2019 (12) TMI 1242

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....d to as 'Appellant') against the Advance Ruling No KAR ADRG 16/2019 dated 25.07.2019 = 2019 (8) TMI 472 - AUTHORITY FOR ADVANCE RULING, KARNATAKA pronounced by the Karnataka Authority for Advance Ruling. Brief lack of the case: 1. The Appellant is a company engaged in construction and sale of residential apartments. The Appellant has executed projects under JDA with Landowners for an agreed ratio of built up area. Construction was commenced during pre-GST period and continued under GST regime. With the implementation of GST, the appellant filed an application on 25.04.2018 before the Karnataka Authority for Advance Ruling under Section 97 of CGST/KGST Act. 2017 read with Rule 104 of CGST / KGST Rules,2017 in form GST ARA-01. seeking a ruling on the following questions. a) Applicability of GST on partially completed flats having identified customers before GST regime. b) Applicability of GST on partially completed flats. where customers are identified after implementation of GST regime. c) Applicability of GST on partially completed flats where no customers are identified. 2. On examination of the issue, the Karnataka Authority for Advance Ruling ....

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....e treated as supply of service, namely- (a) renting of immovable property (b) construction or complex, building. civil structure or a part thereof, including a complex or building intended for sale to a buyer, wholly or partly, except where the entire consideration has been received after issuance of completion of certificate. where required. by the Competent Authority or after its first occupation, whichever is earlier 3.3.  They submitted that on a combined reading of the above provisions it is understood that, construction of building is works contract. Works contract activity is classified as supply of service. Supply of service falls under the scope of 'supply' as defined under Section 7 of the Act and therefore attracts tax under Section 9 of the Act. They further submitted that the term ''works contract" starts with the expressions means a contract for building, construction. The term contract is not defined under GST Law. As per section 2(h) of The Indian Contract Act. 1872. contract means an agreement enforceable by law". As per section 2(e) of The India Contract Act. 1872 the word "agreement" means "every promise and every set of promises, formin....

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....ies to the facts of their case under GST Law, hence, levying tax on the transaction which does not fall under the definition of works contract, runs contrary to the law declared by the Apex Court as well as well as the definition and charging section under GST Law. Therefore. the ruling given by the Authority for Advance Ruling on this aspect, should be set aside. 3.8.  Further they relied on the Hon'ble Karnataka High Court decision in the case of Nagarajuna construction Company Limited & Another Vs State of Karnataka and Others [2011] 45 VST 390 (Kar) = 2010 (6) TMI 737 - KARNATAKA HIGH COURT wherein the court had an occasion to decide whether the levy of tax on advance before transfer of property in goods or sale is valid or not. Dismissing the levy of tax on advances, the Heel)le High Court held that, "section 7 of the KVAT Act, which creates a legal fiction that a transaction of sale is completed for the purposes of the Act when payment is received as advance is akin to bringing to tax an agreement to sell goods, even before the property in the goods passes to the buyer. This is plainly contrary to the very definition of "sale" under the Act itself. Therefore, to the s....

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.... of the order of the AAR. 8.  At this juncture it is relevant to take note of Section 100 of the CGST Act which reads as under: 100 (1) The concerned officer. the jurisdictional officer or an applicant aggrieved by any advance ruling pronounced under sub-section (4) of section 98, may appeal to the Appellate Authority. (2) Every appeal under this section shall be filed within a period of thirty days from the date on which the ruling sought to be appealed against communicated to the concerned officer, she Jurisdictional officer and the applicant. Provided that the Appellate Authority may, if it is satisfied that the appellant was prevented by a sufficient cause from presenting the appeal within the said period of thirty days, allow is to be presented within a further period not exceeding thirty days. (3) Every appeal under this section shall be in such form, accompanied by such fee and verified in such manner as may be prescribed. 9.  On a plain reading of the provisions of Section 100 of the said Act, it is apparent that the same mandates that an appeal should be filed within 30 days from the date of communication of the advance r....

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....er for condonation can he accepted is statutorily provided. It was submitted that the logic of Section 5 of the Indian Limitation Act, 1963 (in short the Limitation Act) can be availed for condonation of delay. The first proviso to Section 35 makes the position clear that the appeal has to be preferred within three months from the date of communication to him of the decision or order. However, if the Commissioner is satisfied that the appellant was prevented by sufficient cause from presenting the appeal within the aforesaid period of 60 days, he can allow it to be presented within a further period of 30 days. In other Words, this clearly shows that the appeal has to be filed within 60 days but in terms of the proviso farther 30 days' time can be granted by the appellate authority to entertain the appeal. The proviso to sub-section (1) of Section 35 makes the position crystal clear that the appellate authority has no power to allow the appeal to he presented beyond the period of 30 days. The language used makes the position clear that the legislature intended the appellate authority to entertain the appeal by condoning delay only up to 30 days after the expiry of 60 days which is t....