . . . . 25.11 25.4.3 Dispute resolution services. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25.12 25.4.4 25.4.5 Teaching and training services. . . . . . . . . . . . . . . . . . . . . . . . . . 25.13 25.4.6 Due diligence services. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25.13 25.4.7 Drafting services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25.14 25.4.8 Project and transaction structuring services. . . . . . . . . . . . . . . . 25.14 25.4.9 Other services. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25.15 25.5 Conclusion. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25.16 PART 8

Miscellaneous: 220+ FAQs and filled forms Chapter 26 Frequently Asked Question’s . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26.1 Part I: General. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26.1.1 Levy, tax rate and exemption. . . . . . . . . . . . . . . . . . . . . . . . . . . . 26.1.2 Valuation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

26.1 26.2 26.2 26.5 xlvii

A Practical Guide to GST on Real Estate Industry

26.2

26.1.3 Input tax credit. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26.9 26.1.4 Reverse charge mechanism . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26.16 26.1.5 Time of Supply. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26.19 26.1.6 Registration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26.21 26.1.7 Type of tax to be charged. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26.24 26.1.8 GST on complex developers . . . . . . . . . . . . . . . . . . . . . . . . . . . 26.25 GST on plot developers. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26.28 26.1.9 26.1.10 GST on contractors. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26.28 26.1.11 GST for joint development agreement. . . . . . . . . . . . . . . . . . . . 26.29 26.1.12 Other Issues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26.30 Part II: New scheme . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26.32 26.2.1 General. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26.32

Chapter 27 Filled Forms. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27.1 27.1 Introduction. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27.1 27.2 Form ASMT-01: Application for provisional assessment under section 60. 27.2 27.3 Form GST-ARA 01: Application form for advance ruling. . . . . . . . . . . . . . 27.3 27.4 Form GST EWB -01: Format of E-way Bill. . . . . . . . . . . . . . . . . . . . . . . . . 27.6 27.5 Form REG-01: Application for Registration. . . . . . . . . . . . . . . . . . . . . . . . . 27.8 27.6 Form GST-REG-14: Application for amendment in registration . . . . . . . . 27.18 27.7 Form GST- REG-16: Application for cancellation of registration . . . . . . . 27.20 27.8 Form GST APL-01: Appeal to Appellate Authority. . . . . . . . . . . . . . . . . . 27.23 27.9 Form GST DRC-03: Intimation of payment made voluntarily or made against the show cause notice (SCN) or statement. . . . . . . . . . . . . . 27.28 27.10 Form GST ITC-01: Declaration for claim of input tax credit under sub-section (1) of section 18. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27.29 27.11 Form GST ITC -03 : Declaration for intimation of ITC reversal/ payment of tax on inputs held in stock, inputs contained in semifinished and finished goods held in stock and capital goods under sub-section (4) of section 18. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27.32 27.12 Form GSTR-1: Details of Outward Supplies of goods/ services . . . . . . . . 27.34 27.13 Form GSTR-3B: Monthly Return. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27.42 27.14 Form GSTR-9: Annual Returns. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27.45 APPENDICES CONTAINING FAQS RELEASED BY CBIC Appendix 1

FAQs on Real Estate, dated 7 May 2019. . . . . . . . . . . . . . . . App-1.1

Appendix 2

FAQs (Part II) on Real Estate, dated 14 May 2019. . . . . . . . App-2.1

xlviii

Table of cases

Table of cases A. Tex (India) (P) Ltd., In re: 2004 (168) E.L.T. 27 (AAR). . . . . . . . . . . . . . . . . . . . 17.9 AAP and Co., Chartered Accountants v Union of India in R/Special Civil Application No. 18962 of 2018. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.10, 9.38 Adfert Technologies Pvt. Ltd. v. UOI and Ors., (2019 (11) TMI 282. . . . . . . . . . . . 2.27 Alembic Limited v Commissioner, (2019-TIOL-358-CESTAT-AHM). . . . . . . . . . 26.50 All India Fedn. of Tax Practitioners v UOI , (2007(7) STR 625(SC).. . . . . . . . . . . . 6.15 Allied Motors (P) Ltd. v C.I.T, (1997) 3 SCC 472). . . . . . . . . . . . . . . . . . . . . . . . . 12.13 Alokik Township Corporation v. CCEx & ST, Jaipur-I (2015) (37) STR 859 (Tri.-Del.), affirmed in (2015) (40) STR J-132 (SC). . . . . . . . . . . . . . . . . . . 4.27 Anant Mills Co. Ltd. v. State of Gujarat,in Civil Appeals Nos. 752 to 755, dated 21-Jan-1975 (SC). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.6 Andaman Timber Industries v CCE [2015] 281 CTR 241 (SC). . . . . . . . . . . . . . . . . 15.7 Arihan Telecommunications v UOI, 2017 (348) ELT 214 (Bombay) . . . . . . . . . . . . 18.5 Association of Leasing & Financial Service Companies v UOI 2010 (20) S.T.R. 417 (S.C.) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.5 Asst. Collector of CE v Harwood Garment, 2003 (158) ELT 401 (SC). . . . . . . . . . 19.16 Asst. Collector v Sayed Mohammed 1983 (12) ELT 193 (SC).. . . . . . . . . . . . . . . . 19.42 Automatic Instruments (P) Ltd. v. Commissioner of Trade & Taxes, Delhi, (2006-07) 46 DSTC J-204. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19.25 B P Industries v Commissioner, DVAT/Appeal No. 176/ ATVAT/ 05806/ Orders on 10-8-06 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19.24 Bala Baskar v CST, (2016(43) S.T.R 161 (Mad.), maintained in 2017(48) STR J43 (Supreme Court) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26.29 Bala Baskar v. CST,(2016) (43) STR 161 (Mad.). . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.16 Bala Baskar vCST,(2016) (43) STR 161 (Mad.), maintained in 2017(48) STR J-43 (SC) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.16 Baroda Meters v Collector Of Central Excise,Â 1997 (94) E.L.T. 13 (S.C.).. . . . . . . . . 7.8 Bayana Builders P.Ltd v CST 2013 (32) STR 49. . . . . . . . . . . . . . . . . . . . . . . . . . . . 26.6 Bharat Heavy Plate and Vessels Ltd. v Assistant Commissioner, 2006 (203) E.L.T. 544 (A.P.). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16.19 Bhayana Builders P.Ltd v CST, 2013 (32) STR 49. . . . . . . . . . . . . . . . . . . . . . . . . . . 26.6 Bhinka v Charan Singh AIR 1959 SC 960. . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.27, 9.39 Bhola Nath Nundi v. Midnapore Zamindari Co. Ltd., (1904) 8 Cal WN 425 . . . . . . . 4.6 xlix

A Practical Guide to GST on Real Estate Industry

Bhumika Enterprises v State of U.P, [2018] 67 GST 273 (Allahabad). . . . . . . . . . . 13.33 Bhupendra A Mehta v Asstt. Commissioner of Commercial Taxes, [1999] 113 STC 77 (Karn). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19.49 Bindu Ventures, In re: 2019 (20) G. S. T. L. 616 (A. A. R. - GST) dt. 03.12.2018. 17.11 Bio-Pharma Capsules v Dy. Commissioner of Commercial Taxes, (2007) 6 VST 35 (AP). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15.7 Birla Corporation Ltd v Commissioner, 2005 (186) ELT 266 (SC). . . . . . . . . . . . . . 18.4 Birla Corporation Ltd. v State of Bihar and Others, [2009] 26 VST 471 (Patna).. . 19.28 BL Mehta Construction (P) Ltd. v CCE & ST, 2017-TIOL-3731-CESTAT-CHD. . 16.15 British Machinery Supply Co v UOI, 1996(86) ELT 449(SC). . . . . . . . . . . . . . . . . . 8.11 BSNL Ltd. v. UOI, 2006 (2) STR 161 (SC). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.27 Builders’ Association of India v State of Karnataka, [1993] 88 STC 248 (SC. . . . . . 15.8 Builders’ Association of India v. State of Karnataka [1993] 88 STC 248 (SC). . . . . 15.8 C.C. of CE and Service & Ors v Ranchi Club Ltd[Civil Appeal No. 7497 of 2019].7.18 C.K Gangadhar v CIT, 2008 (228) ELT 497 (SC) . . . . . . . . . . . . . . . . . . . . . . . . . . . 18.4 C-277/05 Sociétethermaled ‘Eugenie-Les-Bains. . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.15 Canara Bank v V.K. Awasthi, AIR 2005 SC 2090 . . . . . . . . . . . . . . . . . . . . . . . . . . 19.12 Carlton Industrial Engineers v CTO, Kakinada and Anr., [2007] 9 VST 77 (AP).. . 19.21 Cavim Properties (P). Ltd. v UOI, 2016 (44) S.T.R. 217 (Bom.). . . . . . . . . . . . . . . 16.20 CC v Fuse base Eltoto Ltd.- 1993(67) ELT 513(SC). . . . . . . . . . . . . . . . . . . . . . . . . 8.11 CC v MM Exports, (2007)212 E.L.T. 165 (SC). . . . . . . . . . . . . . . . . . . . . . . . . . . . 24.19 CCE & CE, Allahabad v Ashok Kumar Tiwari, 2015 (37) STR 727 (All). . . . . . . . . 18.5 CCE v Bill Forge Pvt. Ltd., 2012 (279) E.L.T 209 (Kar). . . . . . . . . . . . . . . . . . . . . 12.12 CCE v Cairn Energy India (P) Ltd., 2015 (316) ELT 612 (AP). . . . . . . . . . . . . . . . . 18.5 CCE v CCE, Delhi-III, Gurgaon, 2005 (2005) 180 ELT 300(SC). . . . . . . . . . . . . . . . 8.3 CCE v ESPN Software India P Ltd., 2018 (17) GSTL J 112(SC) . . . . . . . . . . . . . . 11.25 CCE v Garware Polyester Ltd., 204 (164) ELT 344 (T-M) . . . . . . . . . . . . . . . . . . . . 8.10 CCE v ICL Sugar Ltd., 2011 (271), ELT 360 (Kar). . . . . . . . . . . . . . . . . . . . . . . . . . 9.18 CCE v ITC Ltd., 2003(152) ELT 241 (SC). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.12 CCE v JOCIL Ltd., 2011 (263) E.L.T. 9 (S.C.) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.10 CCE v Jubiliant Enpro P Ltd, 2019(25) GSTL J 153(SC) . . . . . . . . . . . . . . . . . . . . 11.25 CCE v Kanta Rubber (P) Ltd. 2010 (257) ELT 554 (Tri-Bang). . . . . . . . . . . . . . . . 19.37 CCE v Sai Samhita Storage P Ltd, 2011 (270) ELT 33(AP).. . . . . . . . . . . . . . . . . . . 9.18 CCE v Vinayak Agrotech Ltd., 2012 (284) E.L.T. 237 (Tri. - Del.). . . . . . . . . . . . . 16.15 CCE v Wood Craft Products Ltd. 1995 (77) E.L.T. 23. . . . . . . . . . . . . . . . . . . . . . . . . 8.7 CCE v. Kay Kay Ind. [2013 (295) ELT 177 (SC)].. . . . . . . . . . . . . . . . . . . . . . . . . . . 9.39 l

Table of cases

CCE v.Shatabdi Cement (P) Ltd. 2007 (217) ELT 387 (Tri-Del). . . . . . . . . . . . . . . 19.42 CCE, Bangalore v Pragathi Concrete Products (P) Ltd., 2015 (322) E.L.T. 819 (SC).. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16.7 CCE, Bhubaneswar v Champdany Industries Ltd., 2009-TIOL-104-104-SC-CX. . . 18.4 CCE, Madurai v Strategic Engineering (P) Ltd, 2014 (310) E.L.T 509 (Mad) . . . . 12.12 Cement Marketing Co. of India Ltd. v Asstt. CST [1980] 45 STC 197 (SC).. . . . . 19.27 Chemical and Fibres of India Ltd. v UOI [1997 (89) ELT 633 (SC).. . . . . . . . . . . . . 8.12 Choice Laboratories Ltd. v UOI, 2015 (315) ELT 197. . . . . . . . . . . . . . . . . . . . . . . . 18.5 Chumber Textiles v State of Punjab and Another, [2008] 13 VST 282 (P&H).. . . . 19.26 CIT v B.R. Sharma, (2005) 275 ITR 303 (Del) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19.12 CIT v Berger Paints (India) Ltd., (2002) 254 ITR 503 (Cal).. . . . . . . . . . . . . . . . . . . 19.6 CIT v Karnataka Power Corporation (2002) 9 SCC 571 (SC). . . . . . . . . . . . . . . . . . 9.18 CIT v Vegetable Product Ltd., 88 ITR 192 (SC).. . . . . . . . . . . . . . . . . . . . . . . . . . . 19.18 CIT v Vegetable Products Ltd. , [1973] 88 ITR 192 (SC) . . . . . . . . . . . . . . . . . . . . 19.32 CIT v Vikas Promotors (P) Ltd., (2005) 277 ITR 337 (Delhi). . . . . . . . . . . . . . . . . 19.12 CIT v.Bazpur Co-Operative Sugar Factory Limited [(1988) 172 ITR 321 (SC)]. . . . 7.20 CIT, Andhra Pradesh v. Motors and General Stores (P) Ltd., [1967] 66 ITR 692 (AP).. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.4 Classic Enterprises v Commissioner DVAT, 46 DSTC J-87 (2007). . . . . . . . . . . . . 19.25 Collector Land Acquisition, Anantnag and Others v Mst. Katiji and Others, 1987 (28) ELT 185 (SC) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18.19 Collector of Central Excise, Pune v Dai Ichi Karkaria Ltd. (1999) 8 TMI 920 (SC) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.10 Collector of Central Excise, Pune v Dai Ichi Karkaria Ltd. [1999 (112) ELT 0353 (SC)] . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.38 Collector v Chemphar Drugs and Liniments, 1989 (40) E.L.T. 276 (SC) . . . . . . . . . 16.5 Columbia Asia Hospitals (P) Ltd., No. KAR/ AAR-15/ 2018, dated 27-Jul-2018. . . 13.5 Columbia Sportswear Company v Director of Income Tax, (2012) (283) E.L.T. 321 (S.C.).. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17.9, 17.10 Commercial Steel Engineering v State of Bihar in Civil Writ Jurisdiction Case No. 2125 of 2019 (Patna High Court). . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.22 Commercial Steel Engineering v State of Bihar in Civil Writ Jurisdiction Case No. 2125 of 2019 (Patna High Court). . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.12 Commissioner of Central Excise, Coimbator v Jawahar Mills Ltd. & Ors. 2001 (132) ELT (3) (SC) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.17 Commissioner of Customs, Central Excise and service Tax, Guntur v. Andhra Sugars Ltd. [2018 (10) GSTL 12 (SC)]. . . . . . . . . . . . . . . . . . . . . . . . . . 9.39 li

A Practical Guide to GST on Real Estate Industry

Commissioner of Income Tax v B. C. Srinivasa Setty. . . . . . . . . . . . . . . . . . . . . . . 10.15 Commissioner of Income Tax v Taj Mahal Hotel 1972 AIR 168 (SC). . . . . . . . . . . . 9.18 Commissioner of Sales Tax, U.P. v Sanjiv Fabrics and Hari Oil, [2010] 35 VST 1 (SC).. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19.22 Commissioner of Service Tax v. Bhayana Builders (P) Ltd., [2018 (10) GSTL 118 (SC)]. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.28 Commissioner Trade Tax U.P. Lucknow v S/S Triveni N.L. Ltd. [RN 910, 911 & 912 of 2001 (All.)] . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.5 Commissioner v MTR Foods Ltd., 2012 (282) E.L.T. 196 (Kar.) . . . . . . . . . . . . . . . 16.7 Commissioner v Phil Corporation Ltd. 2008 (223) ELT 9 (SC). . . . . . . . . . . . . . . . . . 8.7 Continental Builders and Developers Bangalore vState of Karnataka in 2009 (67) Kar.L.J. 359 (Tri.) (FB) (KVAT). . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.12 Continental Foundation Jt. Venture v Commissioner, 2007 (216) E.L.T. 177 (SC). . 16.7 Cosmic Dye Chemical v Collector, 1995 (75) E.L.T. 721 (SC). . . . . . . . . . . . . . . . . 16.4 Crompton Greaves Ltd. v State of Gujarat, (2000) 120 STC 510 (Gujarat High Court) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24.8 CTO v Juharmal Badri Lal, (2007) 5 VST 276 (Raj). . . . . . . . . . . . . . . . . . . . . . . . 19.19 Deepak Kumar Khurana v. Sattva Developers (P) Ltd., (2019) 74 GST 322 (NAA).2.29 Dena Bank v B.B.P. Parekh & Co. (2000) 5 SCC 694(SC). . . . . . . . . . . . . . . . . . . . . 6.7 Dena Bank v. B.B.P. Parekh & Co., (2000) 5 SCC 694 (SC). . . . . . . . . . . . . . . . . . . . 4.6 Devangree Cotton Mills v CCE, Belgaum, 2006 (198) ELT 482 (SC). . . . . . . . . . . . 18.7 Developers Association of Navi Mumbai v Union of India (Bombay High Court)(2018 (12) G.S.T.L. 232 (Bom.). . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.7 DheerajGulati v. Commissioner of DVAT, (2006) 45 DSTC J-97 (Delhi). . . . . . . . 19.23 Dunlop India Ltd & MRF Ltd v UOI â&#x20AC;&#x201C; 1983(13) ELT 1566(SC) . . . . . . . . . . . . . . . 8.12 Dy. Commercial Tax Officer v Coromandal Pharmaceuticals,1996(1) ALD-161 . . 16.19 Eagle Flask Industries Ltd. v DCIT, (1999) TTJ (Pune) 422 (2000) ITD 245 (Pune).. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19.12 Eicher Motors Limited, and Anr. v Union of India and Ors., 1999(106) ELT 3 (SC). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.3, 9.4, 9.6 Eicher Motors Ltd v UOI 1999(106) ELT 3 (SC). . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.23 Eicher Motors Ltd. v Union of India (1999) 106 ELT 3 (SC) . . . . . . . . . . . . . . . . . . 9.10 Eicher Motors Ltd. v Union of India [(1999) 106 ELT 3 (SC)]. . . . . . . . . . . . . . . . . 9.38 Eicher Motors Ltd. v Union of India, 2002-TIOL-149-SC-CX-LB. . . . . . . . . . . . . 12.12 Federation of Hotels & Restaurants Association of India v. UOI, 2016 (44) S.T.R. 3 (Del.). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.23 Filco Trade Centre (P) Ltd v Union of India, [Special Civil Application lii

Table of cases

No. 18433 of 2017].. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22.25 Flevel International v CCE 2016 (332) ELT 416 (Del).. . . . . . . . . . . . . . . . . . . . . . 19.43 Formica India Division v CCE (1995) 77 ELT 511 (SC). . . . . . . . . . . . . . . . . . . . . . 9.11 Formica India Division v CCE [1995 (77) ELT 511 (SC)]. . . . . . . . . . . . . . . . . . . . . 9.38 Galaxy Sports Shoes (P) Ltd v Commissioner of Trade & Taxes, Delhi, in Appeal No. 555-566/ ATVAT/ 09-10. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19.29 Gannon Dunkerley & Co. v. State of Rajasthan [1993] 88 STC 204 (SC). . . . . . . . . 15.8 GatiKinetsu Express Private Limited v Commissioner of Commercial Taxes, Madhya Pradesh [2018] (15) G.S.T.L 310 (M.P). . . . . . . . . . . . . . . . . . 13.33 General Officer Commanding-in-Chief v Subhash Chandra Yadav, AIR 1988 SC 876. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.17 Gian Chand v State of Punjab, 1983 (13) ELT 1365 (SC).. . . . . . . . . . . . . . . . . . . . 19.16 Girdhar International (P) Ltd . v Commissioner, DVAT/ Appeal No. 305/ ATVAT/ 05-06/ Orders on 08-9-06 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19.24 Girnar Traders v State of Maharashtra, (2011) 3 SCC 1. . . . . . . . . . . . . . . . . . . . . . . 26.3 Gowra Ventures (P) Ltd., In re: 2018(18) G.S.T.L.625(A.A.R.-GST) dt. 26.07.2018.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17.10 Gowri Infra Engineers Pvt. Ltd , In re: (2019-TIOL-317-AAR-GST). . . . . . . . . . . 17.12 Grasim Industries Limited v Union Of India, R/Special Civil Application No. 11061 of 2019 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22.24 GSPL India Transco Ltd. v Union of India, (2013) (32) S.T.R. 271 (Guj.).. . . . . . . . 17.9 Gujarat Travancore Agency v Commissioner of Income Tax, (1989) 177 ITR 455 (SC). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19.21 HDFC Standard Life Insurance Co. Ltd. v CCE, 2017 (49) S.T.R. 301 (Tri. - Mumbai) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16.16 Hi Tech Abrasive Ltd. v CCE 2018 (362) ELT 961 (Chhattisgarh).. . . . . . . . . . . . . 19.43 Himgiri Electricals, [No. 638/ ATVAT/ 08-09] dt. 20-Jan-10.. . . . . . . . . . . . . . . . . 19.27 Hind Electric Store v. Commissioner of Sales Tax, Delhi, (2006) 45 DSTC J-101 (Delhi). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19.23 Hindalco Industries Limited v Union of India, [W.P.(C) No. 3138 of 2019] [TS-239-HC-2019(ORI)-NT], [W.P. (C) No. 3138 of 2019]. . . . . . . . . . 22.24 Hindustan Ferodo Ltd. v CCE – 1997(89) ELT 324(SC). . . . . . . . . . . . . . . . . . . . . . 8.11 Hindustan Steel Ltd. v State of Orissa [1970] 25 STC 211 (SC).. . . . . . . . . . . . . . . 19.27 Hindustan Steel Ltd. v State of Orrisa, (1970) 25 STC 211 (SC): (1970)1 SCR 753: AIR 1970 SC 253. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19.7 Hindustan Steel Ltd. v State of Orrissa, (1970) 25 STC 211 (SC): AIR 1970 SC 253: (1970) 1 SCR 753. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19.8 liii

A Practical Guide to GST on Real Estate Industry

Hotel Vallalar v The Registrar, Tamil Nadu Taxation Tribunal, Chennai and Others [2008] 15 VST 516 (Mad). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15.8 India Boni Factory v State of U. P. and Others, [2013] 57 VST 524 (All). . . . . . . . . 15.7 India Cements Ltd v CCE, 2015(321) ELT 209(Mad). . . . . . . . . . . . . . . . . . . . . . . . 9.18 Indus Towers Ltd. v. Assistant S.T.O. , [2018] 66 GST 364 (Kerala). . . . . . . . . . . 19.34 Indusind Media Communications Ltd. v UOI, [2018 (19) G.S.T.L. 643 (Del.). . . . 22.25 Instalment Supply Ltd. v STP Ahmedabad-I, AIR 1974 SC 1105. . . . . . . . . . . . . . . 4.10 Intel Design Systems (I) (P) Ltd. v CCE- 2008(223) ELT 135(SC). . . . . . . . . . . . . . . 8.9 Intercontinental Consultants and Technocrats Pvt. Ltd . v Union of India, (2013 (29) S.T.R. 9 (Del.) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.29 IWI Crogenic Vaporization System (I) (P) Ltd. v CCE & ST, Vadodara-II, 2017 (47) STR 209. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18.7 J.K. Spinning and Weaving Mills Ltd. v UOI, 1987 (32) ELT 234 (SC).. . . . . . . . . 19.16 J.R. Construction Co. v CCE & ST, 2016 (41) S.T.R. 642 (Tri.- Del.).. . . . . . . . . . . 16.7 J.R. Construction Co.v. CCE & ST, 2016 (41) S.T.R. 642 (Tri.- Del.). . . . . . . . . . . . 2.23 Jagannath Prasad v State of Uttar Pradesh [1963] 14 STC 536 (SC). . . . . . . . . . . . . 19.6 Jagdish Rexine Store v Commissioner, Trade & Taxes, 49 DSTC J-256 (2010-11) (Delhi Tribunal).. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19.30 Jaipur IPL Cricket (P) Ltd. v CST, 2015 (38) S.T.R. 1193 (Tri. - Mumbai). . . . . . . 16.16 Jason James Clemens, In re: (2005) (181) E.L.T. 16 (AAR).. . . . . . . . . . . . . . . . . . . 17.9 Jatinder Mittal Engineers and Contractors v Commissioner of Trade & Taxes, Delhi [2011] 46 VST 498 (Delhi). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19.29 Jayam & Co. v Assistant Commissioner and Another [2018 (19) GSTL 3 (SC)] . . . 9.38 Jayaswals Neco Ltd. v CCE- 2006 (195) ELT 142(SC). . . . . . . . . . . . . . . . . . . . . . . 8.11 JCB India Ltd. and others v UOI, [2018-TIOL-23-HC-MUM-GST]. . . . . . . . . . . . 22.25 Jijrushu N Bhattacharya v N P Foods, 2018-TIOL-08-NAA-GST. . . . . . . . . . . . . . . 10.5 Jindal Drugs Pvt Ltd. v UOI (2018) 361 E.L.T. 769 (SC).. . . . . . . . . . . . . . . . . . . . 19.43 Joint Plant Committee, [2018- TIOL-07-AAR-GST]. . . . . . . . . . . . . . . . . . . . . . . . 26.18 Joint Plant Committee, In re:2018 (13) GSTL 89 (AAR-GST). . . . . . . . . . . . . . . . 11.25 JT (India) Export and Another v Union of India, 262 ITR 269 (Delhi).. . . . . . . . . . 19.11 K. Selvaraj v CCE 2009 (238) ELT 502 (Tri-Chennai).. . . . . . . . . . . . . . . . . . . . . . 19.37 K. Raheja Development Corporation v. State of Karnataka (2006 (3) S.T.R. 337 (S.C.) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.3 K. Raheja Development Corporation v. State of Karnataka, [2006 (3) S.T.R. 337 (S.C.) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.25 K.G. Somani and Co. v Commissioner of Service Tax, Delhi, (2007) 6 VST 75 (Delhi). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19.20 liv

Table of cases

K.P. Varghese v ITO, (1981) 131 ITR 597 (SC). . . . . . . . . . . . . . . . . . . . . . . . . . . . 19.11 K.S Venkataraman v UOI, AIR 1966 SC 1089. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18.14 Kaki Butchi Raju Sons v State of Andhra Pradesh, [1995] 96 STC 634 (AP). . . . . 19.49 Kalra Glue Factory v Sales Tax Tribunal, (1987) 167 ITR 498 (SC). . . . . . . . . . . . 19.10 Kara Property Venture, In re: LLP No. 2019 (23) G.S.T.L.287(A.A.R.GST) dt. 21.01.2019. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17.10 Kara Property Ventures LLP in Order No. 1/ AAR/ 2019 (AAR Tamil Nadu) . . . . . 2.15 Kara Property Ventures LLP, In re: (AAR Tamil Nadu) in Order No. 01/ AAR/ 2019. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.26 Kara Property Ventures LLP, In re: 2019-TIOL-86-AAR-GST. . . . . . . . . . . . . . . . . 3.23 Kent Electrical & Electronics , Appeal Nos. 484-487/ ATVAT/ 09-10 dt 8-Jun-12 (Delhi VAT Tribunal) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19.31 Kent Electrical & Electronics v Commissioner of Trade & Taxes [2012], 50 DSTC J-125 (Delhi Tribunal).. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19.31 Khazan Chand v State of Jammu & Kashmir, [1984] 56 STC 214 (SC).. . . . . . . . . . 19.6 Khidmat Restraurent v Commissioner of Trade & Taxes, Delhi, in Appeal No. 416 & 417/ ATVAT/ 10-11, dated 30-Jun-2011. . . . . . . . . . . . . . . . . . 19.31 Kraipak v Union of India, AIR 1970 SC 150. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19.8 Kshetriya Punjab KhadiMandal v State of Punjab and Anr., [2007] 8 VST 34 (P&H). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19.21 Kyocera Wireless (India) (P) Ltd., (2016) 43 STR (Kar). . . . . . . . . . . . . . . . . . . . . . 9.39 L&T Limited v State of Karnataka, (2013-TIOL-46-SC-CT-LB) . . . . . . . . . . . . . . . . 6.3 Landmark Lifestyle v Union of India in WP (C) No. 6055/ 2019 (Delhi High Court) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.22 Landmark Lifestyle v Union of India in WP (C) No. 6055/ 2019 (Delhi High Court).. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.13 Larsen & Toubro Limited & Anr. v. State of Karnataka & Anr,. Civil Appeal No. 8672 of 2013, arising out of SLP(C) No.17741 of 2007 dated 26 September, 2013 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.3 Larsen & Toubro Limited and another v State of Karnataka and another (2013-TIOL- 46-SC- CT-LB). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.22 Larsen & Toubro Limited v State of Karnataka, 2014 (303) E.L.T. 3 (S.C.). . . . . . 22.16 Larsen & Toubro Ltd. & Anr. v. State of Karnataka & Anr., (2013) TIOL 46 SC- CT-LB . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.7 Larsen & Toubro Ltd. v Commissioner of Value Added Tax & Anr., [2014] 73 VST 190 (Delhi) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15.18 Larsen & Toubro Ltd. v State of Orissa and Others [2008] 12 VST 31 (Orissa). . . . 15.8 lv

A Practical Guide to GST on Real Estate Industry

Larsen and Toubro Ltd. v. State of Bihar [2004] 134 STC 354 (Patna). . . . . . . . . . . 15.8 Larsen and Tubro Ltd. (2013-TIOL-46-SC-CT-LB). . . . . . . . . . . . . . . . . . . . . . . . . . 3.27 Laxman Exports Ltd. v Collector of Central Excise, 2002 (143) E.L.T. 21 (SC). . 19.43 LCS City Makers (P) Ltd. v Commissioner , 2013 (30) S.T.R. 33 (Tribunal). . . . . . . 6.4 LCS City Makers Ltd v CST, (2012-TIOL-618-CESTAT-MAD) LB . . . . . . . . . . . . 6.10 Liberty Cables India v Commissioner, DVAT STI (2006) Delhi Tribunal 105/ Appeal No. 257/ ATVAT/ 05-06/ Orders on 07-8-06. . . . . . . . . . . . . . . . . 19.24 LMJ International v Commissioner of Trade & Taxes, Delhi, in Appeal No. 111-112/ ATVAT/ 10-11, dated 23-Feb-2011 . . . . . . . . . . . . . . . . . . . . . . . 19.29 Lohati Overseas Ltd. v CST, Delhi, (2008-09) 47 DSTC J-135. . . . . . . . . . . . . . . . 19.26 Lord Venketshwara Caterers v CTO, Anti Evasion, Jaipur, [2007] 10 VST 535 (Raj).. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19.20 M K Pushparanjini, Chikku’s Wood Crafts v STO, [2004] 138 STC 302 (Ker).. . . 19.21 M N Securities (P) Ltd. v Commissioner of Sales Tax, Delhi, 46 DSTC J-303 (2007-08).. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19.26 M. AyyasamiNadar v State of Madras, [1963] 14 STC 952 (Mad) . . . . . . . . . . . . . 19.50 M. H. Industries v Assistant STO , [2018] 66 GST 553 (Kerala).. . . . . . . . . . . . . . 19.35 M/s Durga Projects and Infrastructure Pvt. Ltd., AAR (2019-TIOL-251AAR-GST). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17.12 M/s Jay Chemical Industries Ltd v UOI, (2018-TIOL-140-HC-AHM-GST) . . . . . 22.26 M/s OEN India Ltd and another v UOI & ors, (2018-TIOL-152-HC-MUM-GST).22.26 M/s Shree Construction, NO.2018(17) G.S.T.L. 504 (A. A. R.- GST) Mumbai dt. 11.07.2018 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17.11 M/s. NBCC (India) Ltd., In re: 2018 (18) G. S. T. L. 724 (A. A. R. – GST) dt. 05.10.2018. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17.11 Maa Vindhyavasini Tobacco (P) Ltd. v State of U.P, [2018] 66 GST 373 (Allahabad). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.33 Macro Marvel Projects Ltd. v. CST, Chennai, [2008 (12) STR 603 (Tri. Chennai)]. 3.27 Maestro Motors Ltd. v CC 2004 (174) ELT 289 (SC).. . . . . . . . . . . . . . . . . . . . . . . . 8.13 Magma Fincorp Limited v State of Telangana, [WP 46792 of 2018]. . . . . . . . . . . . 22.25 Magma Fincorp Limited v. State of Telangana [WP 46792 of 2018]. . . . . . . . . . . . 22.23 Maharaja Jewellers v Commissioner, DVAT/ Appeal No. 30/ ATVAT/ 06-07/ Orders on 07-12-06. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19.25 Mahindra Intertrade Ltd. v The State of Haryana, (2011) 40 PHT 91 (HTT).. . . . . 19.22 Makin Paper Mills v State of Punjab and Ors., (2007) 5 VST 363 (P&H).. . . . . . . 19.19 Maneka Gandhi v UOI, AIR 1978 SC 597. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19.9 Manoj Kumar Arora v Union of India ,2018 (15) G.S.T.L. J115. . . . . . . . . . . . . . . 19.45 lvi

Table of cases

Manoj Kumar Arora v UOI 2018 (15) GSTL 323 (All). . . . . . . . . . . . . . . . . . . . . . 19.45 Marana Holdings Pty Ltd v Commissioner of Taxation [2004] FCAFC 307 (25 November 2004). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.11 Mardia Chemicals Ltd v Union of India [2004] AIR 2004 SC 2371. . . . . . . . . . . . 19.27 Mega Cabs (P) Ltd. v Union of India & Others [2015] 53 DSTC 147 (Delhi) . . . . 15.17 Mega Media Solution v Commissioner of Trade & Taxes [2010-11] 49 DSTC J-417 (Delhi Tribunal). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19.31 Megha Engineering & Infrastructures Ltd. v Commissioner of Central Tax in W.P No. 44517/ 2018 (Telangana High Court). . . . . . . . . . . . . . 12.13, 12.22 Metagraphs (P) Ltd. v CCE – 1996(88) ELT 633(SC). . . . . . . . . . . . . . . . . . . . . . . . 8.11 MGF Developments Ltd. v. CCE,(2018-TIOL-221-CESTAT-DEL).. . . . . . . . . . . . . 4.28 MM Enterprises v CTO Moore Market (South), Assessment Circle, Chennai (2007) 5 VST 392 (Mad). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15.7 Moorco India Ltd. v. CC, 1994 (74) E.L.T. 003 (SC). . . . . . . . . . . . . . . . . . . . . . . . . . 8.9 Mudra Port & SEZ Ltd v CCE, 2015(39) STR 726(Guj). . . . . . . . . . . . . . . . . . . . . . 9.18 Municipal Corporation of Delhi v Birla Cotton Spinning and Weaving Mills, AIR 1968 SC 1232. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.17 N Bala Baskar v UOI 2016TIOL824HCMADST. . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.4 Naresh Shridhar v State of Maharashtra, (1966) 3 SCR 744-770. . . . . . . . . . . . . . . . 19.7 Narne Construction (P) Ltd. v. UOI, (2013) (29) STR 3 (SC). . . . . . . . . . . . . . . . . . 4.27 Narne Constructions, (2013)(29) STR 3 (SC) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.12 Navinon Ltd. v UOI, 2008 (12) STR 84. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18.5 New Holland Tractor India (P) Ltd. v Commissioner of Trade & Taxes, Delhi, Appeal No. 108-115/ ATVAT/ 07-08. . . . . . . . . . . . . . . . . . . . . . . . . . . . 19.30 New Shiva Transport Service v State of U.P, [2018] 68 GST 661 (Allahabad). . . . 13.34 Nforce India Infrastructure (P) Ltd., [2019 (20) G.S.T.L 184 (A. A. R. GST) dt. 28.11.2018]. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17.10 Nirlon Ltd. v Commissioner, 2015 (320) E.L.T. 22 (SC). . . . . . . . . . . . . . . . . . . . . . 16.8 Northern India Motor Company v Commissioner of VAT, New Delhi (2009) 25 VST 466 (Delhi).. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19.28 Oil Fields Warehouse & Services Ltd v UOI – 2019(20) GSTL 20. . . . . . . . . . . . . 15.17 Om Prakash v UOI, 2011 (272) ELT 321(SC). . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19.48 P.K. Jewellers v. Commissioner. DVAT/Appeal No. 228/ ATVAT/05-06/ Orders on 19-4-06 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19.23 Padmavathi Tubes v CCE & St, Vapi ,2017 (351) ELT 38 (Guj). . . . . . . . . . . . . . . 18.14 Padmini Products v Collector, 1989 (43) E.L.T. 195 (SC). . . . . . . . . . . . . . . . . . . . . 16.6 Pandurang Travels v Commissioner, 2009 (15) S.T.R. 567 (Tribunal) . . . . . . . . . . 16.15 lvii

A Practical Guide to GST on Real Estate Industry

Panoli Intermediate (India) (P) Ltd. v Union of India, (2015) (326) E.L.T. 532 (Guj.) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17.8 Parashwanath Granite India Ltd. v State of Rajasthan, [2006] 144 STC 271 (Raj.). 19.6 Pawan Rajgarhia v State of Bihar, [2008] 13 VST 305 (Patna). . . . . . . . . . . . . . . . 19.50 Philips Electronics India Ltd. v State of Karnataka and Others [2009] 21 VST 321 (Karn).. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19.27 Pitambar Coated Paper Ltd. v Commissioner, 2003 (152) E.L.T. 392 (Tribunal).. . 16.16 Pradeep Oil Corporation v Municipal Corporation of Delhi (2011) 5 SCC 270 (SC)..6.7 Pradeep Oil Corporation v. Municipal Corporation of Delhi, (2011) 5 SCC 270 (SC). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.6 Prajapati Developers, In re: NO. 2018 (16) G.S.T.L.320(A.A.R.-GST)Mumbai dt. 05.04.2018 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17.11 Pratibha Processors v Union of India, 1996 (88) E.L.T. 12 (SC). . . . . . . . . . . . . . . 12.12 Public Prosecutor v K P Chandrasekharan, [1957] 8 STC 615 (Mad). . . . . . . . . . . 19.49 Puranik Construction Pvt. Ltd., (2019 (24) G.S.T.L. 699 (A.A.R. - GST).. . . . . . . 17.12 Raj Iron & Building Materials v Union of India, [2018] 66 GST 374 (Allahabad).13.34 Raja Jagannath Baksh Singh v. State of UP, AIR 1962 SC 1563. . . . . . . . . . . . . . . . . 4.6 Rajasthan Spinning and Weaving Mills Ltd, 2010 (255) ELT 481(SC). . . . . . . . . . . 9.18 Rajat Pharmachem Ltd. v UOI, 2017 (52) S.T.R. 480 (Guj.). . . . . . . . . . . . . . . . . . 16.19 Rajesh Kumar v. DCIT (2006) 287 ITR 91 (SC). . . . . . . . . . . . . . . . . . . . . . . . . . . 15.18 Ramesh Chandra v State, [1966] 18 STC 341 (All). . . . . . . . . . . . . . . . . . . . . . . . . 19.50 Rana Kalyana Mandapam v CCE, 2016 (44) S.T.R. 246 (Mad.). . . . . . . . . . . . . . . 16.20 Ranchi Club and Sports Club of Gujarat v UOI (2013-TIOL-528-HC-AHM-ST) . . 7.18 Ranchi Club Ltd v.CC of CE&ST, Ranchi and Others 2012(026) STR 0401(Jharkhand). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.18 Real Opticals Co v CC â&#x20AC;&#x201C; 2010 (129) ELT 7 (SC). . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.12 Reckitt Benckiser (India) Ltd. v CCT, (2007) 6 VST 390 (Ker).. . . . . . . . . . . . . . . 19.20 Reckitt Benckiser India (P) Ltd. v UOI, in W.P.(C) 7743/2019 dated 19Jul-2019, Delhi High Court. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.13 RSPL Ltd v UOI, [2018 (19) G.S.T.L. 430 (Guj.) . . . . . . . . . . . . . . . . . . . . . . . . . . 22.25 S K Petrochem v Commissioner VAT, Delhi 49 DSTC (2010-11) J-48 (Delhi-Tribunal). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19.28 S N Mukherjee v Union of India, AIR 1990 SC 1984 . . . . . . . . . . . . . . . . . . . . . . . 19.10 S. L. Enterprises v. Commissioner of VAT, W.P.(C)7325/ 2012, C.M. Appl. 18817/ 2012. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15.8 S.L. Enterprises v. Commissioner VAT in W.P. (C) 1700/ 2010 dated 20-08-2010. 15.18 S.N. Chandrashekar v. State of Karnataka (2006) 3 SCC 208 (SC). . . . . . . . . . . . . . . 6.7 lviii

Table of cases

S.N. Chandrashekar v. State of Karnataka, (2006) 3 SCC 208 (SC) . . . . . . . . . . . . . . 4.6 Safari Retreats (P) Ltd. v. Chief Commissioner of Central Goods & Service tax ,(Orissa High Court) in W.P. (C) No. 20463 of 2018,. . . . . . . . . . . . 2.18 Safari Retreats Private Limited v Chief Commissioner of Central Goods & Service tax, W.P. (C) No. 20463 of 2018 (Guj). . . . . . . . . . . . . . . . . . . . . . . . 9.17 Safari Retreats Private Limited W.P. (C) No. 20463 of 2018 (Guj). . . . . . . . . . . . . . 9.39 Safari Retreats Pvt Ltd v C.C , [2019-TIOL-1088-HC-ORISSA-GST]. . . . . . . . . . 26.13 Safari Retreats Pvt Ltd v C.C of CGST [2019-TIOL-1088-HC-ORISSA-GST]. . . . 9.35 Safiya Bee v Mohd. Vajahath Hussian,(2011) 2 SCC 94 (SC). . . . . . . . . . . . . . . . . . . 6.7 Safiya Bee v. Mohd Vajahath Hussian, (2011) 2 SCC 94 (SC). . . . . . . . . . . . . . . . . . . 4.6 Sahara India (Firm) v Commissioner of Income Tax, (2008) 14 SCC 151 : 2008 (226) E.L.T. 22 (S.C.). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.17 Sahara India (Firm) v. CIT (2008) 226 ELT 22 (SC). . . . . . . . . . . . . . . . . . . . . . . . 15.18 Sahil Mehta v. Salarpuria Real Estate (P) Ltd., (2019) 74 GST 301 (NAA).. . . . . . . 2.29 Sakti Engg Construction, 2019(20) GSTL, J 181 (SC) . . . . . . . . . . . . . . . . . . . . . . 11.25 Samtel India Ltd v CCE 2003(155) ELT 14 (SC). . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.23 Sangeetha Ready Made World v State of Kerala (2008-09) 47 DSTC J-105 (Ker)..19.26 Sanjeev Sharma, In re: 2018 (13) G.S.T.L. 395 (A.A.R. - GST).. . . . . . . . . . . . . . . . 3.23 Saurashtra Chemicals v CC 1986 (23) ELT 283 (Tri-LB) . . . . . . . . . . . . . . . . . . . . . 8.12 Sayam Zafar and Another v ACST, Kolkata South Circle And Others, [2008] 11 VST 963 (WBTT). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19.49 Seth Prasad Agro (P.) Ltd. v. State of U.P. , [2018] 66 GST 531 (Allahabad). . . . . 19.34 Shantabhai v. State of Bombay, AIR 1958 SC 532. . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.6 Shimsha Infrastructure, AAR (2019-TIOL-406-AAR-GST).. . . . . . . . . . . . . . . . . . 17.12 Shital Fibres Ltd. and Anr. v State of Punjab &Ors., (2007) 5 VST 354 (P&H).. . . 19.19 Shiv Dutt Rai Fateh Chand v Union of India, AIR 1984 SC 1194. . . . . . . . . . . . . . . 19.9 Shree Krishna Electricals v State of Tamil Nadu and Another, [2009] 23 VST 249 (SC).. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19.22 Shri Sanjeev Sharma, In re: Delhi, 2018 (13) G. S. T. L. 395 (A. A. R. GST) dt 28.03.2018. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17.11 Siemens Engineering & Manufacturing Co. v UOI, AIR 1976 SC 1785. . . . . . . . . . 19.8 Singh Enterprises v CCE, Jamshedpur, 2008 (221) ELT 163 (SC) . . . . . . . . . . . . . . 18.5 Singh Enterprises v Commissioner, (2008) (221) E.L.T. 163 (S.C.).. . . . . . . . . . . . . 17.8 Skilltech Engineers & Contractors (P) Ltd., In re: 2018(13) G.S.T.L.251(AA.R.GST) 03 dt. 21.3-2018.. . . . . . . . . . . . . . . . . . . . . . . . . . . . 17.11 Smt. UjjamBai v State of UP, (1963) 1 SCR 778. . . . . . . . . . . . . . . . . . . . . . . . . . . . 19.7

lix

A Practical Guide to GST on Real Estate Industry

Spaco Carburettors (I) v Collector, 1988(34) ELT 3 (SC). . . . . . . . . . . . . . . . . . . . . 8.10 Sri Chaitanya Education Committee (SCEC) v Commissioner, 2016 (41) S.T.R. 241 (Tribunal). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16.6 Standard Chartered Bank v Directorate of Enforcement, 2006 (197) ELT 18 (SC).19.44 Star Paper Mills case, (1989 (43) ELT 178 (SC)).. . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.3 State of Andhra Pradesh & Ors. v. Larsen & Toubro Limited & Ors., (2008-TIOL-158-SC-VAT) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.14 State of Andhra Pradesh & Ors. v. Larsen & Toubro Limited & Ors., (2008-TIOL-158-SC-VAT).. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.12 State of Bihar v Industrial Corporation (P) Ltd., AIR 2004 SC 1151 (SC).. . . . . . . 19.11 State of Kerala v M M Mathew, [1978] 42 STC 348 (SC). . . . . . . . . . . . . . . . . . . . 19.49 State of Madras v. Gannon Dunkerley& Co.,(1958) 3 STC 353 (SC).. . . . . . . . . . . . . 2.3 State of Nagaland v LipokAO, 2005 (183) ELT 337 (SC). . . . . . . . . . . . . . . . . . . . 18.19 State of Orissa v. Titaghar Paper Mills Co. Ltd., AIR 1975 Ori 90 . . . . . . . . . . . . . . . 4.6 State of Rajasthan v Rao Raja Kalyan Singh, AIR 1971 SC 2018. . . . . . . . . . . . . . . 18.7 State of U.P. v. VII Additional District Judge, AIR 1993 SC 1232: (1992) 4 SCC 429.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.4 State of WB v Calcutta Club Limited [Civil Appeal No. 4184 of 2009]. . . . . . . . . . 7.18 State v Vishandas Motiram Malvani, [1961] 12 STC 409 (Bom).. . . . . . . . . . . . . . 19.50 Subh Polymer (P) Ltd. v Commissioner, DVAT/ Appeal No. 313/ ATVAT/ 05-06/ Orders on 26-5-06. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19.24 Sunil Forging and Steel Industries v CCE, 2016 (332) E.L.T. 341 (Tri.-Mumbai).. . 16.8 Suraj Lamp & Industries (P) Ltd. vState of Haryana in SLP (C) No.13917 of 2009..4.10 Suresh Kumar Bansal v. UOI [2016 (043) STR 0003 (Del). . . . . . . . . . . . . . . . . . . . 3.27 Swadeshi Cotton Mills v Union of India, AIR 1981 SC 818. . . . . . . . . . . . . . . . . . . 19.9 Swadeshi Polytex Ltd. v Collector of Central Excise, 2000 (122) E.L.T. 641 (SC).19.43 T R Bhagat v Director General of Central Excise, 2012 (280) ELT 499 (Del) . . . . 19.44 T.T. Recycling Management India (P) Ltd., In re: (2016) (340) E.L.T. 422 (AAR)..17.9 Tamil Nadu Housing Board v Collector, 1994 (74) E.L.T. 9 (SC). . . . . . . . . . . . . . . 16.4 Tata Sky Ltd. v Commissioner of Trade & Taxes, Delhi, 48 DSTC J-245 (2009-10) (Delhi-Tribunal).. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19.28 Tata Steel Ltd. v. CST, Delhi, (2007) 26 Sales Tax Today 01 (VAT, Delhi). . . . . . . 19.23 Tej Kiron Jain v N. Sanjiva Reddy (1970) 2 SCC 272: AIR 1970 SC 1573 (1574). (Constitution of India, Art. 105). . . . . . . . . . . . . . . . . . . . . . . . . . . 7.24 The Modern Co-Op Bank Ltd. v CCE, 2010 (19) S.T.R. 697 (Tri. - Chennai) . . . . 16.15 Tin Box Company v CIT, (2001) 249 ITR 216 (SC).. . . . . . . . . . . . . . . . . . . . . . . . . 19.9

Table of cases

Titaghur Paper Mills Co Ltd. v UOI, 1981 (8) ELT (27) (Calcutta). . . . . . . . . . . . . . 18.5 Travelite (India) v Union of India [2014] 48 taxmann.com 227 (Delhi). . . . . . . . . 15.17 Triveni Engineering & Industries Ltd. v Commissioner of Central Excise & Another, [2000 (120) E.L.T. 273 (S.C.). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.5 Tulip Telecom Ltd. v. GNCT of Delhi in W.P.(C) 2039/ 2010 dated 19-08-2010 . . 15.18 U.T. Chandigarh Administration and Anr. v. Amarjeet Singh and Ors., (2009) 4 SCC 660.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.3 Union of India & Ors. v Kamlakshi Finance Corpn. Ltd.(1991) 55 E.L.T. 433 (SC). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19.12 Union of India v Dharamendra Textile Processors [2008] 18 VST 180 (SC).. . . . . 19.27 Union of India v S. Srinivasan, (2012) 7 SCC 683 : 2012 (281) E.L.T. 3 (S.C.). . . 10.17 Uniworth Textiles Limited v Commissioner of Central Excise, Raipur [(2013) 31 taxmann.com 67 (SC).. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19.42 UOI v Kamalakshi Finance Corporation Ltd., AIR SC 711 at 712 . . . . . . . . . . . . . 18.14 Utkarsh Corporate Services v CCE & ST, 2014 (34) STR(35) (Guj). . . . . . . . . . . . . 18.7 V. Lakshminarayana K.V. & Ors. v State of AP, (1972) 30 STC 368 (AP).. . . . . . . . 19.7 Vannttarikandy Ibrayi v. Kunhabdulla Hajee, AIR 2003 SC 4453 (4461). . . . . . . . . . 3.4 Vasanta Green Projects v Commissioner of Commercial Taxes, GST 2018-TIOL-1611-CESTAT-HYD. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.4 Vasantha Green Projects v. CCE, [2018 (5) TMI 889]. . . . . . . . . . . . . . . . . . . . . . . . 4.16 Vasulal International v Addl. STO-II, 1st Circle, Kanur and Anr., [2007] 7 VST 283 (Ker).. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19.21 Vidya Wati v State, 1988 (37) ELT 341 (Delhi). . . . . . . . . . . . . . . . . . . . . . . . . . . . 19.44 Vijay Sanjani v UOI (2017)345 E.L.T. 323 (SC). . . . . . . . . . . . . . . . . . . . . . . . . . . 24.19 Vikas Hire Purchase Co. Ltd. v CCE, 2017 (48) S.T.R. 4 (Ker.). . . . . . . . . . . . . . . 16.19 Vikram Solar (P) Ltd. v Union of India, [2018] 67 GST 385 (Allahabad). . . . . . . 19.35 Vivek Coal Depot v Commissioner, Trade Tax, (2007) 6 VST 85 (All).. . . . . . . . . 19.20 Voltas Limited v State of Jharkhand, [2007] 5 VST 492 (Jharkh). . . . . . . . . . . . . . . 15.8 Voltas Limited v. State of Jharkhand [2007] 5 VST 492 (Jharkh) . . . . . . . . . . . . . . . 15.8 VSL Alloys India (P.) Ltd. v State of U.P, [2018] 67 GST 688 (Allahabad) . . . . . . 13.33 Weston Components Ltd. v Commissioner [2000 (115) E.L.T. 278 (SC).. . . . . . . . 19.37 Wipro Ltd v. Assistant Collector of Customs, 2015 (319) E.L.T. 177 (SC). . . . . . . . 3.23 Xerox India Ltd. v Commissioner of Trade & Taxes, 49 DSTC (201011) J-311 (Delhi Tribunal). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19.30 Zaver Shankarlal Bhanushali. 2018 (14) G.S.T.L. 429 (A.A.R. - GST), dt. 22.05.2018. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17.10

lxi

Chapter 1

Introduction to Industry and GST Synopsis 1.1

1.2

1.3 1.4

1.5

1.6

1.7

Real estate sector in general ....................................................................... 1.2 1.1.1 Coverage .................................................................................... 1.2 1.1.2 Drivers for growth of real estate sector ...................................... 1.3 Role of real estate in the Indian economy .................................................. 1.4 1.2.1 Developments in the recent past ................................................ 1.4 1.2.2 Expectations from the sector (as a whole) ................................. 1.5 A brief history of taxation on real estate sector.......................................... 1.5 Types of Sectors, Statistics, and Contribution to GDP .............................. 1.6 1.4.1 Residential segment ................................................................... 1.6 1.4.2 Commercial segment.................................................................. 1.7 1.4.3 Retail segment ............................................................................ 1.8 1.4.4 Hospitality segment.................................................................... 1.8 1.4.5 SEZâ&#x20AC;&#x2122;s segment ........................................................................... 1.9 Challenges in the growth of real estate ...................................................... 1.9 1.5.1 Obtaining Construction permit and approvals ........................... 1.9 1.5.2 Lack of funding/high cost of capital .......................................... 1.9 1.5.3 Delayed projects ....................................................................... 1.10 1.5.4 Insufficient focus on sustainable real estate ............................. 1.10 Government initiatives for real estate vide Budget 2019 (July) ............... 1.10 1.6.1 Deduction of interest for affordable housing ........................... 1.10 1.6.2 Alignment of definition of affordable housing with GST Acts .................................................................................. 1.10 1.6.3 Measures to incentivize affordable housing and real estate ........................................................................................ 1.10 1.6.4 Special package for real estate sector ....................................... 1.11 Journey of GST ........................................................................................ 1.11

1.1

A Practical Guide to GST on Real Estate Industry

Chapter 1

Existing Indian indirect tax regime .......................................................... 1.12 Fundamentals of GST............................................................................... 1.12 1.9.1 Need for GST ........................................................................... 1.12 1.9.2 What does not fall within the ambit of GST?........................... 1.12 1.10 Challenges–Navigating the uncharted territory ........................................ 1.14 1.11 Treatment of inter-State and International trade ...................................... 1.15 1.12 Conclusion................................................................................................ 1.16 1.8 1.9

1.1

REAL ESTATE SECTOR IN GENERAL

1.1.1

Coverage

Construction of commercial houses, residential housing, hotels, restaurants, cinemas, factories, Government buildings, industrial buildings, office spaces, etc. The purchase, sale, development of land and or building and it’s renting are all covered under the ambit of a real estate sector. RERA Act, 2016 defines real estate project as“Real estate project means the development of a building or a building consisting of apartments, or converting an existing building or a part thereof into apartments or the development of land into plots or apartment, as the case may be, for the purposes of selling all or some of the said apartments or plots or buildings, as the case may be, and includes the common areas, the development works, all improvements and structures thereon, and all easement, rights and appurtenances belonging thereto.” The real estate sector may be broadly classified into the following sub sectors: (a)

Residential,

(b)

Retail,

(c)

Hospitality,

(d)

Commercial, and

(e)

SEZ

For the last many years, the Indian real estate sector has been experiencing massive changes both as a result of governmental reforms as well as due to changing demographics and increasing demand of the customers. Over the years the sector graph has shown a rising trend and has experienced an excellent growth that steered in an age of liberalization because of innumerable reasons discussed hereunder. 1.2

Chapter 1

1.1.2 (a)

(b)

(c)

(d)

(e)

Introduction to Industry and GST

Drivers for growth of real estate sector Increasing demands due to rapid urbanization Rising employment opportunities in multinational companies, enhanced standard of living has consistently been a driver for re-location of Indians to urban areas. Around 10 million people each year tend to migrate to urban cities like Delhi-NCR, Mumbai, Bangalore etc. This has generated a huge demand for the improved face of real estate sector, thereby demanding advanced facilities in housing, hospitals, shopping markets. Rising household income It has been observed that due to improving purchasing power of families over the years, parallel demand for infrastructure and high-tech facilities including concepts like affordable and nuclear housing has also augmented. Relaxation in limits of FDI Since the post-liberalization era, the Indian Government has left no stone unturned to initiate efforts in inviting foreign direct investments in the real estate sector. Consistent policies for instance increase in FDI limits in constructing townships/settlement development to 100%, projects within SEZ have been permitted to be sourced by 100% FDI etc. Moreover, the construction industry sector of India has also been ranked as the 4th largest sector in terms of FDI inflows. FDI equity inflows for this sector has been to the tune of US$ 38.92 billion during the period April 2000-December 2018.1 This was a consequence of the structural reforms and transparency drive of GOI. Furthermore, multinational corporations in the recent past have shown a keen interest in investing in the sector due to higher returns [than any other country] and availability of cheap and skilled labour. Affordable housing granted infrastructure status The Government in order to encourage growth in this sector has granted â&#x20AC;&#x2DC;infrastructure statusâ&#x20AC;&#x2122; to affordable housing thus, having the developers do business at ease. Growth of corporate environment The growth of globalization in India as also with an enhanced culture of MNCs and the corporate environment in India has resulted in a massive demand for office space. Growth in ITES/IT, banking, financial service, and insurance sector, consulting and manufacturing has fuelled this demand.

Department of Industrial Policy and Promotion (DIPP).

1.3

A Practical Guide to GST on Real Estate Industry

(f)

Chapter 1

Regulatory reforms Regulatory reforms initiated by Government of India like introducing RERA, 2016 aimed at(i)

consolidating the Indian Real Estate sector;

(ii)

elimination of unscrupulous developers;

(iii)

improving sales by rebuilding trust among buyers and developers.

Further, reforms like merging VAT/CST, Central Excise, Entry Tax, Luxury tax etc in GST Act, 2017 further helped in cutting cost by 3-4%.

1.2

ROLE OF REAL ESTATE IN THE INDIAN ECONOMY

With the consistent growth of the realty sector in the past 2 decades, we have world-class office structures, luxurious residential housing, innovative shopping structures, high-tech industrial buildings, hotels, restaurants etc. There is much development in terms of the infrastructure to be done. This sector is contributing around 10% of the GDP of our country. Increasing demand for technology companies including BPO and ITES has helped growth. Indian realty sector has enjoyed funding over past many years banks, institutional investors as well as NBFCs. The failing of some of these funders and the high level of Non-Performing Assets in banks and NBFC has been a dampener in recent times. However, the Government plans announced in September/October 2019 as well as focus of the budget indicate better times. As such, to encourage growth, the Government is expected to design favourable policies which open up varied avenues for the sector and on the other side, the industry is expected to be most accountable, transparent and provide quality service to their consumers. Some statistics on real estate:

1.2.1

Developments in the recent past

(a)

Cross-border capital inflows to the real estate sector have increased 600% reaching $2.6 billion during 2012-17.

(b)

Institutional investments worth US$ 30 billion has been realized during the period 2009-2018.

(c)

India has been ranked 19th out of 73 countries in attracting cross-border capital in 2017.

(d)

Moreover, Mumbai and Bangalore have been rated as top real investment destinations in Asia.

(e)

In May 2018, Blackstone Group acquired one India bulls in Chennai for around Rs. 900 crores (US$ 136.9 million).

1.4

Chapter 1

Introduction to Industry and GST

(f)

Another achievement observed in the economy was the establishment of Indiaâ&#x20AC;&#x2122;s first REIT, Embassy Office Parks which went public in March 2019.

(g)

Private equity and venture capital investments have reached $4.47 billion during 2018 and US$ 546 million in Jan-Feb 2019.

(h)

Another most remarkable change has been the shifting of developers from family-owned businesses to that of professionally managed ones. They have started to adopt innovative patterns to conduct business by-

(i)

1.2.2

(i)

investing in centralised processes to source material

(ii)

organizing manpower

(iii)

hiring qualified professionals in areas like project management, architecture and engineering

(iv)

revamping their accounting and management systems to meet due diligence standards.

Substantial increase in real estate activity in cities like Indore, Raipur, Ahmedabad, Jaipur and other 2-tier cities have further contributed to the growth.

Expectations from the sector (as a whole)

(a)

The Indian real estate sector is projected to reach a market size of US$1 trillion in 2030 from US$120 billion in 2017.

(b)

It is expected that with the rapid urbanization along with ease of doing business, the Indian real sector will soon contribute 13% of the countryâ&#x20AC;&#x2122;s GDP by 2025.

(c)

It is further anticipated that real estate stock shall reach 3.7 million square feet in 2019 with an addition of 200 million square feet during the year.

(d)

Bengaluru is expected to be the most favoured property investment destination for NRIs, followed by Ahmedabad, Pune, Chennai, Goa, Delhi and Dehradun.

(e)

With the approval given by SEBI for development of REITs, it is longed that it shall create an opportunity worth Rs. 1.25 trillion (US$ 19.65 billion) in the Indian market over the years.

(f)

Investment in real estate is expected to rise by 7% in 1st quarter of 2019 reaching upto 17,682 Crores.

1.3

A BRIEF HISTORY OF TAXATION ON REAL ESTATE SECTOR

Real Estate has experienced various ups and downs since 2004 but growing. Some of the key indications of growth included:

1.5

A Practical Guide to GST on Real Estate Industry

Chapter 1

(a)

Entry of many local and big names into the reality sector

(b)

Induction of investments from foreign companies being attracted by eye-catching returns on investments

(c)

Introduction of private equity funds and pension funds

In 2007 up till mid-quarter of 2008, the industry again attracted many foreign as well as local investors even higher than what it was before, however, by the mid of the year 2008, took a reverse gear when the world was attacked by economic crisis. The consistent inflow of FDI got adversely affected and the Indian economy faced a real setback when one of its most proficient industry could no longer attract foreign investments. The period was marked as a period of recession for the Indian economy. It was in 2010, when finally, real estate in India managed to overcome the dark clouds of recession and introduced the concept of â&#x20AC;&#x2DC;Affordable Housingâ&#x20AC;&#x2122;. Year 2014, however, proved to be a prosperous year for the reality sector when the affordable residential housing projects were given a better push when issues with respect to infrastructure, inflexibilities in the Land Acquisition and Real Estate Regulatory Bill were considered. Cumulative FDI inflows in the construction development sector, which includes infrastructure, reached US$ 25.05 billion between April, 2000-March, 2019. The total FDI inflow in construction sector is given below: Year

FDI inflows in Construction Development Sector (in US$ billion)

2013-14

22.08

2014-15

23.3

2015-16

24.06

2016-17

24.18

2017-18

24.29

2018-19

24.83

(Source: IBEF report, June 2019)

1.4

TYPES OF SECTORS, STATISTICS, AND CONTRIBUTION TO GDP

1.4.1

Residential segment

(a)

1.6

Past statistics and Government sanctions With rapid urbanization and growth in population, the residential sector in real estate has experienced massive demand. India has been ranked among

Chapter 1

(b)

1.4.2 (a)

(b)

Introduction to Industry and GST

top 10 price appreciating housing markets. Investment inflows in housing sector since 2014 has reached to Rs. 590 million, being 47% of the total invested money in real estate. As a result, the figure of houses built under the Pradhan Mantri Awas Yojana (PMAY) Urban reached to 15.3 million during 2014-18 accompanied by an increased percentage of 75 with respect to housing launches across top eight Indian cities to 1,82,207 units in 2018. Despite such sanctions, there is still a shortage of housing in urban areas of around 10 million units. Therefore, more than 8.09 million houses have been sanctioned under the PMAY (Urban) scheme as on 27th May 2019. Moreover, in February 2018, creation of National Urban Housing Fund has also been approved with an outlay of Rs. 60,000 crores (US$ 9.27 billion). Union Cabinet has approved 100 Smart City Projects in August 2015. This will reduce migration to metro cities and other developed cities. Expectations from the sector With the expectation of relaxing FDI norms and norms relating to land acquisition, the contribution of housing to GDP has been expected to increase to 11% in the year 2020. Share of urban areas in GDP is expected to be 70% by the year 2020. Furthermore, ‘Housing for all’ initiative of the Government is expected to bring $1.3 trillion investment in housing sector by the year 2025. 60 million houses are proposed to be built, 40 million pertaining to rural and 20 million in urban areas.

Commercial segment Past statistics and government sanctions Growth in ITES/IT, BFSI, consulting and manufacturing are one of the major reasons for the increased demand for office space. Mumbai, NCR, Bangalore occupied 60% of total office space demand in the year 2017. Coworking space across the top seven cities has shown a sharp increase reaching 3.44 million square feet in 2018 (up to September) as compared to 1.11 million square feet for the same period in 2017. Moreover, gross office absorption in top Indian cities has displayed an increasing trend of 26% on year on year basis to 36.4 million square feet during Jan-Sep 2018. Warehousing space in top eight Indian cities increased 22 per cent year-onyear in 2018 to 169 mn sq. ft. investments of $7.76 billion during the year 2018-19. Expectations from the industry Recently, the operating model of the commercial sector has shifted from sales to a lease and maintenance model. Most of the activities involve the concept of leasing only. Office space leasing in the top eight cities is expected to cross 100 million square feet during 2019-20. With rising demand from MNC’s and office space in Tier-II cities, the net absorption of office space is expected to increase 12% year on year in 2019. Further, 1.7

A Practical Guide to GST on Real Estate Industry

Chapter 1

Grade ‘A’ office space absorption is likely to cross 700 million square feet by year 2022. Moreover, warehousing space is also anticipated to reach 247 million square feet by year 2020.

1.4.3 (a)

(b)

1.4.4 (a)

Retail segment Past statistics and government sanctions Currently, retail do not account for a very large portion due to the reason of limited organized retailers and moreover, the organized retail space has been mostly developed by residential/office space developers. However, the retail segment in real estate sector, on the other hand, managed to attract private equity of Rs. 5,500 crores ($853.4 million). Mumbai, NCR, Bangalore, Kolkata were one of the cities experiencing maximum growth in regard with retail segment of the real estate sector. During the period JanMar 2019, investment in this segment has shown a jump reaching Rs. 1,000 crores. Retail space of around 5.1 million sq. ft. became operational in top seven Indian cities during 2018. Expectations from industry Due to booming consumerism, better-organized structures of the retail sector growing at the rate of 25-30% annually, entry of MNC retailers and also population not more than 30 years of age having exposure to global retail are likely to drive huge demand in the near future. Around 32 new malls of area 13.5 million sq. ft. are anticipated to be made operational.

Hospitality segment Past statistics and government sanctions Hospitality segment of real estate sector includes hotels, service apartments, convention centres etc. Due to robust domestic tourism, rising trend of global Indian business thereby increasing travelling, tax incentives for hotels and higher FSI, hotel room space has been observed to increase by 7.5 % in FY 2018. Also, it has attracted 3 times the investment amounting to Rs 3,950 Crore in 1st quarter, 2019 as compared to that in 2018. As of now, Delhi-NCR and Mumbai have been the biggest hospitality market followed by Bangalore, Hyderabad and Chennai. The number of Foreign Tourists Travels (FTAs) to India has significantly increased by 15.6 % in 2017 reaching 10.177 million and reached 10.6 million during the period of Jan-Dec, 2018, displaying a growth rate of 5.2% year on year. As a result, India’s foreign exchange earnings (FEEs) from tourism has shown an increase by 20.8% during 2017 reaching $27.693 billion and further, reaching Rs. 18,017 crores ($2.6 billion) in 2019 showing year on year growth rate of 1.2 per cent.

1.8

Chapter 1

(b)

Introduction to Industry and GST

Expectations from industry The Indian Government for a very long time is trying hard to boost the tourism industry in India by granting attractive initiatives to the industry. The Government has set a target of 20 million foreign tourist arrivals by the year 2020 as also a target of doubling the foreign exchange earnings. Growing inflow from tourists are expected to stimulate the hospitality sector. Furthermore, medical tourism sector in India is also gaining momentum, with a target of attracting 8 million tourists by the year 2020. Government initiatives to promote tourism in Tier 2 and Tier 3 cities may also promise significant demand especially for budget hotels in India.

1.4.5

SEZ’s segment

Past statistics and government sanctions Government of India’s recent reforms involving granting of (i) 100% FDI for projects within SEZ (ii) 100% FDI for townships/settlements development projects have steered the growth of the SEZ segment of reality sector. Exports from SEZ have reached to Rs. 5.29 trillion (US$ 75.65 billion) in FY 2018-2019 (up till December 2018). Furthermore, as of May 5, 2019, 416 SEZ have been approved of which 213 have been made operational. Lately, industry players including realtors and property analysts, have been found rooting for the creation of ‘Special Residential Zones’ (SRZs) along the lines of SEZs. The minimum land requirement has been brought down from 1000 hectares to 500 hectares for multiproduct SEZ and for SEZ and for sector specific SEZs to 50 hectares.

1.5

CHALLENGES IN THE GROWTH OF REAL ESTATE

A number of incentives have been announced. However, the lack of last-mile efforts on the part of Government has restricted their usefulness. The areas are:

1.5.1

Obtaining Construction permit and approvals

Developers in India seem to lack interest in contributing to real estate due to extended and tedious approval tasks. On an average, it takes around 18 months for any developer to seek construction permits. As a consequence, a negative impact is observed over project costs, delivery duration etc. Moreover, short supply may also lead to rising prices in next 3-4 quarters.

1.5.2

Lack of funding/high cost of capital

Not only approvals but fund-raising capabilities also are some of the major cause of concerns, the developers of the country are facing. Despite the Government’s efforts towards ‘Make in India’ projects, banks and other financial institutions resist lending for the real estate, finding it comparatively risky. It should, however, be analysed whether the funding is sought for affordable housing or the luxury ones. There is a need of the hour that the government considers the situation and 1.9

A Practical Guide to GST on Real Estate Industry

Chapter 1

may issue guidelines for an easy lending process at least to such affordable housing developers.

1.5.3

Delayed projects

Due to unwarranted circumstances, the projects do not get completed within a stipulated time. The buyers have been left discontented for the past many years. In the recent past, even NBCC was roped to complete the pending projects, however, the same was not materialized. Accordingly, such a slow pace of project development has left a deeply negative impact with the buyerâ&#x20AC;&#x2122;s trust as also with the developerâ&#x20AC;&#x2122;s motivation to take active participation in such projects.

1.5.4

Insufficient focus on sustainable real estate

Indian urban developers must understand that in the real estate sector, building is still in its nascent stage in India. As per reports of IGBC, more than 500 square feet of buildings have been achieved till date in India, but this figure is still well within 5% of the total buildings in India. Therefore, IGBC has re-dedicated itself to achieve a sustainable target in the times to come. It is the domestic and foreign investors who can create a real momentum and recovery mode in the development of sustainable real estate sector.

1.6

GOVERNMENT INITIATIVES FOR REAL ESTATE VIDE BUDGET 2019 (JULY)

1.6.1

Deduction of interest for affordable housing

In order to incentivise the purchase of affordable house, it is proposed to provide a deduction upto Rs. 1,50,000 for interest paid on loan taken for purchase of residential house having value upto Rs. 45 lakhs. This shall be in addition to the existing interest deduction of Rs. 2 lakhs.

1.6.2

Alignment of definition of affordable housing with GST Acts

In order to align the definition of affordable housing in the Income-tax Act with the GST Acts, it is proposed to increase the limit of carpet area from 30 square meters to 60 square meters in Metropolitan regions and from 60 square meters to 90 square meters in non-metropolitan regions. It is also proposed to provide the limit on the cost of the house at Rs. 45 lakhs in line with the definition in the GST Acts.

1.6.3

Measures to incentivize affordable housing and real estate

Housing has been an area of concern for the middle and lower-middle class. Further, real estate sector plays a significant role in generating employment in the 1.10

Chapter 1

Introduction to Industry and GST

economy. Considering the importance of housing sector, this Government has taken the following measures to promote this sector: (a)

Deduction of interest on loan taken to purchase self-occupied house property was increased from Rs. 1.5 lakh to Rs. 2 lakhs.

(b)

100% deduction was provided for the income of affordable housing projects.

(c)

The base year for computation of long-term capital gains was shifted from 1981 to 2001.

(d)

The holding period for long-term gain on immovable property was reduced from 36 months to 24 months.

(e)

Safe harbour of 5% on stamp duty value was provided for the purpose of computation of capital gains on immovable property.

1.6.4

1.7

Special package for real estate sector (a)

Construction of affordable residential houses i.e. houses having a carpet area of upto 60 sqm in metros and 90 sqm in non-metros and having value upto Rs. 45 lakhs)- 1% without ITC.

(b)

Construction of residential houses other than affordable residential houses- 5% without ITC.”

JOURNEY OF GST

India’s journey towards a unified tax regime Change is Inevitable Today, the process of ‘globalization’ and ‘digitization’ has transformed the trade, commerce and lifestyle across the globe. In this era of rapid technological evolution and ever-changing consumption patterns, change is the only constant thing. To address the needs of changing societies and to keep pace with the ways in which people conduct their businesses, it is imperative that archaic laws are abolished and new ones are engineered to enhance the relevance and adapt to the contemporary modes of doing business. In this context, it may be relevant to quote— “Law cannot stand still; it must change with the changing social concepts and values. If the law fails to respond to the needs of the changing society, then either it will stifle the growth of the society and chock its progress or if the society is vigorous enough, it will cast away the law which stands in the way of its growth. Law must, therefore, constantly be on the move adapting itself to the fast-changing society and lag behind.”- P N Bhagwati [Former Chief Justice of India]

1.11

A Practical Guide to GST on Real Estate Industry

Chapter 1

Introduction of GST is one such act of unprecedented tax reform, India witnessed since its independence. Expected to be serviced by state-of-the-art technology, GST endeavours to achieve fiscal unification and replace a number of indirect tax levies India imposed under earlier laws.

1.8

EXISTING INDIAN INDIRECT TAX REGIME

The Constitution of India is quasi-federal in nature i.e. federal in character but unitary in spirit. The federal features of the Constitution entail the distribution of powers between the Central and the State governments by way of allocated ‘fields of legislation’ through three distinct lists viz. Union List, State List and Concurrent List. The exclusive division of powers had led to a multiplicity of indirect taxes in the country at different rates and multiple tax points for a taxpayer. Further, the absence of any setting-off mechanism resulted in a cascading effect of these taxes. This is accentuated by huge compliance costs incurred in respect of each of the taxes.

1.9

FUNDAMENTALS OF GST

The GST structure is two-tiered, whereby tax is levied by both Centre and State on intra-State supply of goods or services viz. the Central GST and State GST respectively. The credit of the above taxes is available throughout the entire supply chain and the ultimate burden is borne by the customer. In the case of interState transactions, Integrated GST is levied by the Centre. To sum up, the Central and the State Governments jointly administer India’s dual GST.

1.9.1

Need for GST

(a)

GST is a more logical tax regime-Central VAT System

(b)

States VAT System was fraught with challenges

(c)

Widening of Tax Base

(d)

Multiple points of taxation

(e)

Service Tax under the GST regime

(f)

CST phased out

(g)

Immense contribution to economic development

1.9.2

What does not fall within the ambit of GST?

The following levies or items do not fall under the ambit of the GST regime— (a)

1.12

Basic Customs Duty: This would continue to be levied as per existing provisions enacted by the Central Government.

Chapter 1

(b)

Introduction to Industry and GST

Real estate: Under successful GST models like in Australia, New Zealand, Canada and South Africa, housing and construction services are treated like any other commodity. Thus, when a real estate developer builds and sells a home, it is subject to GST on the full selling price, which would include the cost of land, building materials and construction services. Commercial buildings and factory sales are also taxable in the same way, as are rental charges for leasing of industrial and commercial buildings. There are only two exceptions, namely(i)

resale of used homes and private dwellings, and

(ii)

rental of dwellings. It may make sense to incorporate these concepts in the design of GST in India as well.

One potential argument against the levy of GST to land and real-estate property would be that they already attract the stamp duty. This argument can be quickly discarded as the purpose and structure of the stamp duty is quite different from that of the GST. Stamp duty is a cascading tax on each conveyance of title to real property, whereas the GST is a tax on final consumer expenditures. GST does not impinge on commercial property transactions, after considering the benefit of input tax credits. It does not result in tax cascading. Under the model described above, in the case of residential dwellings, the GST would apply to the first sale only. Thus, the two taxes cannot be viewed as substitutes. However, the application of GST to real property transactions does warrant a review of the structure and rates of stamp duties and registration fees. The rates should be lowered and the structure rationalized when the GST is introduced. (c)

Liquor: Liquor is a State subject; hence, State governments have exclusive power to control its manufacture, possession, transportation, purchase and sale. In fact, the liquor industry has been a substantial contributor to the State revenues, with many States relying heavily on it. The sector is currently plagued by numerous challenges viz. heavy taxes and duties varying from State to State, cascading effect of taxes and the multiple regulations in tax administration distinct in almost every State. The inclusion of liquor industry under GST could impact State revenues positively, as liquor would likely be taxed at a higher GST rate and the States authorized to compensate revenue shortfall through an additional levy. Further, it would mitigate/simplify the tax and regulatory issues associated with the production, storage, and distribution of liquor by related sectors such as hotels and restaurants, and departmental/other stores.

(d)

Petroleum Products: The existing regime of taxing petroleum products is shared between the Centre and States, and the absence of standardization has produced a cumbersome and complex set of taxes. Further, it suffers from tax cascading due to the restricted utilization of input tax credits on 1.13

A Practical Guide to GST on Real Estate Industry

Chapter 1

the various goods and services consumed during exploration and production. Considering the size and importance of the petroleum sector, the proposal to subsume its products under GST is a positive one as it allows the industry to utilize the input tax credits on the goods and services consumed in the supply chain (from exploration and production to distribution and marketing), thereby, mitigating the cascading effect of taxes. Further, the Centre and States can converge on the standardization of tax policies, which could, to a large extent, simplify the associated regulations, processes, and compliances. (e)

Electricity: Every State levies an electricity duty, rates, and structure vary from State to State. Further, the excise and GST paid for the equipment and services incurred during the construction of the plant, uniquely to the power sector, cannot be set off against the end-produce since power is exempt from excise duties or GST. Post-phase-out of the Mega Power Policy, 2005, impact of tax cascading has increased as the developer pays substantial duties during project development, but these duties, for want of set-off with the end-product, stay accumulated in the project company, burdening the developer. These costs eventually get loaded onto the power tariff and get transferred to the consumer of power after loading for transmission and distribution losses, subsidies and thefts, thereby burdening him significantly per unit of power. For this to change, power needs to be included in the GST regime, the benefit of set-offs can be availed and power can be cheaper.

1.10

CHALLENGES–NAVIGATING THE UNCHARTED TERRITORY

The introduction of GST in other parts of the world has been a tedious and longdrawn process. Every jurisdiction had to undergo its own share of challenges. In an agrarian Indian economy, with a burgeoning population, majority middle class and grappling with after-effects of demonetization, the government would have to make untiring efforts for successful implementation of GST so as to reap the benefits it is expected to give to the developing economy. With great legislative power, comes even greater responsibility. Hence, it is imperative that the government addresses/passes the following hurdles to conquer the uncharted waters of this new tax regime quickly—

1.14

(a)

Fiscal autonomy and harmonization

(b)

Taxation Powers of Centre and States – Dual administration

(c)

Inflation

(d)

Inter-State Transactions

(e)

Goods out of GST-cascading problem

Chapter 1

1.11

Introduction to Industry and GST

(f)

Determination of Revenue Neutral Rate (RNR)

(g)

Intra-chain set off not allowed

(h)

Fiscal Deficit an alarming issue

(i)

VAT experience cannot be forgotten

(j)

Economic imbalances

(k)

Dispute Settlement Mechanism and Advance Ruling

(l)

Rural India a big threat

(m)

Vertical equity may perish

(n)

Organized frauds a big threat

(o)

Competency of the draftsmen

(p)

Administrative issues

(q)

Robust electronic system

(r)

Compensation to States

(s)

Other vexed issues

(t)

Role of media

TREATMENT OF INTER-STATE AND INTERNATIONAL TRADE

Treatment of inter-State and International supplies of goods and services is one of the most crucial elements of the design of a Dual GST. A set of rules are enacted to define the jurisdiction in which they would be taxable under the destination principle. Further, a mechanism is needed for enforcing compliance with those rules. The taxation of cross-border transactions could be a significant challenge in the absence of any inter-State fiscal border controls. Even if such border controls were to exist, they would be ineffective for taxation of services, which entail no physical inter-State movement. This concern has been a topic of increased discussion over recent years due to the growth in internet sales and transactions. Cross-border VAT leakage is also a growing concern in the EU because of the removal of border controls between member countries. Place of taxation, International transactions In virtually all countries, VAT is levied on the basis of the destination principle. For this purpose, some countries follow the practice of prescribing a set of rules for defining the place of taxation or place of supply. A supply is taxable in a given jurisdiction only if the supply is considered to take place in that jurisdiction. An alternative approach followed by other countries is to first define what supplies are potentially within the scope of the tax, and then provide criteria for determining 1.15

A Practical Guide to GST on Real Estate Industry

Chapter 1

which of those supplies would be zero-rated as exports. The Service Tax in India followed the second approach. While the rules and approaches vary from country to country, the basic criteria for defining the place of taxation are as followsA sale of goods is taxable if the goods are made available in or delivered/shipped to that jurisdiction (i.e., on the basis of place of delivery or shipment to the recipient) Real Estate Transactions A sale of real estate property is taxable if the property is located in that jurisdiction (i.e., on the basis of place of location of the property). Services directly connected with real estate property are also taxable on this basis (For instance, services of estate agents or architects).

1.12

CONCLUSION

The Empowered Committee described the GST as “a further significant improvement–the next logical step towards comprehensive indirect tax reforms in the country.” Indeed, it has the potential to be the single most important initiative in the fiscal history of India. It can pave the way for modernization of tax administration -make it simpler and more transparent and significant enhancement in voluntary compliance. For instance, when the GST was introduced in New Zealand in 1987, it yielded revenues that were 45% higher than anticipated, in large part due to improved compliances. It’s more neutral and efficient structure could yield significant dividends to the economy in increased output and productivity. In India, due to the unique federal nature of our democracy, the challenges are much more. Hopefully, by 2021 we would see GST as a success.

1.16