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High Court grants relief in challenge to GST notification on land sale & bungalow construction The High Court granted relief to the writ applicant in a challenge to a GST notification regarding tax liability on the sale of land and construction of a ...
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High Court grants relief in challenge to GST notification on land sale & bungalow construction
The High Court granted relief to the writ applicant in a challenge to a GST notification regarding tax liability on the sale of land and construction of a bungalow. The Court found that the applicant had established a strong prima facie case for an interim order and allowed the applicant to deposit the tax amount raised under the invoice without prejudice to his rights and contentions. The advocate on record was directed to provide the entire paper-book to the Addl. Solicitor General of India promptly for instructions before the next hearing.
Issues: Challenge to GST notification regarding tax liability on sale of land and construction of bungalow
Analysis: The writ applicant challenged Entry No.3(if) of Notification No.11/217 -Central Tax (Rate) dated 28th June, 217, along with Para-2 of the said notification. The challenge arose from an agreement with a developer for the purchase of a plot of land and construction of a bungalow on it. The agreement involved separate considerations for the sale of land and the construction of the bungalow. The contention was that the applicant was required to pay tax at 9% CGST plus 9% SGST on the entire consideration, including the land and bungalow construction, after paying 1/3rd value towards the land. The impugned notification deemed only 1/3rd of the total consideration as the value of the land, which was disputed as ultra vires section 7(2) of the GST Act and Entry No.5 of Schedule-III to the GST Act. Additionally, it was argued that the deeming fiction introduced by Para-2 of the notification contradicted Section 15 of the GST Act.
The High Court, after hearing the arguments, found that the writ applicant had established a strong prima facie case for an interim order in his favor as per para-27(F) of the writ application. Consequently, the Court granted relief by permitting the writ applicant to deposit the tax amount raised under the invoice without prejudicing his rights and contentions raised in the writ application. Furthermore, the advocate on record was directed to provide the entire paper-book to the Addl. Solicitor General of India promptly for necessary instructions before the next hearing date.
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