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2021 (4) TMI 184 - HC - GSTAccrual of GST liability - agreement for the sale of flats in a project being undertaken by Shanklesha Constructions - when is the ‘date of receipt of payment’ where no tax invoice is issued under Section 31? - HELD THAT:- Explanation (ii) of section 13 of GST Act tells that the date of receipt of payment is the earlier of (i) the date on which the payment is entered in the books of account of the supplier or (ii) the date on which the payment is credited to the supplier’s bank account - the entire amount of ₹ 15 crores was paid between January and June 2015, before the GST Act came into force on 8th July 2017. Saifee Developers exercised its option on 14th June 2018, just under a year after the GST Act became operative. In 2018, 25 agreements for sale were executed, and 10 of these were registered. These are said to account for ₹ 3 crores from the ₹ 15 crores, and Saifee Developers has paid ₹ 35,50,200/-. Now that Saifee Developers has exercised its options to buy flats, and Shanklesha Constructions has agreed to ‘supply’ these, is not Shanklesha Constructions liable to pay GST on the balance, and is this not recoverable from Saifee Developers? - Saifee Developers’ construct is actually self-defeating. It accepts that on 14th June 2018 it opted to treat the entire amount as a purchase price. The wrangle is about the number of flats. That is immaterial for my purposes. Whether it is one huge flat or a hundred smaller flats will make no difference to the applicability of GST or to the concept of ‘time of supply of services’ under Section 13. Once the nature of the transaction is determined, then the Section begins to operate. Notably, Section 13(2) uses ‘earliest’ not once, but twice. The first time is in the main sub-section (2). It is repeated in Explanation (ii). The emphasis, therefore, is clearly to peg the ‘time of supply of services’ to the logically earliest possible date: when the service was provided or when the payment was received in Section 13(2)(b); and, if a question of date of payment arises, then the earlier of the entry in the books of account or date of receipt of payment - Shanklesha Constructions’ entry in its books is after the date of receipt of payment. The earlier of the two must apply. It is nobody’s case that the GST regime will be reckoned back to a time when it did not exist. Hence, logically, if the payment was already in received in Shanklesha Constructions’ account on the date the GST Act came into force, that must be the date taken for the ‘time of supply of services’. Saifee Developers had absolutely no justification in not paying the remaining GST and interest. It is unclear whether it has even paid the stamp duty on the MoU/Agreement as yet. It cannot be in default and yet continue to squat on a protective ad-interim order granted in exercise of equitable and discretionary jurisdiction - the Review Petition, being entirely without merit, is dismissed.
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