GST ON RREP ON ONGOING PROJECT 01-04-2019 IF DECLARATION IN FORM IV NOT SUBMITTED

[NIRANJAN MOHANTY]

AS PER Notification No. 03/2019-Central Tax (Rate) one declaration needs to be submitted before 10-05-2019.

What will be the consequence if the declaration not submitted and tax @12% was paid earlier with input credit.

If rate changed by virtue of this ammendment to 5% then excess amount paid earlier can be claimed as refund or not?

[KASTURI SETHI]

(i) If the declaration  in Annexure-IV was not  filed  within prescribed time limit i.e. before 20.10.19  (extended) ), it  would  be deemed that the tax payer   availed option not to avail ITC in respect of ongoing project (effective from 1.4.2019). 

(ii) No person can pay GST on his own volition. Hence not eligible for ITC.

(iii0 Litigation-prone. 

[KALLESHAMURTHY MURTHY K.N.]

Sir,

The ITC availed without option is required to be reversed or the department may demand for reversal as per Notification 3/2019,

In construction services, the developer collects advances from the customers including tax element. 

So, any tax paid in excess to the department can be applied for a refund by raising credit notes against the tax collected from the customers. That means the developer has to refund any excess amount paid to the government to his customers subject to the provisions of Sec. 76(9). & (1).

This is my personal opinion not to be construed as legal advice. 

[KALLESHAMURTHY MURTHY K.N.]

Sir, 

Please read the Sec. 76(9) &(10). 

[KASTURI SETHI]

         I agree with Sh.Kalleshmurthy Murthy. 

[KALLESHAMURTHY MURTHY K.N.]

Kasturi Sethi Ji, 

Respected Sir, 

Thanks very much for agreeing with me. 

[KASTURI SETHI]

Sh. Kalleshamurthy Murthy Ji,

Actually your reply has  completed my reply. 

[Shilpi Jain]

What was the reason the annexure was not filled? Was it missed? Or the decision to continue @ 18% was taken later?

Lot of ifs and buts. You will have to contest this since I believe these kind of implications will be of huge amount in the real estate industry.

Ideally if we see, the govt. would have got its share of revenue by this even if you have paid 5% and not taken credit. That needs to be communicated to the tribunal/courts in future.

AI Summary

Deemed opt out of input tax credit triggers reversal obligations and potential refund adjustments via credit notes to customers. Failure to file the prescribed declaration in Annexure IV within the statutory period results in the taxpayer being deemed to have opted not to avail Input Tax Credit for the ongoing project; ITC claimed contrary to that deemed option must be reversed and cannot be sustained merely by voluntary payment. A developer may seek to adjust excess tax paid by issuing credit notes to customers and pursuing refund or adjustment under the statutory refund and recovery framework, subject to applicable procedural conditions and potential disputes.