TaxTMI 
TaxTMI 
TaxTMI 
2025 (8) TMI 64
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.... justice and equity." 2. Heard learned counsel for the petitioner and learned Additional Government Advocate for respondents and perused the material on record. 3. In addition to reiterating the various contentions urged in the petition and referring to the material on record, learned counsel for the petitioner invited my attention to the impugned order dated 30.12.2023 passed by the respondent No. 1, in order to point out that the respondent No. 1 has come to the erroneous conclusion that the petitioner was liable to pay Goods and Service Tax (GST) towards 100% of the property on the ground that the Joint Development Agreement dated 06.02.2017 entered into between the petitioner and M/s. DivyaSree R.O.W. Projects Private Limited (for short, 'M/s. DivyaSree Projects') was an unregistered document which did not have the effect of creating / transferring / assigning any rights by the petitioner / land owner in favour of the aforesaid M/s. DivyaSree Projects, who is a Developer of the property. In this context, it is submitted that prior to the impugned order dated 30.12.2023 i.e., on 28.12.2023, two days prior to the impugned order, the Deputy Commissioner of Commercial Taxes, ....
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....the You, the Developer, have appointed your contractor for putting up the constructions of apartments to portions of the lands vide the agreement of appointment of contractor as discussed in DOCUMENT-1. Further, You have initially contended that You had given the entire scope of construction of the portion of the lands to M/s Divyasree R.O.W. LLP a partnership firm and hence there was no construction activity undertaken by You and that You had not collected any money from the apartment purchasers and all money of the construction was collected by the Divyasree R.O.W. LLP contractor. However there was no assignment of rights to the Divyasree R.O.W. LLP. This contractor was a mere agent and not an independent contractor of the Developer. In this regard the SCN cited in reference 3 has been issued to You wherein the liability of CGST Rs. 5,84,36,140/-, and KGST Rs. 5,84,36,140/- has been proposed to be demanded from you. In response to the said SCN You, have now furnished 2 unregistered documents, viz DOCUMENT-1 and DOCUMENT-3, both of which are unregistered documents. The said Joint Development Agreement is not registered. The sufficient stamp duty is not paid, hence under sect....
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....nd KGST Rs. 58,43,614/-, levied on the said tax liability due as per the provisions of section 122(2)(a) of the KGST Act and section 122(2)(a) of the CGST Act, and section 20 of the IGST Act r/w section 122(2)(a) of the CGST Act. Abstract of the Tax Liability arising along with applicable Interest and Levied Penalty: Particulars of Additional Tax and Other Liabilities arising in respect of CGST (in Rs.) SGST (in Rs.) 1) Output tax liabilities on Supply of Value of Rs. 64,92,90,448/-, during the period from July-2017 to March-2018. 5,84,36,140 5,84,36,140 Add: Interest u/s 50(1) of CGST/KGST Act, (for the period from 20-04-2018 to 30-12-2023) 5,99,41,071 5,99,41,071 Add: Penalty @ 10% on Tax Due 58,43,614 58,43,614 Total 12,42,20,825 12,42,20,825 -:Tax, Interest and Penalty Summary:- Total Tax 5,84,36,140 5,84,36,140 Total Interest 5,99,41,071 5,99,41,071 Total Penalty 58,43,614 58,43,614 Grand Total 12,42,20,825 12,42,20,825 This Adjudication Order is passed without any prejudice to any other or further action that may be taken against You the taxable person, either in this case or any other case 'under the provisions of the KGST Act an....
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....ee and penalty arising from the impugned order, as is admitted by him, and (b) a sum equal to 10% of the remaining amount of tax in dispute, arising from the said order, subject to a maximum of twenty-five crore rupees in relation to which the appeal has been filed. * Attention is invited to the provisions governing these and other related matters. Contained in the Karnataka Goods & Services Tax Act. 2017 and the rules made/notifications issued there under, for compliance. * Certified copy of this order may be applied immediately in order to avoid delay in filing of statutory appeal as required under rule 108(3) of the KGST Act. * In case of any mistakes apparent on record, the same may be brought to attention of the undersigned within 3 months under section 161 of KGST Act. FORM GST DRC-07 [See rule 100(1), 100(2), 100(3) & 142(5)] To, Case ID No : AD290523013422F Date: 17.05.2023 Trade Name : M/s. Divyasree R.O.W. Projects Private Limited GSTIN : 29AAGCD0372F1ZS Address : No. 11 A Wing, Divyasree Chambers, O Shaugnessy Road, Langford Town, Bengaluru-560025 Email : [email protected] Tax Period : April-2018 to March-2019 Subject: Adjudication Order under....
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....rom Shyamaraju and Co (India) Pvt Ltd (SRIPL) through agreement for sale dt. 07/01/2018. However as per the agreement for appointment of construction contractor entered into with Shyamaraju and Co (India) Pvt Ltd dated 19/05/2014 the taxpayer is only a contractor to construct apartment as per the specification of the approved plan and as per this agreement the taxpayer needs to enter into separate construction agreements with customers and consideration for that construction is to be collected by taxpayer directly from that customer. Further on verification of agreement for sale dated 07/01/2018 entered into with Shyamaraju and Co (India) Pvt Ltd and others, it is observed that, the developer i.e. M/s Shyamaraju and Co (India) Pvt Ltd has agreed to convey the UDI corresponding apartment units remaining unsold in Phase I of the project as on the date of receipt of the occupancy certificate, in lieu of payments due to the purchaser who was their contractors in relation to the construction of phase I of the project. It is important to note that the taxpayer is receiving entire sale consideration from customers as per the agreement dated 19/05/2014 entered into with M/s Shyamaraju an....
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....ion amount receiver. As the taxpayer has provided the construction service by constructing flats whether sold or unsold they are liable for GST, irrespective of receiving of occupancy certificate. Therefore, GST on the turnovers mentioned in the GST ADT-02 of this office dated: 12-04-2023 as per the KGST Act, 2017 at an amount of Rs. 8,21,57,826/- is not discharged by you towards Disallowance of Deduction Claimed for Sale of Immovable Property under KGST Act 2017; a. Tax of Rs. 4,31,17,856/- on the disallowance of deduction claimed for sale of immovable property of the KGST Act 2017 b. Interest of Rs. 3,90,39,970/- on the said turnover as applicable under Section 50 of the KGST Act. Therefore, you are hereby showcased under Sec. 73 and under Sec. 122 of read with Sec. 50 of the KGST Act as to why the amount mentioned in the below table should not be demanded from you in accordance with law. Tax Interest IGST CGST SGST TOTAL IGST CGST SGST TOTAL TOTAL PAYABLE 0 21558928 21558928 43117856 0 19913362 19913362 3903970 82944580 Note: The interest amount mentioned is calculated till the date of DRC-O1A issued. However the Auditee is hereby informed t....
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....dated property with the name and style 'Republic of Whitefield' (hereinafter referred to as "ROW Project") in terms of Joint Development agreement (hereinafter referred to as "JDA") dated 06.02.2017 entered between the noticee and the landowner. A copy of JDA entered is annexed herewith and marked as DOCUMENT-1. 2. The landowner represented to the noticee that prior to the entry into the Joint Development Agreement by this noticee with the landowner, the landowner had nominated M/s. Divyasree R.O.W. LLP (hereinafter referred to as "DROW") to take up the construction of the ROW Project. 3. To the extent of undertaking construction activity, the landowner and DROW had entered into an 'Agreement for Appointment of Construction Contractor' (hereinafter referred to as "AACC") on 19.05.2014. Wherein, it was agreed that DROW will undertake the construction of the ROW Project on its own cost and expense and receive consideration directly from the purchasers of the residential apartment. The landowner has represented to the DROW regarding the plan obtained vide sanction letter dated 24.01.2014 for construction of 4 blocks in the ROW Project (subsequently modified vide pl....
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....ial units left unsold as on the date of OC obtained. A copy of the Agreement for Sale entered is annexed herewith and marked DOCUMENT-5. 8. The noticee was served with a notice in Form GST DRC-01A dated 20.05.2023, issued by your good-self directing the noticee to pay CGST and SGST each of Rs. 2,15,58,928/- on construction services along with applicable interest thereon for the FY 2018-19. Copy of Form GST DRC-01A is enclosed as Annexure-2. 9. In reply, the noticee filed its reply on 04.07.2023 in Part B of Form GST DRC-01A. However, prior to the submissions made in reply to Form GST DRC-O1A, the impugned SCN is issued. Copy of reply in Part B of Form GST DRC-01A is enclosed as Annexure-3. 10. The subject-referred SCN has been issued stating that on perusal of the AACC executed on 19.05.2014 between the SCPL and DROW; AoS executed on 07.01.2018 between the SCPL and the noticee, the following allegations emerge: (i) The SCPL has entered into an AoS dated 07.01.2018 with the noticee for the properties described, which are conferred with OC, and essentially immovable properties namely sale of land and sale of building finding entry under serial number 5 reads as "Sale of land ....
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.... in its reply dated 04.07.2023. Therefore, the SCN is bad in law and is liable to be dropped on this ground alone. A.2. It is submitted that the SCN has been issued without considering the submissions made by the Notice wherein, the Noticee submitted that there is no underlying supply of goods or services both is being made through the above agreement from the SCPL to Noticee. However, the SCN has been issued by merely reiterating the contents of DRC-01A. Thus, the SCN has been issued With a foreclosed mind. That the SCN has failed to assign any independent reasons or analysis of the submissions made before the Department: A.3. It is further submitted that in the SCN your good authority has stated that the allegations have been levelled after verification of the submissions made by the Noticee. However, bare perusal of the SCN would reveal that the SCN is a mere reiteration of Form GST DRC-01A. The same is evident from the fact that the Noticee had made all the relevant submissions to substantiate its submissions. Thus, it is evident on bare perusal of the SCN that the same has been issued by merely reiterating the allegations made in Form GST DRC-01A and without considering th....
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....y merely reiterating the allegations, is bad in law and hence is liable to be dropped. B. THE NOTICEE IS NEITHER THE RECIPIENT OF ANY SERVICES FROM SCPL NOR LIABLE TO DISCHARGE TAX ON THE CONSTRUCTION SERVICES PROVIDED: B.1. It has been alleged in the subject-referred SCN that the Noticee has the "obligation" to construct and develop the consolidated property in terms of agreement entered dated 19.05.2014, and hence, Noticee has been appointed by the SCPL to discharge this obligation and as such the Noticee is the provider of construction services. However it is brought to the notice of this adjudicating authority that the above said agreement is rescinded on account of winding up of construction firm DROW. B.2. At the outset, it is admitted that the SCPL has entered into an agreement with Noticee to construct and develop the consolidated property in terms of development agreement entered dated 06.02.2017, and hence, Noticee has been appointed by the SCPL to discharge the obligation to construct; develop; and market the residential units, and as such the Noticee is the provider of construction services towards the entire ROW project in the capacity of Developer. A copy of JDA....
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....doubt whatsoever that a document has to be read as a whole. The purport and object with which the parties thereto entered into a contract ought to be ascertained only from the terms and conditions thereof." In the case of Bihar State Electricity Board, Patna & Ors., v. M/s. Green Rubber Industries & Ors., (1990) 1 SCC 731, the Hon'ble Supreme Court observed that: "Every contract is to be considered with reference to its object and the whole of its terms and accordingly the whole context must be considered in endeavouring to collect the intention of the parties, even though the immediate object of enquiry is the meaning of an isolated clause." B.7. It is also submitted that the Hon'ble Supreme Court of India in the case of Mangalore Ganesh Beedi Works v. CIT (2015) 378 ITR 640/280 CTR 521/126 DTR 233 (SC), has held that authorities do not have the power or jurisdiction to re-write the terms of the agreement arrived at between the parties with each other at arm's length and with no allegation of any collusion between them and that the commercial expediency of the contract was to be adjudged by the contracting parties as to its terms. B.8. Similar ruling was pronou....
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....ine, who is the recipient of Noticee's construction services is Section 2 (31) and Section 2 (93) of CGST Act, 2017 must be referred to, which reads as below: Section 2. Definitions:- [31] "consideration" in relation to the supply of goods or services or both includes - (a) any payment made or to be made, whether in money or otherwise, in respect of, in response to, or for the inducement of, the supply of goods or services or both, whether by the recipient or by any other person but shall not include any subsidy given by the Central Government or a State Government; (b) the monetary value of any act or forbearance, in respect of, in response to, or for the inducement of, the supply of goods or services or both, whether by the recipient or by any other person but shall not include any subsidy given by the Central Government or a State Government; Provided that a deposit given in respect of the supply of goods or services or both shall not be considered as payment made for such supply unless the supplier applies such deposit as consideration for the said supply; (93) "recipient of supply of goods or services or both, means- (a) where a consideration is payable for t....
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....hat: "4.3 Without prejudice, it is also seen that the amount received from the clients/customers have been subjected to Service Tax at the hands of the Broadcasters. The revenue also admitted that appellant do not qualify as Broadcasting agency. Hence, on the Broadcasting Service actual liability of payment of services tax is on the Broadcasting company who provide the said services to the clients. In the present matter Broadcasters already deposited the service tax amount to government as allegedly collected by the appellant from clients against the Broadcasting Services and demand of service tax again from the appellant would amount to double payment. However, the Broadcasters having already paid such collected amount to the government, the appellant cannot be asked to deposit the same again with the Government exchequer. It is our considered view, that once tax has already been paid on the services, it was not open to the Department to confirm the same against the appellant, in respect of the same services. Accordingly, the impugned order liable to be set aside." B.18. Therefore, it is submitted that GST on the construction services provided by the noticee has already suffer....
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....terest is geared to actual amount of tax withheld and the extent of the delay in paying the tax on the due date. Essentially, it is compensatory and different from penalty - which is penal in character. C.3. Considering the fact that no tax itself is payable, no interest should be paid in the facts of the present case. 13. We further submit that, Joint Development/Venture Agreement dated 6th February 2017 has not been considered by your good office. Hence, we request your good self to consider the same. 14. Therefore, in view of the above submissions, it is submitted that the Notice is unsustainable in Law and all the proceedings initiated in the Notice deserve to be dropped. 15. The Noticee submits that the above grounds are without prejudice to one another. 16. The Noticee further submits that they reserve their right to alter/modify/amend these objections/submissions and also reserve their right to produce such other additional objections/submissions as may be deemed fit by them. 17. It is humbly prayed that the above submissions be taken on record and no further proceedings be initiated in this regard. PRAYER In view of the foregoing, the Noticee prays that: i.....
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....Divya Sree R.O.W. Projects Private Limited) and the Land owner respectively. The Landowner initially has commenced construction on its own and laid down basic infrastructure to the Schedule property. Subsequently has appointed Construction contractor namely M/s. Divyasree R.O.W. LLP in terms of agreement entered 'Agreement for Appointment of Construction Contractor' dated 19.05.2014, also on 14.10.2014 the BBMP Authorities have issued a Commencement Certificate (CC) bearing number JDTP/LP/07/2010-11, in favour of the landowner, considering the application preferred by the landowner. Subsequently due to closure of the business of the construction contractor namely M/s. Divyasree R.O.W. LLP, on 06.02.2017, the landowner has proceeded to rescind the agreement entered with construction contractor w.e.f., 06.02.2017, and entered into fresh agreement to take up the construction; development and marketing the residential units in the project of Republic of Whitefield with M/s. DivyaSree R.O.W. Projects Private Limited, i.e., this RP. In terms of the Joint Development Agreement entered the RP has acquired the status of developer and developed the project of Republic of Whitefie....
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..... Also the Developer has undertaken to the payment of Output tax on the entire receipts including the portion of super built-up area falling to the land owners on receipt of advances from prospective buyers and to apportion the revenue to the land owner. Thus, the receipts from the construction services provided till and up to the date of obtaining OC, is found to be subjected to the admissible GST, further on the part of the residential units left unsold as on and after the date of OC, and the corresponding construction services provided and completed before issuance of OC is disposed off in terms of the development agreement entered, and which the relevant phrase of the agreement is reproduced as below; "It is agreed between the Parties, if at the completion of the construction of the said Project followed with obtaining the completion certificate from the local authorities, if portion of built up area in the said Project remains unsold, the Parties may by mutual consent share the unsold built up area in ratio of 30% to the Owner and 70% to the Developer by physical demarcation and shall record the sharing in writing and Agreement signed by both the Parties. The principles of....
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....from the sale, mortgage, gift, lease or otherwise disposed of the same or any part thereof. Thereby, the RP being the registered person under the provisions of CGST/KGST/IGST Acts, engaged in supplying 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, is liable to discharge admissible GST on the Construction services provided to the portion of super built-up area falling to the landowner. And here in this regard the notification issued by the hon'ble Ministry of Finance of Government of India bearing Notification no.4/2018-Central Tax (Rate), New Delhi, Dated 25.01.2018, which reads as under; "G.S.R (E)- In exercise of the powers conferred by section 148 of the Central Goods and Services Tax Act, 2017 (12 of 2017), the Central Government, on the recommendations of the Council, hereby notifies the following classes of registered persons, namely:- (a) registered persons who supply development rights to a developer, builder, construction company or any other registered person against consideration, wholly or partly, in the form of constructio....
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....e on hand the RP has provided the outward taxable services namely construction services to the recipient (i.e., the Land owner) and in return received the consideration from the recipient as recorded above, but has failed to subject the same to admissible GST, and the un-sold area in the project is observed at 26,314 sq. ft., and therefore the portion of developed area in the 'un-sold area of the project as on the date of OC obtained' falling to the portion of the land owner is stands at 7,894.23 sq. ft. (i.e., 30% of unsold area), on which you have failed to discharge the admissible GST. Further to the valuation of the services provided the agreement entered between the landowner and this RP i.e., 'Agreement for sale' of flats left unsold as on the date of OC dated 07.01.2018, is considered in terms of rule 28(1) of the CGST/KGST Rules, 2017, wherein the total value of the unsold flats are recorded at Rs. 23,93,96,540/- for the total unsold UDI area consisting of 26,314 sq. ft. along with saleable area of 87,371 sq. ft., and therefore the value for the unsold UDI area of 7,894.23 sq. ft. along with saleable area proportionately at 26,211.30 sq. ft., is arrived as....
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....taka 41,95,387 43,38,605 4,19,539 0 89,53,531 Total 83,90,774 86,77,210, 8,39,078 0 1,79,07,062 CW: Issue demand notice in DRC-07 accordingly. 7. It is an undisputed fact that pursuant to the said order, the aforesaid M/s. DivyaSree Projects has discharged the entire GST liability towards the entire property as evidenced from the intimation of voluntary payment in Form GST DRC-03 which is extracted hereunder: FORM GST DRC-03 [See rule 142(2) & 142(3)] Intimation of payment made voluntarily or made against the show cause notice (SCN) or statement 1 GSTIN 29AAGCD0372F1ZS 2 Name DIVYASREE R.O.W. PROJECTS PRIVATE LIMITED 3 Cause of Payment SCN 4 Section under which voluntary payment is made 73(8) 5 Details of show cause notice, if payment is made within 30 days of its issue Reference No: AD290523013422F Date of Issue 28/12/2023 6 Financial Year 2017-2019 7 Details of payment made including interest and penalty, if applicable (Amount in Rs.) Sr.No. Tax Period Act Place of Supply Tax/Cess Interest Penalty, if applicable Fee Others Total Ledger Utilised (Cash/credit) Debit entry no. Date of entry 1 JAN 2018-JAN 2018 CGST Karnat....