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2023 (5) TMI 169 - HC - GSTAlleged short payment of output tax qua supply of construction services - supply of construction services involving the transfer of property in land or undivided interest in land - Applicability of N/N. 11/2017-Central Tax (Rate) dated 28.06.2017 - assessing authority concludes that the Notification does not permit distinguishing of sale of land and supply of construction services and in cases of composite construction, a 70 30 formula is liable to be adopted. HELD THAT - The Notification dated 28.06.2017 would be applicable only in cases where the assessee is unable to supply the bifurcation of the construction as relatable to construction services or sale of land - The methodology set out under the Notification as relatable to construction services, is for bifurcation of the total consideration by way of a deeming fiction, to arrive at the deemed amount attributable to construction services and land costs. The deeming fiction would not apply in cases where the assessee is in a position to supply the actual amount of the consideration received towards construction services and land cost. In the present case, it is its consistent stand that such evidences are available with it, though, as learned Standing Counsel points out, such particulars do not appear to have been actually produced before the authority. The officer could well have sought such particulars instead of proceeding on the basis that the Notification would be applicable in all cases of property development as he has done - in an event where the officer is of the view that the attribution adopted by an assessee is unsupported by hard evidences or the documents produced do not satisfies him that the attribution has been made in an appropriate manner commensurate with business practices and costs in that particular area, he is alway at liberty to seek more particulars or to apply the deeming fiction as per the Notification, rejecting the attribution made by the assessee. However, pending writ petitions, returns have been filed by the petitioners and my attention is thus drawn to Notification No.6 of 2023 dated 31.03.2023, which is a beneficial notification providing that if returns were filed on or before 30.06.2023, orders of assessment passed under Section 62(1) shall be deemed to have been withdrawn - Petition allowed.
Issues involved:
The judgment involves issues related to the interpretation and application of the provisions of the Tamil Nadu Goods and Services Tax Act, 2017, specifically concerning the valuation of supply of construction services and works contracts in relation to land, as well as the eligibility of Input Tax Credit (ITC) and the implications of non-payment of consideration for supplies received within a specified period. Issue 1: Valuation of supply of construction services: The assessing authority issued show-cause notices to the petitioner for alleged short payment of output tax on the supply of construction services, citing Notification 11/2017-Central Tax (Rate) dated 28.06.2017. The authority contended that the value of land or undivided share of land should be deemed to be the development charges in cases of supply of construction services involving the transfer of property in land. The petitioner argued that the levy of GST based on a 70:30 proportion of the total value of construction is unlawful and double taxation, as stamp duty is already paid on the actual sale consideration of land. The petitioner emphasized the independence of the sale of land and supply of construction services, presenting sample agreements to support their position. Issue 2: Input Tax Credit (ITC) eligibility: The petitioner raised concerns regarding the claim of ineligible ITC not reflected in the auto-populated statement of monthly inward receipts in form GSTR2A. They explained that discrepancies in ITC were due to some vendors not filing GSTR1 and others filing quarterly, leading to reconciliation differences on a monthly basis. The petitioner assured that efforts were made to follow up with suppliers to rectify the ITC discrepancies. Issue 3: ITC ineligibility due to non-payment of consideration within 180 days: Acknowledging delays in payment to suppliers beyond 180 days from the date of invoice, the petitioner agreed to pay interest as per the annexure. This issue pertains to the non-payment of consideration for supplies received within the stipulated period, impacting the eligibility of ITC. Judgment Summary: The judgment scrutinized the application of the Notification dated 28.06.2017 concerning the valuation of construction services and works contracts involving land transfers. The court highlighted that the deeming fiction provided in the Notification applies when the assessee is unable to supply the bifurcation of construction and land costs. It emphasized that the deeming fiction does not automatically apply to all property development cases, especially when the assessee can provide actual evidence of the consideration received for construction services and land. The court emphasized the authority's responsibility to seek further particulars if the assessee's attribution lacks supporting evidence, rather than solely relying on the deeming fiction formula for assessment. Furthermore, the judgment set aside assessments in specific writ petitions, noting that the petitioner had filed returns post-assessment, leading to the withdrawal of certain orders under a beneficial notification. The court directed the petitioner to appear before the respondent with all relevant records for reassessment within a specified timeframe, ensuring compliance with the law. This comprehensive summary outlines the issues, arguments, and the court's analysis and decisions regarding the valuation of construction services, ITC eligibility, and non-payment implications within the context of the Tamil Nadu Goods and Services Tax Act, 2017.
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