Others-Judicial Pronouncement 

Hon’ble Supreme Court , in the case of Commissioner of Customs Vs Indo Rubber and plastic works- The department challenged the TRIBUNAL order. However, the Apex Court has dismissed the appeal.

The hon’ble Tribunal held that mere making of marketing, advertising; sponsorship and promotional expenses/payments by the appellant in consultation with the foreign seller did not attract provisions of Rule 10(1) (e). Moreover, the activity of marketing, advertising, sponsorship and sales promotion was a post-import activity and expenses/payments were incurred by the appellant on its own account and not for discharge of any obligation of the seller under terms of sale and the appellant had not paid any amount on behalf of the seller. Therefore, it was held that such expenses/payments made by the appellant to promote brand was not a condition of sale and, hence, same were not liable to be included in the value of imported goods in terms of Rule 10(1)(e). 

Hon’ble Telangana High Court in the case of Sathyam Shivam papers Ltd Vs. Asst.Commissioner St and 4 Others WP.No.9688/2020( 2022- June-4)

There was no material before the 2nd respondent to come to the conclusion that there was evasion of tax by the petitioner mererly on account of lapsing of time mentioned in the e-way bill because even the 2nd respondent does not say that there was any evidence of attempt to sell the goods to somebody else on

06.01.2020' On account of non-extension of the validity of the e-way bill by petitioner or the auto trolley driver' no presumption can be drawn that there was an intention to evade tax'

As per Hon'ble Court ,Opinion there has been a blatant abuse of power to the 2nd respondent in collecting from the petitioner tax and penalty both under CGST and SGST and compelling the petitioner to pay Rs.69,000/- by such conduct.

we deprecate the conduct of 2nd respondent in not even adverting to the response given by petitioner to the form gst mov-07 in form gst mov - 09' and his deliberate intention to treat the validity of the expiry on the e-way bill as amounting to evasion of tax without any evidence of such evasion of tax by the petitioner. and 

The 2nd respondent shall also pay costs of Rs. 10,000/- to the petitioner in 4 weeks.”

Hon’ble Madaras High Court in the case of KJK Poly Diamonds International P Ltd. W.P. No.4485 of 2023 and W.M.P. No.4507 of 2023)

Petition filed under Article 226 of the Constitution of India praying to issue a writ of Certiorari calling for the records of the first respondent Proceedings in TIN/33410461489/2023/A3 dated 30.01.2023 and quash the same being illegal, invalid, without jurisdiction and violated the principles of natural justice and contrary to the law.

it is clear that only for some of the assessment years, assessment orders were passed by the first respondent. However, as seen from the impugned proceedings dated 30.01.2023, wherein the first respondent has communicated the second respondent Bank to withhold the amount to the extent of Rs.69,70,561/-, available in the petitioner's account and pay the same to the office of the first respondent, pertaining to the assessment years 2006-07 to 2016-17, without passing the assessment orders with respect to some of the assessment years, the first respondent has attached the funds, belonging to the petitioner, which is lying with the Bank account, maintained with the second respondent Bank. 

Unless and until the assessment orders are passed in respect of all the assessment years, for which the attachment order has been passed, which is the subject matter of challenge in this writ petition, the first respondent cannot exercise its power under Section 45 of the Tamil Nadu Value Added Tax Act, 2006 to enforce the sums alleged to be due and payable by the petitioner towards tax liability. If at all, the first respondent can take coercive steps against the petitioner under Section 45 of the TNVAT Act only in respect of the assessment years, where the assessment orders are passed. 

But being a single proceeding dated 30.01.2023, covering all the assessment years right from 2006-07 to 2016-17, it/the proceeding has to be declared as invalid as in respect of some of the assessment years, mentioned in the impugned proceeding dated 30.01.2023, no assessment orders were passed by the first respondent prior to the issuance of the impugned proceedings.

Accordingly, the impugned proceedings dated 30.01.2023, issued by the first respondent is hereby quashed and the writ petition is allowed.

Posted on: 18/03/2023

The Hon’ble Telangana High Court in the case of M/s. Prahitha Constructions Private Limited v. Union of India and Ors. [Writ Petition No. 5493 of 2020 dated February 09, 2024] dismissed the writ petition and held that transfer of development rights would be considered as service and is, therefore, subject to levy of GST.

Facts:

M/s. Prahitha Constructions Private Limited (“the Petitioner”) is engaged in the business of conceptualizing, planning, constructing and developing commercial real-estate projects. The Petitioner entered into a Joint Development Agreement (“JDA”) with the land owners for the development of land by constructing towers in the first phase with common facilities.

The Petitioner has filed a writ petition for declaring that the transfer of development rights of land owner to the Petitioner by way of JDA should be treated as sale of land by the land owners and hence the execution of JDA should not be subject to levy of GST. The Petitioner also prayed for declaring Notification No. 4 of 2018-Central Tax (Rate) dated January 25, 2018 (“the Impugned Notification”) as amended by Notification No. 23 of 2019 dated September 30, 2019, imposing GST on transfer of development rights of land by the land owners under JDA is ultra vires to the Constitution of India.

The Petitioner contended that, the execution of JDA is almost like sale of the land which is developed by the Petitioner. The Petitioner further contended that, the Revenue Department (“the Respondent”) cannot compel the Petitioner to pay GST by treating JDA as a transaction of sale of the land.

Issue:

Whether the transfer of development rights would be considered as service under GST Law?

Held:

The Hon’ble Telangana High Court in Writ Petition No. 5493 of 2020 held as under:

• Noted that, the JDA comprises of two parts i.e. one is the agreement between the landowner and the Petitioner and other is supply of construction services by the Petitioner to the land owner and thereafter, the sale of constructed area to third-party buyers.

• Further Noted that, there is no automatic transfer of ownership to the Petitioner at the time of execution of JDA. The Petitioner gets the right on the developed property only after the completion of the project and issuance of completion certificate, the Petitioner derives the right to sell the area of property, which is allotted to him for the realization of the amount of money invested in the course of execution of JDA.

• Further Noted that, under no circumstance, does the execution of JDA or transfer of development rights indicate an automatic transfer of ownership or title rights over any portion of land belonging to the landowner in favour of the Petitioner.

• Opined that, the services rendered by the Petitioner in the execution of JDA were supplied prior to issuance of JDA and therefore, would fall within the purview of GST.

• Further Opined that, the aforesaid supply would attract GST as the said supply would fall within the purview of construction services as per Entry 5(b) of Schedule II of the Central Goods and Services Tax Act (“the CGST Act”).

• Further Opined that, the services rendered by the Petitioner the transfer of development rights cannot be brought within the purview of Entry 5 of Schedule-III of the CGST Act.

• Further Opined that, the challenge to the Impugned Notification is devoid of merits

• Held that, the grounds raised by the Petitioner are not sustainable and the writ petition is devoid of merit. Hence, the writ petition is dismissed.

Relevant Provisions:

Entry 5(b) of Schedule II of the CGST Act:

“Activities or Transactions to be treated as supply of goods or supply of services

5. Supply of services

The following shall be treated as supply of services, namely:-

(a) renting of immovable property;

(b) construction of a 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 certificate, 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;”

Entry 5 of Schedule III of the CGST Act:

“Activities or Transactions which shall be treated neither as a supply of goods nor a supply of services

5. Sale of land and, subject to clause (b) of paragraph 5 of Schedule II, sale of building.”

Posted on: 03/03/2024