TaxTMI 
TaxTMI 
2025 (8) TMI 64
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....ms fit under the circumstances of the case in the interest of 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 ....
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....s of development are coupled with transfer of interest in the lands. There after 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. ....
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....hereon of CGST Rs. 5,99,41,071/- and KGST Rs. 5,99,41,071/- as per the provisions of section 50(1) of the KGST Act and the Rules made thereunder; iii) the penalty CGST Rs. 58,43,614/-, and 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....
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.... months from the date of communication of this derision or order. The appeal shall enclose a certified copy of the order, and any other relevant documents. • In terms of Sec 107(6), no appeal shall be filed under Sec 107(1) unless the appellant has paid (a) in full, such part of the amount of tax,, interest, fine, fee 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....
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....certained tax dues, Hence, a show-cause notice was issued to the RP requiring him to show cause as to why he should not pay the amount specified in the Audit findings as cited above under ref. no.6, and the verb-trite of the 'Brief facts of the case' and 'Grounds of the case' of the show cause notice issued are reproduced as under; "...... Hence the present Show Cause Notice for the following reasons. The taxpayer has purchased UDI for unsold units post receipt of Occupancy certificate from 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 a....
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....tion service in the capacity of contractor and the occupancy certificate is irrelevant for contractor to determine the applicability of GST. In order to avoid GST on construction service the arrangement mentioned in agreement dated 07/01/2018 is entered to represent the contractor as a developer and claiming the entire consideration received after the date of occupancy certificate as a sale of Immovable property. It is also observed that, during verification of sample sale deeds entered into with the customers there is no clarity about the consideration 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,....
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....ction 50 of the KGST Act and the Rules made thereunder, should not be demanded and recovered; At the outset, we would like to inform you that we have not evaded any taxes and have been regularly and timely paying all the applicable duties as well as availing eligible ITC. In continuation of our earlier reply dated 04.07.2023; with respect to the Show Cause dated 09.06.2023, our submissions in response to the same are as below,: BRIEF FACTUAL BACKGROUND LEADING UP TO THE ISSUANCE OF THIS SCN: 1. The Noticee and M/s. Shyamaraju & Co (India) Private Limited (hereinafter referred to as "the landowner/SCPL") had decided to build residential high rise apartments in the consolidated 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....
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....(Tower-A & B), and Block R4 (Tower-H, J, K, L, M & N) and upon completion of construction, the noticee along with the landowner approached the concerned authorities and obtained the Occupancy Certificate (partial) (hereinafter referred to as "OC") dated 06.01.2018, bearing number BBMP/Addl.Dir/JD NORTH/107/2010-11 from the BBMP. A copy of the OC obtained is annexed herewith and marked as DOCUMENT-4. 7. Followed with obtaining the OC the landowner with an intent to easement and to effective transfer of title to the residential units to the ultimate purchasers has entered into an 'Agreement for Sale' (hereinafter referred to as "AoS") with the noticee dated 07.01.2018 and transferred the right of ownership to the noticee of residential 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 A....
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....d Interest of land by the SCPL to the Noticee. ii. No interest is leviable DETAILED SUBMISSIONS 12. At the outset and without prejudice to the following submissions, the Noticee submits that the SCN is merely a reiteration of DRC-01A and has been issued without any fresh application of mind and without considering the submissions made by the Noticee. Further, the SCN lacks necessary justification and does not have sufficient reasons to allege tax demand proposed against the Noticee. Hence, the SCN is liable to be dropped on this ground alone. A. THAT THE SCN HAS BEEN ISSUED WITHOUT CONSIDERING THE DOCUMENTS PLACED ON RECORD BY THE NOTICEE. A.1. That in the present case, your good authority has issued the SCN without giving due consideration to documents placed on record by the Noticee and submissions made by the Noticee 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 ....
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....ble in the record of the adjudicating officer he was duty bound to look into these evidences before giving any finding in this regard. On the contrary, in the impugned order. he stated that these were not the documents relied upon by the department while issuing the show cause notice and these documents were not looked into. This non-examination is a clear violation of the order of the Tribunal by way of remand wherein it was specifically stated that the appellants should be given an opportunity to produce any such evidence. This not only is an evidence produced by the appellant but is an evidence available with the department itself. Therefore non-consideration of this evidence is violating the principles of natural justice. In any case, the directions of the Tribunal in this regard has not been carried out." A.6. Thus, the SCN issued without considering the submissions made by the Noticee and by 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-refe....
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....ould not be proper to cull out a sentence here or a subclause there and read the same in isolation. What is required is not a fragmentary examination in ports but an overall view and understanding of the whole. Again, it is the substance of the documents constituting the contract, and not merely the Form which has to be looked into. 30. The real intention of the contracting parties is primarily to be sought within the four corners of the documents containing Standard and Special Conditions of the Contract...... In M/s. Hindustan Shipyard v. State of Andhra Pradesh, AIR 2000 SC 2411, the Apex Court has also emphasized the need of looking into the substance and not merely the factum of the contract. The Court observed also stated that the terms and conditions of the contract should be read as a whole. The Hon'ble Supreme Court in the case of Super Poly Fabriks Ltd. v. Commissioner Of C.Ex., Punjab 2008 (10) S.T.R. 545 (S. C.), held: "8. There cannot be any 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 condi....
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....nce, and the applicable law: (a) The Noticee is not the provider of construction services to SCPL: B.11. It is submitted that the construction services provided by Noticee are a taxable supply and the same is determined on the basis of the following definitions of "supplier", scope of supply, and "taxable supply": 7. Scope of supply- (1) For the purposes of this Act, the expression "supply" Includes- (a) all forms of supply of goods or services or both such as sale, transfer, barter, exchange, licence, rental, lease or disposal made or agreed to be made for a consideration by a person in the course or furtherance of business; Section 2. (108) "taxable supply" means a supply of goods or servicers or both which is leviable to tax under this Act; Section 2. (105) "supplier" in relation to any goods or services or both, shall mean the person supplying the said goods or services or both and shall include an agent acting as such on behalf of such supplier in relation to the goods or services or both supplied. B.12. To determine, who is the recipient of Noticee's construction services is Section 2 (31) and Section....
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....e the recipient of DRPPL's services, not the SCPL. B.15. It is also further submitted that since the recipient of the Noticee's services is the apartment purchasers and not the SCPL, this is also not the case of supply between related parties. (b) The GST on the construction services provided by Divyasree has already suffered taxed in the hands of Divyasree B.16. It is further submitted in the case of construction services, the recipient ought to bear the burden of tax and the supplier must collect the same and deposit it to the Government. In the instant case, the apartment purchasers being the recipients of the construction service have paid the applicable GST as per law to the Noticee for the construction services provided by it and the same has been deposited to the Government as required under law. The question of taxing the construction services again does not arise at all, and would also amount to double taxation. Therefore, the demand of CGST/KGST from the Noticee is unsustainable. B.17. In this regard, reliance is placed on the case of Triton Communication Pvt. Ltd., v. C.S.T. 2022 (11) TMI-CESTAT AHMEDABAD, wherein the Hon'b....
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....ery of any interest does not arise. Reliance in this regard is placed on the judgment of Pratibha Processors vs. Union of India [1996-VIL-22-SC-CU] wherein it was held that interest is compensatory in character and is imposed on an assessee who has withheld payment of any tax as and when it is due and payable. The levy of interest is geared to actual amount of tax withheld. This is a basic principle that where the amount of duty payable is nil, interest payable is also nil. Interest has no independent or separate existence. Consequently, the levy of interest under section 50 of the Act is untenable. Relevant part of the decision is extracted below: 13. in fiscal Statutes, the import of the words "tax", "interest", "penalty", etc. are well known. They are different concepts, tax is the amount payable as a result of the charging provision. It is a compulsory exaction of money by a public authority for public purposes, the payment of which is enforced by law. Penalty is ordinarily levied on an assessee for some contumacious conduct or for a deliberate violation of the provisions of the particular statute. Interest is compensatory in character and is imposed on an assessee who....
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....es preferred to the show cause notice by the Taxable Person is closely examined, and the following complies are made to complete the proceedings in accordance with provisos of the IGST/KGST/CGST Act, 2017, as under; Para No. 1: Non-Payment of GST on construction services provided to Landowner: - On scrutiny of the audit records it is observed that during the return periods falling in the year 2018-19 the RP is in the business of property development namely construction of residential apartments, and during the above return periods you are engaged in a project named 'Republic of Whitefield' at Kundalahalli Vilalge, K R Puram Hobli, Bangalore East Taluk, Bengaluru, being constructed by the Developer (i.e., RP) on the Schedule A Property comprises of 4 blocks, viz., Block R1, Block R2 and Block R3 consisting of 2BF+GF+14UF (inclusive of clubhouse in Block R3), and Block R4 consisting of 2BF+GF+19UF, along with car parking spaces, roads, internal driveways, Common Areas and Amenities and the Clubhouse. From the available Audit records it is observed that the project 'Republic of Whitefield' is a Joint development project comprising of 1,448 nu....
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.... Sl.No. Particulars Area (Sg. Ft.) 1 The total area of the Development of the Project (A) 68,391 2 Area sold in the project developed (B) 42,077 3 Un-sold area in the project developed (C) (A-B) 26,314 % of Un-sold area in the project developed 38.48 Therefore as OC is obtained; it is deemed to be treated as Construction is completed, and thereby the possession or right in the property of the flats pertaining to the land owners in respect of the Republic of Whitefield was deemed to be transferred to the land owner by way of conveyance deed i.e., OC and the Project is completed in the return period of January'2018, also there are 1st occupations in the projects by way of units sold. On verification of the details provided by the RP it is observed that the RP is engaged in development of land into residential high rise apartments under the scheme of Joint Development Agreement with Landowners. As per the Joint Development Agreement entered with M/s. Shyamaraju & Co (India) Private Limited for developing the property measuring 11 acre 31.5 guntas in Kundalahalli Village, KR Puram Hobli, Bengaluru. It is agreed in....
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....re agreed to be constructed by the developer, rendering "Construction Residential Complex Service" and given to the land owners in lieu of the development rights transferred to the developer, is a non-monetary consideration, were transferred to the land owners by way of entering into joint development agreement entered by and between this Registered Person and the Land owners. Thus, the land owners became entitled to sell, mortgage, gift, lease or otherwise dispose of the same or any part thereof, along with their undivided share in the land along with proportionate car parking area, by virtue of the Agreement entered, and upon conferring the Certificate of occupancy to the Constructions by BBMP, on 06.01.2018. Therefore the actual right over the property i.e. the flats that were left unsold was effectively transferred on completion of construction i.e., on 06.01.2018 (partial OC obtained) in respect of project "Republic of Whitefield". It can be seen from the above referred Joint Development Agreement that the apartments agreed to be constructed and given to the landowners in lieu of the development rights in land transferred to M/s. DivyaSree R.O.W. Projects Pri....
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....into a conveyance deed or similar instrument (for example allotment letter)." Thus, the Services namely construction services rendered by this Registered Person are the activities that have been specified in Section 7 of the CGST/KGST Act, 2017. When such activities are carried out by one person for another in the taxable territory for a consideration then such activities are taxable services. Whereas from the above discussion and the given facts in the case, it appeared that works contract service is being provided by the builder/developer to the landowner. The developer receives consideration for the construction service provided by him, from landowner: in the form of development rights in "scheduled property"; and from other buyers: normally in cash. Thus construction of residential complex service provided by the developer in respect of construction of residential flats is taxable in case any part of the payment/development rights of the land was received by the developer before the issuance of completion certificate and the Goods and Service tax would be required to be paid by builder/developers even for the flats given to the land owner. Fu....
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....o the portion of landowner is subjected to tax the ITC as is attributed at Rs.45,36,640/- (i.e., 30% Rs. 1,51,22,135/-) is to be adjusted with the liability, also furnished the details of ITC subjected to reversal on completion of project relating to Phase-1 of the ROW project. Which the submission of the RP is examined carefully, and found in order, hence, the tax payment made by way of ITC reversal on the portion of construction services provided by this tax payer to the landowner is considered, and allowed set off as under. In view of the above facts/findings/discussions, the construction services provided by this RP is subjected to admissible GST and quantified the tax liability as below, and further subjected to interest liability in terms of Section 50(1) of the CGST/KGST Act, 2017, and incorporated as below; Abstract: Particulars IGST CGST KGST Output GST payable on Construction services provided to Land owner at Rs.7,18,18,962/- 0 64,63,707 64,63,707 Less: Discharged by way of ITC reversal 0 22,68,320 22,68,320 Balance to be payable 0 41,95,387 41,95,387 Add: Interest U/s. 50(1) of the Act 0 44,21,36....
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....07 Adjdn Order issued by DCCT 4.1 8. The aforesaid facts and circumstances are sufficient to come to the conclusion that the adjudication order dated 28.12.2023 was passed against the registered person i.e., Developer - M/s. DivyaSree Projects pursuant to which the said person discharged the entire GST liability in relation to the entire property including the 30% share of the petitioner under the Joint Development Agreement dated 06.02.2017 and consequently, the question of there being double taxation i.e., payment being made by the aforesaid M/s. DivyaSree Projects and once again payment being demanded from the petitioner would not arise in the facts and circumstances of the instant case and the impugned order deserves to be quashed. 9. In so far as the contention of the learned Additional Government Advocate and the finding recorded by the respondent No. 1 that the Joint Development Agreement dated 06.02.2017 being unregistered cannot be made the basis to exempt the petitioner from payment of GST is concerned, as stated supra, prior to the impugned order, Deputy Commissioner of Commercial Taxes, (Audit)-4.1, DGSTO-4, Bengaluru has already recognized, accepted and acted upo....