TaxTMI 
TaxTMI 
2025 (5) TMI 633
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....der dated 30.11.2023 and the summary of order in Form GST DRC-07 (Annexure-P2 series) passed by the Assistant Commissioner of Assistant Commissioner of State Tax, Muzaffarpur (respondent no. 4) under Section 73 (9) of the Bihar Goods and Services Tax Act (hereinafter referred to as the 'GST Act'). 4. The respondent no. 4 has held the petitioner liable to pay a total amount of Rs. 4,61,72,628/- on account of the CGST/BGST and IGST to the tune of Rs. 2,37,59,706/-. The petitioner has been held liable to pay interest thereon at the rate of 1.5% per month i.e. Rs. 20017554/- and penalty of Rs.2,39,5368/-. Challenge to the Notifications 5. The petitioner has also challenged the Notification No. 09/2023 dated 31.03.2023 as contained in Annexure-P8 and the Notification No. 56 of 2023 dated 28.12.2003 present at Annexure-P9 to the writ application. By these two Notifications, the respondent no.2 has extended the time limit specified under sub-section (10) of Section 73 of the CGST Act for issuance of order under sub-section (9) of Section 73 of the GST Act for recovery of tax not paid or short paid or input tax credit wrongly availed or utilized upto 31st March, 2024 for the Finan....
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....ound irrelevant and superfluous. 11. The contention of learned senior counsel for the petitioner that the order, as contained in Annexure-P2 series, has been passed beyond the time limit set out in Section 73 (10) of the GST Act is liable to be rejected. This Court finds substance in the submission of learned SC-11 for the State that the impugned order has been passed within a period of three years from the last due date of filing of the return for the Financial Year 2018-19. Taxability of the Transaction of Execution of Development Agreement 12. Learned senior counsel for the petitioner has further argued that in case of a development agreement registered prior to coming into force of the GST laws with effect from 01.07.2017, the land stood transferred in favour of the builder. According to him, once the land stood transferred prior to 01.07.2017, the transaction under the development agreement would not fall within the purview of the CGST/BGST Act and the notifications issued thereunder. According to him, the development agreement was executed on 27.11.2014 and though the project was completed on 20.12.2018, the liability to pay tax in respect of such development agreeme....
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....greement. The notice mentions that there is an element of supply of service and receipt of consideration under development agreement which is liable to tax under the Act. A summary of show cause notice was also issued in Form GST DRC-01 quantifying the amount of tax, equivalent penalty and interest. 17. It is stated that the order dated 30.11.2023 and the summary of order in Form GST DRC-07 passed by the Assistant Commissioner of State Tax, Muzafarpur West under Section 73 (9) of the GST Act charging tax, interest and imposing penalty three fold the amount of tax payable. It is submitted that pursuant to the SCN, Order-in-Original has been passed by the concerned State GST authority. 18. On behalf of the State GST authority, a counter affidavit has been filed through the Deputy Commissioner, State Tax. On this point, it is stated that the petitioner is misleading this Court by claiming that liability to pay tax on supply of development rights was introduced through Notification No. 04/2019 dated 29.03.2019. The submission is that in fact, in the instant matter, it is the supply of construction services (SAC code 9954) by the petitioner that has been taxed and not the supply b....
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....49 of 2023 (M/s. Adarsh Construction Vs. State of Bihar) wherein this Court finding no reason to invoke the extraordinary jurisdiction under Article 226 of the Constitution of India took a view that there are alternative remedies available and the assessee has not been diligent in availing such alternate remedies within the stipulated time. Learned counsel has also relied upon the order of this Court in CWJC No.18168 of 2023 (M/S Radhika Packing and Printers vs. The State of Bihar and Others). Consideration 22. Having heard learned senior counsel for the petitioner, learned ASG for the CGST and CX assisted by Sr. Standing Counsel for CGST and CX and learned SC-11 for the State Tax Authorities, this Court finds that while assailing Annexure-P2 series to the writ application, the main contention of learned senior counsel for the petitioner is that the impugned order has been passed without consideration of the provisions of the Act, the rules made thereunder and also notification fixing the liability only in respect of the development agreement on or after 01.04.2019. The petitioner had also filed a review before the respondent no. 5 which stood rejected on the ground that ther....
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.... right, title and interest over the Developer's area and they shall be fully entitled to transfer, convey, grant, otherwise alienate their interest, in any manner as deemed fit by them to any person or persons, Association of persons, Firms, Body, Corporate, Cooperative Societies, Government's agencies, etc. on such terms and conditions as may be decided by the Developer or its nominee(s) individually or collectively." 24. It is evident upon a bare reading of the registered development agreement that the land owner has granted exclusive license to the developer to enter upon the said land and to take up and proceed with the development, planning and construction of the said building in terms of this agreement. In this regard, paragraph '9' of the development agreement may be referred to. 25. In this case the completion certification (Annexure-P/4) enclosed with the writ petition has been issued on 20.12.2018. The date of transfer of the owners' share in the project has not been disclosed in the writ petition. 26. We find it important to take note of the observations of the Hon'ble Supreme Court in the case of Super Poly Fabriks Limited vs Commissioner of Central Excise, Pu....
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....re handed over under the 'JDA', the same would tantamount to "transfer" within the meaning of Sections 2 (47) (ii), (v) and (vi) of the Income Tax Act. 30. While dealing with the issues involved in the case, the Hon'ble Supreme Court has discussed the relevant provisions of the transfer of property Act (Section 53A-Part performance), the definition of the word "transfer" in clause (47) of Section 2 and the "Capital gain" under Section 45 of the Income Tax Act. Paragraph '25' and '26' of the judgment reads as under:- "25. The object of Section 2 (47) (vi) appears to be to bring within the tax net a de facto transfer of any immovable property. The expression "enabling the enjoyment of" takes colour from the earlier expression "transferring", so that it is clear that any transaction which enables the enjoyment of immovable property must be enjoyment as a purported owner thereof.^1 The idea is to bring within the tax net, transactions, where, though title may not be transferred in law, there is, in substance, a transfer of title in fact. 26. A reading of the JDA in the present case would show that the owner continues to be the owner throughout the agreement, and ha....
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....where required, by the competent authority or after its first occupation, whichever is earlier." Explanation.-For the purposes of this clause- (1) the expression "competent authority" means the Government or any authority authorised to issue completion certificate under any law for the time being in force and in case of non-requirement of such certificate from such authority, from any of the following, namely:- (i) an architect registered with the Council of Architecture constituted under the Architects Act, 1972 (20 of 1972); or (ii) a chartered engineer registered with the Institution of Engineers (India); or (iii) a licensed surveyor of the respective local body of the city or town or village or development or planning authority; (2) the expression "construction" includes additions, alterations, replacements or remodelling of any existing civil structure; (c) ............ (d) ............ (e) ............. (f) ............. 35. The petitioner has not controverted the submission of the State that vide notification no.11/2017 dated 28.06.2017, construction of a complex, civil structure etc....
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....ation No. 4 of 2018 dated 25th January 2018 clearly provides that the liability to pay Central tax on the said services (a) and (b) shall arise when the developer/builder transfers possession and right in the constructed complex. The supply of services of transfer of development rights remained taxable since introduction of the GST but by virtue of notification No. 04/2018, the liability to pay Central tax shall arise only on the consideration received in form of construction services. 39. At this stage, we reproduce the Notification No.11 of 2017-Central Tax (Rate) dated 28.06.2017, Notification No. 4 of 2018-Central Tax (Rate) dated 25.01.2018 and Notification No. 4 of 2019-Central Tax (Rate) dated 29.03.2019 hereunder for a ready reference:- [TO BE PUBLISHED IN THE GAZZETE OF INDIA, EXTRAORDINARY, PART II SECTION 3, SUB-SECTION (1)] Government of India Ministry of Finance (Department of Revenue) Notification No. 11/2017-Central Tax (Rate) New Delhi, the 28th June, 2017 G.S.R......(E). In exercise of the powers conferred by subsection (1) of section 9, sub-section (1) of section 11, sub-section (5) of section 15 and sub-section (1) of section 16 of t....
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....or civil structure; and (b) registered persons who supply construction service of complex, building or civil structure to supplier of development rights against consideration, wholly or partly, in the form of transfer of development rights, as the registered persons in whose case the liability to pay central tax on supply of the said services, on the consideration received in the form of construction service referred to in clause (a) above and in the form of development rights referred to in clause (b) above, shall arise at the time when the said developer, builder, construction company or any other registered person, as the case may be, transfers possession or the right in the constructed complex, building or civil structure, to the person supplying the development rights by entering into a conveyance deed or similar instrument (for example allotment letter). [F. No.354/13/2018-TRU] (Ruchi Bisht) Under Secretary to the Government of India (underline is mine) (TO BE PUBLISHED IN THE GAZZETE OF INDIA, EXTRAORDINARY, PART II, SECTION3, SUB-SECTION (i)] Government of India Ministry of Finance (Department of Revenue) Notification No....
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....the date of issuance of completion certificate, or first occupation of the project, as the case may be, in the following manner-[GST payable on TDR or FSI (including additional FSI) or both for construction of the residential apartments in the project but for the exemption contained herein) x (carpet area of the residential apartments in the project which remain un-booked on the date of issuance of completion certificate or first occupation /Total carpet area of the residential apartments in the project) Provided further that tax payable in terms of the first proviso hereinabove shall not exceed 0.5 per cent of the value in case of affordable residential apartments and 2.5 per cent. of the value in case of residential apartments other than affordable residential apartments remaining un-booked on the date of issuance of completion certificate or first occupation. The liability to pay central tax on the said portion of the development rights or FSI, or both, calculated as above, shall arise on the date of completion or first occupation of the project, as the case may be, whichever is earlier. 41B Heading 9972 Upfront amount (called as premium, salami,....
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....pment charges or by any other name) paid for long term lease of land, calculated as above, shall arise on the date of issue of completion certificate or first occupation of the project, as the case may be. (iii) after paragraph 1, the following paragraphs shall be inserted, namely, - "1.A. Value of supply of service by way of transfer of development rights or FSI by a person to the promoter against consideration in the form of residential or commercial apartments shall be deemed to be equal to the value of similar apartments charged by the promoter from the independent buyers nearest to the date on which such development rights or FSI is transferred to the promoter. 1B. Value of portion of residential or commercial apartments remaining un-booked on the date of issuance of completion certificate or first occupation, as the case may be, shall be deemed to be equal to the value of similar apartments charged by the promoter nearest to the date of issuance of completion certificate or first occupation, as the case may be." (iv) in paragraph 3 relating to Explanation, after clause (iv), the following clause shall be inserted, namely: - "(v) Th....
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....nt of India Note: -The principal notification No. 12/2017-Central Tax (Rate), dated the 28th June, 2017 was published in the Gazette of India, Extraordinary, vide number G.S.R. 691 (E), dated the 28th June, 2017 and was last amended by notification No. 28/2018-Central Tax (Rate), dated the 31 December, 2018 vide number G.S.R. 1272 (E), dated the 31 December, 2018." 40. It is evident from a bare reading of the aforesaid notifications that the State-respondents are correct in contending that the construction of a complex, civil structure etc. intended for sale to a buyer was made exigible to GST except where the entire consideration has been received after issuance of completion certificate or after its first occupancy, whichever is earlier. There would be no ambiguity in the above-mentioned notifications. Reliance placed by learned senior counsel for the petitioner on the judgment of Hon'ble Supreme Court in the case of M/S Govind Saran Ganga Saran (supra) seems to be misplaced. We reproduce paragraph '6' of the said judgment hereunder:- "6. The components which enter into the concept of a tax are well known. The first is the character of the imposition known by....