Supply of building and related services and reporting in GST returns

[SANJAY JAIN]

Querry 1:

As per the entry number 5 of the schedule III of the CGST Act, Sale of land and, subject to clause (b) of paragraph 5 of Schedule II, sale of building is not a Supply.

Hence if there is a sale of building after obtaining the completion certificate, it is not a supply.

In case a builder has both types of sale transactions, i.e. sale of the building before obtaining the completion certificate and sale of buildings after obtaining the completion certificate, he is required to charge GST only sale of the building before obtaining a completion certificate. Since the items of schedule III are not supply hence not required to be reported in GSTR-1 and GSTR 3B. Items covered in the scheduled III will also not to be reported in exempted and nill rated supply also.

Querry 2:

Sale and consumption of power are not covered in GST as same is part of entry no 53 of list II under Schedule VII, of Constitution of India.

In case a builder has given a commercial complex on rent. He has taken a single electrical connection and recovering the electricity expenses from all tenants of the building on prorate basis based on the number of units consumed, it will also not to be reported in GSTR 3B and GSTR-1 return.

Querry 3:

In case the booking of the flat was done during 2017 before the implementation of GST and service tax has been paid on the amount of advance received. If the buyer wants to cancel the booking now i.e before registration of property, whether the refund of service tax paid earlier can be claimed?/

Experts view are invited on above-mentioned queries.

[KASTURI SETHI]

Reply to query No.1

"No supply" and Non-GST Supply" are one and the same. These are to be reflected Serial no. 3.1 (e) in GSTR 3 B and also in serial no. 8 of GSTR-1 Agree to the extent that exempted and NIL/zero rated supplies are out of purview of Schedule-III

[KASTURI SETHI]

Reply to query no.2 : Same reply as in reply to query no.1.

Reply to query No.3 Refund will be admissible to the consumer after disclaimer certificate from the assessee.

[SANJAY JAIN]

Dear Kasturiji,

Thanks for your response, however the same has not been defined under the act whether Non GST supply includes the items which is not considered as supply as per schedule III.

In the CGST Act, the Non-taxable supply has been defined under section 2(78) of the CGST Act, i.e. the supply of goods and services or both, which is not leviable to tax under this act or under IGST Act.

Other experts view are also invited whether we can treat the same to the terms 1) No supply 2) Non GST Supply 3) Non-Taxable supply for reporting in GST return.

If all 3 are same than what is the difference between supply of 5 items such as petrol, ATF, crude oil etc and items mentioned in the Schedule III of the CGST Act?

[SANJAY JAIN]

Thanks Kasturiji for your response to query no 3 also. I have further query, whether the builder can also claim the refund of service tax after issuing a credit note to the customer?

A service tax refund can be filed within one year. Whether the department can reject the refund since it has been filed after one year?

[KASTURI SETHI]

Non-taxable supply is different from non-GST supply or non supply. Non-supply/non-GST supply is out of scope of GST whereas non–taxable supply is within scope of GST. ' Supply' falls within GST network but not taxable. Petrol and petroleum products are out of purview of GST. Hence non-GST supply.

[KASTURI SETHI]

Dear Querist, .Pl. refer to your query dated 10.2.19 (Serial No.4). Yes refund can be claimed by the builder if credit note is issued to the buyer. Actually refund claim must not be hit by the principle of unjust enrichment. Regarding the time bar limit now the period is 2 years under GST. Service Tax law stands repealed.

[SANJAY JAIN]

Dear Sir,

Thanks for your reply. Since the refund will be filed for service tax paid earlier hence the claim will be filed as per existing law only i.e. service tax (not GST). Hence in my view, claim should be filed in one year only.

[KASTURI SETHI]

Let me know the following information:-

1.Date of deposit of ST

2.Date of filing ST-3 return

3.Date of filing refund claim.

AI Summary

Non-GST supply reporting: items outside supply must still be reported in returns as non-GST entries for compliance. Sale of land and sale of building after a completion certificate are stated as not supply under Schedule III and therefore out of GST scope; nevertheless such transactions should be disclosed in GST returns under non-GST/non-supply reporting lines rather than as exempt or nil-rated supplies. Recharges of electricity to tenants on a prorata basis are similarly out of scope and to be reported accordingly. Refunds of prior service tax paid on advances may be claimable if the assessee issues a credit or disclaimer and procedural time limit rules of the original regime are observed.