2020 (12) TMI 1298 - AAR - GST

Adjusting GST Rates for Flat Buyers: Ruling on Excess GST Collection and Credit Notes

In Re: M/s. Prasu lnfrabuild Private Limited

The ruling addressed queries related to passing on the benefit of a lower GST rate to flat buyers under the CLSS Scheme. It clarified that excess GST ... Benefit of lower rate of GST under CLSS Scheme - entitlement to get interest Subvention certificate and/or Interest subsidy in his / her bank - adjustment of GST Credit if builder does not have future GST liability in this project - entitlement to GST refund if amount is not adjustable from future liability of GST under the project - Section 54 of Central Goods & Services Tax Act, 2017 read with Rule 89 of Central Goods & Services Tax Rules, 2017. If any Flat buyer otherwise qualified to get lower rate of GST under CLSS Scheme, get interest Subvention certificate and/or Interest subsidy in his / her bank account after: a). Tower / Building get Completion Certificate from Competent Authority, or b). Expiry of six months from end of financial year Can builder pass-on benefit of lower rate of GST to this flat buyer in such situation? And How? - HELD THAT:- The excess tax is to be adjusted as per clarification issued by Tax Research Unit, Ministry of Finance, Govt. of India vide F.No. 354/52/2018/TRU dated 07.05.2018. Even then if the applicant is unable to adjust the same, the applicant may approach to appropriate forum which is GST Policy Wing. How can builder get GST Credit adjustment if builder does not have future GST liability in this project? - HELD THAT:- The question is out of purview of advance ruling authority. As such, the question raised by the applicant is not answered. Will builder be entitled to GST refund if amount is not adjustable from future liability of GST under the project? - HELD THAT:- The question is out of purview of advance ruling authority. However, whether the applicant is entitled for refund or not under Section 54 of Central Goods & Services Tax Act, 2017 read with Rule 89 of Central Goods & Services Tax Rules, 2017 would be decided by the jurisdictional authority subject to fulfillment of necessary conditions of refund. The questions raised by the applicant are in nature of procedural clarification which is to avail benefit of reduced rate of GST under CLSS scheme as explained in clarification issued by the Tax Research Unit, Ministry of Finance, Govt. of India. As due to time limit to issue credit note and also applicant's inability to adjust excess tax paid due to reduced tax liability, the applicant is not getting benefit of reduced tax liability under CLSS. It creates a very peculiar condition but the authority of advance ruling is not an appropriate authority for seeking procedures or clarifications in such exceptional circumstances. If the applicant is unable to issue credit note or unable to adjust their reduced tax liability due to any reason, they may approach to the GST Policy Wing for remedial measures. Issues Involved:1. Passing on the benefit of a lower GST rate to flat buyers under the CLSS Scheme.2. GST credit adjustment if the builder has no future GST liability.3. Entitlement of the builder to a GST refund if the amount is not adjustable from future liability.Issue-Wise Detailed Analysis:1. Passing on the Benefit of Lower GST Rate to Flat Buyers under CLSS Scheme:The applicant, engaged in real estate activities, sought clarification on whether a builder can pass on the benefit of a lower GST rate to flat buyers who qualify under the CLSS Scheme, especially when the interest subvention certificate or subsidy is received after the building completion certificate or six months post the financial year-end. The ruling referenced the clarification issued by the Tax Research Unit, Ministry of Finance, which states that excess GST collected can be adjusted through credit notes against future GST liability. However, the applicant faced difficulties due to the time limit for issuing credit notes as per Section 34(2) of the CGST Act, 2017, and insufficient future GST liability to adjust these credit notes. The ruling advised that if the applicant cannot adjust the excess tax due to these constraints, they should approach the GST Policy Wing for remedial measures.2. GST Credit Adjustment if Builder Has No Future GST Liability:The applicant queried how to adjust GST credit if there is no future GST liability in the project. The ruling stated that this question falls outside the purview of the Advance Ruling Authority. Therefore, no answer was provided for this query.3. Entitlement to GST Refund if Amount is Not Adjustable from Future Liability:The applicant also sought to know if they would be entitled to a GST refund if the amount is not adjustable from future liability under the project. The ruling clarified that this question is also outside the purview of the Advance Ruling Authority. However, it mentioned that the jurisdictional authority would decide on the entitlement to a refund under Section 54 of the CGST Act, 2017, read with Rule 89 of the CGST Rules, 2017, subject to the fulfillment of necessary conditions.Conclusion:The ruling concluded that the applicant should follow the clarification issued by the Tax Research Unit for adjusting excess tax. If adjustment is not possible, the applicant should seek guidance from the GST Policy Wing. Questions regarding credit adjustment without future liability and entitlement to refunds were deemed outside the authority's purview and referred to the jurisdictional authority for further determination. This ruling is valid within the jurisdiction of the Authority for Advance Ruling Uttar Pradesh, as per Section 103(2) of the CGST Act, 2017, until declared void under Section 104(1) of the Act.