TaxTMI 
TaxTMI 
2019 (4) TMI 1500
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....uling No. GST-ARA-40/2018-19/B-118 dated 24.09.2018 = 2018 (12) TMI 1355 - AUTHORITY FOR ADVANCE RULING, MAHARASHTRA BRIEF FACTS OF THE CASE A. Kolte Patil Developers Ltd ('the Appellant') is engaged in the activity of Construction of Residential and Commercial complex. B. The application for Advance Ruling (AR) dated 19th June 2018 was filed by them with an intent to seek clarification whether the Service Tax/VAT paid earlier can be claimed as credit or allowed as refund to property buyers. C. The facts in the instant case are that at the time of booking of flat by the customer, the applicable Service Tax and Maharashtra VAT (MVAT) was deposited. Given this, the Service Tax and MVAT burden borne by the individual customer on flat booked in pre-GST regime ranged from 4.50%- 5.50%. However, due to certain reasons, the flats booked by the customer in the pre-GST regime, are cancelled by the customer on or after 1st July 2017 (i.e. after implementation of GST). D. In pre-GST regime, Developer was entitled to avail service tax credit in case of cancellation flat as per Rule 6(3) of Service Tax Rules, 1944. Hence, the customer who cancelled flat was not required ....
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....) from customer and - Cancellation without retention of any amount from customer (i.e. total amount refunded to the customer) 1.4 During the hearing dated 19th September 2018 the AAR had asked to submit the clarity whether the question under consideration was also for applicability of GST on retention charges collected from the customer. 1.5 As per the additional submission the primary question for advance ruling was whether GST input tax credit of Service Tax and State VAT paid while booking of flat was available to the Developer, if cancelled in GST regime (with and without retention amount) and not the applicability of GST on retention charges collected from the customer. 1.6 Given the aforesaid, the contention of the AAR that, the applicant had decided not to contest the issue about cancellation with retention of some amount is incorrect. Hence, both the question given below amongst which one question wrongly has not been considered by the AAR need to be considered: - What is the legal procedure in case of cancellation with retention of certain amount (could be referred as cancellation charges) - What is the legal procedure in case of cancell....
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....on of price then if will be covered under Section 142 (2) of the CGST Act, where the credit note can be raised with GST. 1.14 As per Section 142 (2) of the CGST Act, credit note can be raised: a. ... b. where, in pursuance of a contract entered into prior to the appointed day, the price of any goods or services or both is revised downwards on or after the appointed day, the registered person who had removed or provided such goods or services or both may issue to the recipient a credit note, containing such particulars as may be prescribed, within thirty days of such price revision and for the purposes of this Act such credit note shall be deemed to have been issued in respect of an outward supply made under this Act: Provided that the registered person shall be allowed to reduce his tax liability on account of issue of the credit note only if the recipient of the credit note has reduced his input tax credit corresponding to such reduction of tax liability. 1.15 Given the aforesaid, the situation like revision of price upward or downward is addressed via sub-clause (a) and sub-clause (b) of Section 142 (2) of the CGST Act wherein credit note can be r....
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....all be used for Interpretation of the provisions of the new statute I. As per the Service Tax Rules, 1994^2 if an invoice is issued for which service is not provided then the taxpayer allowed to avail credit of such excess service tax paid. II. Reference is drawn to section 174(2) of the CGST Act, the repeal of the said Acts and the amendment of the Finance Act, 1994 (hereafter referred to as "such amendment" or "amended Act", as the case may be) to the extent mentioned in the sub-section (1) or section 173 shall not- a. ... b. affect the previous operation of the amended Act or repealed Acts and orders or anything duly done or suffered there under; or c. affect any right, privilege, obligation, or liability acquired, accrued or incurred b. .... III. Accordingly, the GST law cannot be interpreted to withdraw the rights of the Repealed Act (i.e. Finance Act, 1994) IV. It is important to note that as per the Principles of Statutory Interpretation of Law the meaning should lead to some results which are reasonably be supposed to have been the intention of the legislature'. V. Further, we would like to refer the essence of the Law ....
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....provide any specific restriction to cover cancellation of flat within the provision of downward revision of price. II. As per the Subordinate Legislation under Repealed Statute when the statute is repealed and re-enacted, Section 24 of the General Clause Act, 1897, provides for continuous of any appointment, notification, order, scheme, rule, form or byelaws made or issued under the repealed statute in so far as it is not inconsistent with the provisions re-enacted. Such appointments, notification, order, scheme etc. are deemed to be made under the corresponding provisions of the new statute and continue to be enforce unless suspended by appointments, notification, order, scheme etc. under new statute. III. Hence, unless a specific exclusion the cancelation of the contract will be interpreted as downward revision for Section 142(2) of the CGST Act. IV. Further, as per the Principle of Interpretation of Statute, words must be ascribed that natural, ordinary or popular meaning which they have in relation to subject matter with reference to which and context in which they have been used in the statute. V. Additionally, as per the 'Cardinal Rule of Interpretation', ....
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....ause. V. Hence, reference to Section 6 of the General Clause Act is required to be taken for interpretation of GST Law. VI. Further, cause (c) to (e) of Section 6 of the General Clauses Act, 1987 is speaking briefly to prevent the obliteration of a statute in spite of it's repeal to keep rights acquired or accrued and liabilities incurred during its operation and permits continuance or institution of any legal proceedings or recourse to any remedy which may have been available before the repeal for enforcement of such rights and liabilities. VII. Given this, section 142(2) of the CGST Act is interpreted as to save the effect of rights available to the builder under Finance Act, 1994 and Maharashtra VAT Act. 5. New law cannot create a situation to deny the benefit available under earlier law I. As per the principle of interpretation of statute wherein beneficent construction involves giving the widest meaning possible to the statutes. When there are two or more possible ways of interpreting a section or a word, the meaning which gives relief and protects the benefits which are purported to be given by the legislation, should be chosen. II. A beneficial statu....
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....ayment of duty" III. Construction of immovable property is a continuous supply service and required sufficient time to complete the same. The one-year time limit is not justifiable in the said case. IV. Hon'ble Apex Court in the case of Mafatlal Industries Ltd Vs. UOI 1997 (89) ELT 247 = 1996 (12) TMI 50 - SUPREME COURT OF INDIA held that, ....... All refund claims to be adjudicated under Sec. 11B except where the levy is held to be unconstitutional. V. Given the aforesaid, it is important to analyse whether the one-year time limit is applicable in case of excess of payment of service tax due to cancellation of flat. VI. As per Section 66B of the Finance Act, 1994 specifies the charge of service tax which is essentially that service tax shall be levied on all services provided or agreed to be provided in a taxable territory, other than services specified in the negative list. VII. Given this, in case of cancellation of flat service is not provided which is agreed to be provided. Hence, service tax is not levied at all. VIII. What is paid erroneously which was not required to be paid at all by the law and doesn't become ....
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....R Construction [2012 (26) S.T.R. 195 (Kar.) = 2012 (7) TMI 22 - KARNATAKA HIGH COURT held that, 'Where the claim of the respondent/assessee is on the ground that they have paid the amount by mistake and therefore they are entitled for the refund of the said amount. If we consider this payment as service tax and duty payable, automatically, Section 11B would be applicable. When once there was no compulsion or duty cast to pay this service tax, the amount of Rs. 1,23,96,948/- paid by petitioner under mistaken notion, would not be a duty or "service tax" payable in law. Therefore, once it is not payable in law there was no authority for the department to retain such amount. By any stretch of imagination, it will not amount to duty of excise to attract Section 11B. Therefore, it is outside the purview of Section 11B of the Act.' XIII. In the case of ITC Limited [1993 (67) E.L.T. 3 (S.C.)] = 1993 (7) TMI 75 - SUPREME COURT OF INDIA honourable Supreme court upheld the view taken by the Division Bench of the Delhi High Court with regard to the question of limitation. On the question of limitation, the Division Bench of the Delhi High Court had observed that "th....
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....excused. b. If the requirements are provided by Statue in the interest of a particular person, the requirement although mandatory may be waived by him. In such cases the act done will be considered as valid act [Wilson v. McIntosh (1894) AC 129]. III. In the given case it is not possible for the assesse to file a claim of refund by complying conditions of one year due to implementation of GST law from 1st July 2017 and hence based on the aforesaid principle it can be said that the requirement is impossible to be complied with. IV. Further, there are a plethora of judicial pronouncements wherein it has been held that the time limit of one year is to be considered from the date of revision of price, or cancellation of contract (i.e. from the date of issue of credit note and not from the date of payment of service tax.) No. Case law Decision 1. M/s. Chambal Fertilizers and Chemical Ltd [2017-TIOL-407-CESTAT-DELHI = 2017 (52) S.T.R. 329 (Tri. - Del.)] = 2017 (1) TMI 549 - CESTAT NEW DELHI It was held that for the purpose of computing the time limit under Section 11B, the date of issue of credit notes is relevant and then only the provisiona....
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.... a 'works contract', tax can be levied by the State Government on the value of the transfer of property in goods involved in the execution of such a contract. 1.26 In this regard, it is important to note that under the sales tax laws, tax can be levied on the 'sale price' of goods. The term, 'goods' defined to include all kinds of moveable properties. 1.27 Given this, it could be construed that, section 142(1) of the MSGST Act is applicable in the given scenario to the extent of value of goods cancelled. (i.e. to the extent of VAT paid) 1.28 However, the AAR has not clearly prescribed whether said provisions are applicable to the MVAT paid on goods portion of the works contract. The underlaying transaction well covered under the questions which can be posed for advance ruling as per section 97(2) of the CGST Act. 1.29 Reference is drawn to the para 5(h)(i) of the ruling where in the authority states that, 'it can be seen that the questions posed before us are not the questions in respect of which an Advance Ruling can be sought under the GST Act. In view thereof, the impugned application is not maintainable. No proceedings o....
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....hen the booking was cancelled is provided. We have been given no agreement or document as such. Therefore, applicability of MVAT Act or Finance Act, 1994 cannot be checked." 1.40 It is to be noted that, all documents were submitted. The AAR had not asked for any documents and/or agreement with respect to booking and cancelation of the flat. 1.41 Hence, the contention of the AAR that applicability of MVAT Act or Finance Act, 1994 cannot be checked due to unavailability of document is incorrect. 1.42 Recently, in the writ petition filed by the Khandelwal Extractions Ltd the [2018-TIOL-189-HC-ALL-GST] = 2018 (12) TMI 891 - ALLAHABAD HIGH COURT the honourable High Court held that ARA have been constituted to avoid the litigation. Any, assessee who seeks an advance ruling discloses his intent to avoid possible litigation hence ARA is required to pass an order only after considering all the facts and documents necessary to arrive at a conclusion. Reference to the para given below of the said writ petition can be taken 13. Having heard learned counsel for the parties and having perused the record, in the first place, the Authority for Advance Ruling and the Appellate Au....
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....rvice tax and MVAT paid can be claimed as refund under erstwhile law by the Developer subject to satisfying the certain conditions. 1.46 It may be noted that had the earlier regime continued, the taxpayer was having right to utilise the excess tax paid (arising due to cancellation of booked flats) against any other Service Tax liability. Now, as the cancellation is taking place in GST regime, typically, cancellation is the trigger point which should either enable the taxpayer (i.e. developer) to claim credit or the customer claim the refund. 1.47 Also, it is to be noted that erstwhile in the Pre-GST regime as per rule 6(3) of Service Tax Rules, 1944 the builder/developer is allowed to avail credit of such excess service tax paid against the invoice issued for which service is not provided then the taxpayer. 1.48 It is pertinent to note that, the erstwhile law did not provide for any restriction on cancellation (as even the wholly cancelled contracts were eligible for the benefit of Rule 6(3) of Service Tax Rules, 1994) and thus, the new provision which essentially is to cover the scenarios provided for under earlier law, cannot curtail the rights of the taxpayers. 1.49 ....
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....er 2018 wherein in it is clarified that in said scenario the rate as per the provisions of the GST Acts (both CGST and SGST or IGST) would be applicable. The clarification states that : Issue In case a debit note is to be issued under section 142(2)(a) of the CGST Act or a credit note under section 142(2)(b) of the CGST Act, what will be the tax rate applicable - the rate in the pre-GST regime or the rate applicable under GST? Clarification i. It may be noted that as per the provisions of section 142(2) of the CGST Act, in case of revision of prices of any goods or services or both on or after the appointed day (i.e., 01.07.2017), a supplementary invoice or debit/credit note may be issued which shall be deemed to have been issued in respect of an outward supply made under the CGST Act. ii. It is accordingly clarified that in case of revision of prices, after the appointed date, of any goods or services supplied before the appointed day thereby requiring issuance of any supplementary invoice, debit note or credit note, the rate as per the provisions of the GST Acts (both CGST and SGST or IGST) would be applicable. 1.58 Given this it could be const....
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....plicant. Section 97(2) of the CGST Act, 2017 encompassing the questions, in relation to which the advance ruling can be sought for, is reproduced herein under for the sake of reference: "(2) the question on which the advance ruling is sought under this Act, shall be in respect of,- (a). classification of any goods or services or both; (b). applicability of a notification issued under the provisions of this act; (c). determination of time and value of supply of goods or services or both; (d) admissibility of input tax credit of tax paid, or deemed to be have been paid; (e) determination of the liability to pay tax on any goods or services or both (f) whether applicant is required to be registered; (g)whether any particular thing done by the applicant with respect to any goods and services or both amounts to or results in a supply of goods or services or both." 5. On perusal of the above provisions which comprised of the above enumerated questions on which advance ruling can be sought by any applicant, it is observed that the above said provision deals only with the admissibility of the input tax credit ....