TaxTMI 
TaxTMI 
2021 (4) TMI 184
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.... company ("Saifee Developers"). The 1st Respondent in the Section 9 Petition is a partnership firm ("Shanklesha Constructions"). Respondents Nos. 2 to 6 in the original Section 9 petition are partners of Shanklesha Constructions.^1 4. Interim Application No 5946 of 2020 is by Shanklesha Constructions (and its partners). It seeks a recall or vacating of interim or ad interim reliefs granted by an order of 15th July 2019 to Saifee Developers. 5. The Review Petition is by Saifee Developers. It seeks a review of my order of 28th February 2020. Specifically, Saifee Developers asks to be relieved of a statement it made regarding payment of Goods & Service Tax ("GST"). The order of 28th February 2020 noted, recorded and accepted that statement made on instructions by counsel then engaged by Saifee Developers. B. SUMMARY OVERVIEW 6. I have heard Mr Andhyarujina for Saifee Developers and Mr Khandeparkar for Shanklesha Constructions at length. I have considered the rival submissions, including on interpretation of Section 13 of the Central Goods and Services Tax Act 2017 ("GST Act"). 7. The sole issue is whether or not Saifee Developers is liable to pay GST on what has metamor....
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....iew Petition fails - as indeed it must, in his submission - the Interim Application must be allowed. A party cannot continue to claim protection under a court's order while not complying with the requirements of that very order. 10. On carefully considering the rival submissions and material before me, I am not at all persuaded that Mr Andhyarujina is correct in his submissions. I have dismissed the Review Petition, but I have not done so on limited grounds, such as holding him to the statement his predecessor made. Since he argued that the entire position in law was diametrically opposite to the statement earlier made (and therefore to the 28th February 2020 order), I permitted him full latitude in presenting his case on the interpretation of the relevant provisions of the GST Act. In my judgment, the view that Mr Andhyarujina canvasses on interpretation does not commend itself. It seems to me to be wholly against the plain meaning and language of the section in question, and possibly fraught with all manner of unintended consequences. 11. The dismissal of the Review Petition necessarily means, in my view, that the Interim Application must be allowed. Mr Khandeparkar is corr....
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....rest at 9% per annum, on the deposit of such amount the adinterim relief in terms of (iii) shall automatically stand vacated. (v) Ordered accordingly. 18] Let reply affidavit be filed by the respondents before the adjourned date of hearing and a copy of the same be served on the learned advocate for the petitioner well in advance. 19] Stand over to 29.07.2019. 20] At this stage, Mr. Tamboli, learned counsel for the petitioner, on instructions, submits that his client is willing to pay GST in respect of sale of the flats in question. He further submits that as informed by the respondents, 10 flats would be available, but there are inter se disputes between the partners pending arbitral proceeding. He submits that in case the injunction as inter se between the partners is vacated, in that event the petitioner should be kept informed of the vacating of the injunction so that the petitioner can have those 10 flats. It would not be unreasonable if such request as made by Mr. Tamboli, learned counsel for the petitioner is granted. Respondent shall accordingly inform the petitioner in case the injunction is vacated. It is clarified that this direction i....
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....insufficiency of stamp duty but also a question of whether the physical document that has been relied on by the Applicant (and on which some stamp has been paid) is in fact the actual physical agreement signed by the parties. The reason for this contention is that while the 1st Respondent firm and four of its five partners do not dispute having signed the agreement in question, they say that the signed agreement did not have on its last page a tabulation or chart showing 44 flats. It is the document with that chart on which stamp has been paid by the Applicant. 4. Another objection taken is that one of the five partners, the present 4th Respondent, did not sign the Agreement at all. This objection is sought to be placed within the frame of Section 19(2) of the Indian Partnership Act 1932. 5. I have only noted these submissions so that there is no ambiguity about the questions that will have to be addressed when that Arbitration Application is taken up. 6. In the Arbitration Petition under Section 9, there are three important orders. The first is the order of GS Kulkarni J of 15th July 2019. At that time, an objection was taken even on the Section 9 Petiti....
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....ns as both indicated that the entire question of GST liability could perhaps be satisfactorily resolved here and now. I suggested to both sides some safeguards while yet ensuring that payment is made into revenue so that the interests of neither side are compromised on account of a later demand by revenue or the imposition of interest and penalty. Both sides agreed in principle. But a final order will require both sides to make appropriate statements on Affidavit. I have broadly indicated the frame of those statements. Specifically, Mr Khandeparkar will need to provide a sufficient assurance to Mr Tamboly's clients that GST payments, applications for refund or adjustment, etc will be openly and transparently handled and that the Petitioner will be kept apprised of all these developments. If there is any refund, Mr Tamboly's clients must be assured of receiving a pro-rated reimbursement to the extent of that refund as well. Mr Tamboly has for his part indicated quite clearly what are the safeguards that are required because, as he puts it, his client is making payment of an amount towards tax that, according to the Petitioner, is firstly not due and secondly, under an Agreement betw....
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....ate the payment of GST on the amount of Rs. 15 crores received by Respondent No.1 from the Petitioner for purchase of immovable property. 2. I say that the Petitioner is liable to pay an aggregate sum of Rs. 2,25,54,238/- (Rupees Two Crore Twenty Five Lakhs Fifty Four Thousand Two Hundred and Thirty Eight Only) as and by way of GST alongwith interest on the principal sum of Rs. 1,80,00,000/- (One Crore Eighty Lakhs Only) after deducting the amount of Rs. 35,50,200/- already paid by the Petitioner towards the outstanding amount of GST, as on 31st January 2020. The interest is computed at the rate of 18% per annum as per the circular / notification bearing number 13/2017 dated 28th June 2017 issued by Government of India, Ministry of Finance. This outstanding GST amount with the applicable interest at the relevant time has been communicated to the Petitioner on various occasions and these Respondents have also provided their Chartered Accounts certificate for the same. Hereto annexed and marked as Exhibits "A " and " B" are copies of the aforesaid GST circular / notification dated 28th June 2017 and Chartered Accountant's certificate certifying that the aforesaid amount is d....
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....oly now has instructions to state that the amount of GST and accrued interest on this amount will be paid on a without prejudice basis by the Petitioners to the Respondents. He seeks some time to make this payment. I will allow him 12 weeks' time to make that payment but the interest up to the date of payment will also be included in the remittance to be made. 6. As a starting point for the computation, Exhibit "B" to the further Affidavit affirmed on 4th February 2020, a Chartered Accountant's certificate showing the total amount due as of 31st January 2020, will serve as the basis for the calculations going forward. 7. This is subject to certain further conditions: (a) that within 48 hours receipt of the amount, the Respondents will make payment of the entire amount to the GST authorities; (b) that they will within 48 hours of receiving the relevant challan forward a copy to the Advocates for the Petitioners; (c) all the conditions and undertakings in paragraph 3 of the Affidavit extracted above will immediately begin to operate. 8. In view of these statements, upon the Petitioners making payment of the balance amount of GST a....
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.... in regard to the sanctioned plans for the structure. His clients have an apprehension that the commercial area of 10,000 sq ft that is part of paragraph 17 (iii) of Kulkarni J's order of 15th July 2019 is not actually available. That aspect is currently kept pending as well, leaving all contentions open. (Emphasis added) 20. It is the commitment to pay GST that Mr Andhyarujina for Saifee Developers assails today in the Review Petition. D. FACTUAL BACKGROUND 21. Shanklesha Constructions, Respondent No.1, is a partnership firm of developers. It says that Chajjed, Respondent No.3, is an erstwhile partner, since expelled. That dispute is not before me today. The Petitioner, Saifee Developers, a private limited company also in the business of real estate development, claims it invested Rs. 15 crores in Shanklesha Constructions' development project at village Shahad, Taluka Kalyan, District Thane under an undated Memorandum of Understanding ("MoU"). The project is called "Sai Nirvana". Saifee Developers claims that the MoU gave it the choice of either (i) joining the Shanklesha Constructions partnership with a 25% share in the profits and losses; or (ii) taking an allotment ....
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....GST liability in respect of the balance payment it has made to Shanklesha Constructions for the purchase of flats? ("Balance payment" because, admittedly, some portion of the entire payment of Rs. 15 crores has been appropriated toward 10 flats, and Saifee Developers has paid Rs. 35,50,200/- as GST). 29. If Saifee Developers' contention is wrong, then its Review Petition fails, and Shanklesha Constructions' Interim Application must succeed. If Saifee Developers is correct, then its Review Petition will have to allowed. 30. I am not dismissing the Review Petition on the basis that the statement made by Saifee Developers through its counsel was on instructions. Ordinarily, I would have done so; but that statement relates to an interpretation of law and hence slightly different considerations very possibly arise. F. SECTION 13 OF THE GST ACT 31. The GST Act came into force with effect from 8th July 2017. Thus, it was not in force when Saifee Developers paid Rs. 15 crores to Shanklesha Constructions. But it was in force when Saifee Developers exercised its option on 14th June 2018, electing to treat this amount of Rs. 15 crores as being towards the purchase of flats. There ....
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....VIDED that where it is not possible to determine the time of supply under clause (a) or clause (b), the time of supply shall be the date of entry in the books of account of the recipient of supply: PROVIDED FURTHER that in case of supply by associated enterprises, where the supplier of service is located outside India, the time of supply shall be the date of entry in the books of account of the recipient of supply or the date of payment, whichever is earlier. (4) In case of supply of vouchers by a supplier, the time of supply shall be- (a) the date of issue of voucher, if the supply is identifiable at that point; or (b) the date of redemption of voucher, in all other cases. (5) where it is not possible to determine the time of supply under the provisions of sub-section (2) or sub-section (3) or sub-section (4), the time of supply shall- (a) in a case where a periodical return has to be filed, be the date on which such return is to be filed; or (b) in any other case, be the date on which the tax is paid. (6) The time of supply to the extent it relates to an addition in the value of supply by way of interest, lat....
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....ific performance compelling such an agreement for 44 flats. Therefore, no service has been provided to Saifee Developers, and there is, therefore, no question of it being required to pay any amount at all towards service tax. 39. Consequently, in Mr Andhyarujina's submission, the Explanation has no application whatsoever to such a case. If Shanklesha Constructions cannot show the payment by Saifee Developers in its books toward a sale of flats, i.e., not as a capital contribution to the firm, then the first part of Explanation (ii) has no role to play. And since the payment, in any case, precedes the GST Act, and was done before the option was exercised, the date of receipt of payment cannot fall under the second part of Explanation (ii) either. At the time when that payment was made, it was not for a sale of flats, and the GST Act was not in operation. 40. There are, as Mr Khandeparkar points out, two answers to this. One is at the factual level, and it is easily met: by showing the amount in the suppliers, i.e., Shanklesha Constructions' books as towards the sale of flats. For this, he points to Exhibit "E" to an additional affidavit dated 5th January 2021. This is a ledger....
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.... of this Court said: 19. Further, as stated by the Hon'ble Justice G.P. Singh in the Principles of Statutory Interpretation, Seventh Edition page 172-173 that an explanation may be added to include something within or exclude something from the ambit of the main enactment or the connotation of some word occurring in it. It is possible that it may have been added in a declaratory form to retrospectively clarify a doubtful point of law. Still further, there can be a limited retrospectivity as well and all of this is permitted by law. It is too well settled to require any reiteration that in matter of taxation the legislature enjoys greater freedom and latitude and it is allowed to pick and choose districts, objects, persons, methods and even rates of taxes if it does so reasonably. In this case, the legislature has indeed acted reasonably and taxed the service provided by training and coaching centre and classes. (Emphasis added) 45. In S Sundaram Pillai v VR Pattabiraman, (1985) 1 SCC 591. the Supreme Court explained the object of a statutory 'explanation' thus: "53. Thus, from a conspectus of the authorities referred to above, it is manifest that the object ....
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....Andhyarujina suggests, the 'time of supply of services' was left open-ended until possession or some such late date, then there was every likelihood of revenue being defeated simply by entering into an agreement, even paying the money, and then not availing of the 'service' (i.e., possession of the property) for decades together; or even staving off the signing and registration of an agreement. 49. I believe Mr Khandeparkar is completely correct in this reading of the section. He is also correct in saying that that pre-GST payments cannot simply be ignored. True, the amount of Rs. 15 crores was paid before the GST Act came into force. But the option to treat it as a flat purchase advance or price was on 14th June 2018. The GST Act came into effect with effect from 8th July 2017. Therefore, it stands to reason that the amount already paid would have to be treated as liable to GST the moment the GST Act began to operate. The 2018 option had to relate back to the date of payment; but on that date, there was no GST. Consequently, the GST regime would apply to this transaction from the date that Act came into force. 50. Saifee Developers' construct is actually self-defeating. It a....
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....relief granted in paragraphs 17(i) to (v) and 20. 58. Now Clause (ii) of the 15th July 2019 order is: (ii) The respondents are directed not to create any third party rights in respect of 15 flats which the respondents intend to transfer to the petitioner, the details of which are stated in the second part of the statement at "Exhibit G" (page 122 of the paper book) This finds reflection in paragraph 8 the 28th February 2020 order: 8. In view of these statements, upon the Petitioners making payment of the balance amount of GST and accrued interest- (a) the Respondents will register the 15 flats mentioned in paragraph 17(ii) at Exhibit "G" to the Affidavit in Reply and listed at page 122 of the paper book in favour of the Petitioners. (b) The stamp duty is to be paid in accordance with the agreement between the parties. (c) Upon those flats being registered and the stamp duty being paid any original documents being held by the Petitioners will be returned to the Respondents. (d) If there is any difficulty in this regard liberty to the parties to apply either to the Court or to the arbitrator in an appropriate application und....