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TMI Blog2025 (5) TMI 633X X X X Extracts X X X X X X X X Extracts X X X X ..... orm GST DRC-07 (Annexure-P2 series) passed by the Assistant Commissioner of Assistant Commissioner of State Tax, Muzaffarpur (respondent no. 4) under Section 73 (9) of the Bihar Goods and Services Tax Act (hereinafter referred to as the 'GST Act'). 4. The respondent no. 4 has held the petitioner liable to pay a total amount of Rs. 4,61,72,628/- on account of the CGST/BGST and IGST to the tune of Rs. 2,37,59,706/-. The petitioner has been held liable to pay interest thereon at the rate of 1.5% per month i.e. Rs. 20017554/- and penalty of Rs.2,39,5368/-. Challenge to the Notifications 5. The petitioner has also challenged the Notification No. 09/2023 dated 31.03.2023 as contained in Annexure-P8 and the Notification No. 56 of 2023 dated 28.12.2003 present at Annexure-P9 to the writ application. By these two Notifications, the respondent no.2 has extended the time limit specified under sub-section (10) of Section 73 of the CGST Act for issuance of order under sub-section (9) of Section 73 of the GST Act for recovery of tax not paid or short paid or input tax credit wrongly availed or utilized upto 31st March, 2024 for the Financial Year 2018-19. 6. Mr. D.V. Pathy, learned senior co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nior counsel for the petitioner that the order, as contained in Annexure-P2 series, has been passed beyond the time limit set out in Section 73 (10) of the GST Act is liable to be rejected. This Court finds substance in the submission of learned SC-11 for the State that the impugned order has been passed within a period of three years from the last due date of filing of the return for the Financial Year 2018-19. Taxability of the Transaction of Execution of Development Agreement 12. Learned senior counsel for the petitioner has further argued that in case of a development agreement registered prior to coming into force of the GST laws with effect from 01.07.2017, the land stood transferred in favour of the builder. According to him, once the land stood transferred prior to 01.07.2017, the transaction under the development agreement would not fall within the purview of the CGST/BGST Act and the notifications issued thereunder. According to him, the development agreement was executed on 27.11.2014 and though the project was completed on 20.12.2018, the liability to pay tax in respect of such development agreement was notified under Notification No. 04/2019 dated 29.03.2019. 13. Le ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... receipt of consideration under development agreement which is liable to tax under the Act. A summary of show cause notice was also issued in Form GST DRC-01 quantifying the amount of tax, equivalent penalty and interest. 17. It is stated that the order dated 30.11.2023 and the summary of order in Form GST DRC-07 passed by the Assistant Commissioner of State Tax, Muzafarpur West under Section 73 (9) of the GST Act charging tax, interest and imposing penalty three fold the amount of tax payable. It is submitted that pursuant to the SCN, Order-in-Original has been passed by the concerned State GST authority. 18. On behalf of the State GST authority, a counter affidavit has been filed through the Deputy Commissioner, State Tax. On this point, it is stated that the petitioner is misleading this Court by claiming that liability to pay tax on supply of development rights was introduced through Notification No. 04/2019 dated 29.03.2019. The submission is that in fact, in the instant matter, it is the supply of construction services (SAC code 9954) by the petitioner that has been taxed and not the supply by way of transfer of development rights (SAC code 9972). The supply of construction ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... son to invoke the extraordinary jurisdiction under Article 226 of the Constitution of India took a view that there are alternative remedies available and the assessee has not been diligent in availing such alternate remedies within the stipulated time. Learned counsel has also relied upon the order of this Court in CWJC No.18168 of 2023 (M/S Radhika Packing and Printers vs. The State of Bihar and Others). Consideration 22. Having heard learned senior counsel for the petitioner, learned ASG for the CGST and CX assisted by Sr. Standing Counsel for CGST and CX and learned SC-11 for the State Tax Authorities, this Court finds that while assailing Annexure-P2 series to the writ application, the main contention of learned senior counsel for the petitioner is that the impugned order has been passed without consideration of the provisions of the Act, the rules made thereunder and also notification fixing the liability only in respect of the development agreement on or after 01.04.2019. The petitioner had also filed a review before the respondent no. 5 which stood rejected on the ground that there was no mistake of fact apparent on the record. 23. On facts, there is no dispute that the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... alienate their interest, in any manner as deemed fit by them to any person or persons, Association of persons, Firms, Body, Corporate, Cooperative Societies, Government's agencies, etc. on such terms and conditions as may be decided by the Developer or its nominee(s) individually or collectively." 24. It is evident upon a bare reading of the registered development agreement that the land owner has granted exclusive license to the developer to enter upon the said land and to take up and proceed with the development, planning and construction of the said building in terms of this agreement. In this regard, paragraph '9' of the development agreement may be referred to. 25. In this case the completion certification (Annexure-P/4) enclosed with the writ petition has been issued on 20.12.2018. The date of transfer of the owners' share in the project has not been disclosed in the writ petition. 26. We find it important to take note of the observations of the Hon'ble Supreme Court in the case of Super Poly Fabriks Limited vs Commissioner of Central Excise, Punjab reported in (2008) 11 SCC 398, wherein Their Lordships have held as under:- "There cannot be any doubt whatsoever that a do ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e issues involved in the case, the Hon'ble Supreme Court has discussed the relevant provisions of the transfer of property Act (Section 53A-Part performance), the definition of the word "transfer" in clause (47) of Section 2 and the "Capital gain" under Section 45 of the Income Tax Act. Paragraph '25' and '26' of the judgment reads as under:- "25. The object of Section 2 (47) (vi) appears to be to bring within the tax net a de facto transfer of any immovable property. The expression "enabling the enjoyment of" takes colour from the earlier expression "transferring", so that it is clear that any transaction which enables the enjoyment of immovable property must be enjoyment as a purported owner thereof.1 The idea is to bring within the tax net, transactions, where, though title may not be transferred in law, there is, in substance, a transfer of title in fact. 26. A reading of the JDA in the present case would show that the owner continues to be the owner throughout the agreement, and has at no stage purported to transfer rights akin to ownership to the developer. At the highest, possession alone is given under the agreement, and that too for a specific purpose-the purpose being ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orised 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; (c) ............ (d) ............ (e) ............. (f) ............. 35. The petitioner has not controverted the submission of the State that vide notification no.11/2017 dated 28.06.2017, construction of a complex, civil structure etc. intended for sale to a buyer was made exigible to GST except where the entire consideration has been received after issuance of completion certificate or after its first occupancy, whichever is earlier. In this case, it has been specifically pleaded by the State-respondent that the consideration had ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... duction of the GST but by virtue of notification No. 04/2018, the liability to pay Central tax shall arise only on the consideration received in form of construction services. 39. At this stage, we reproduce the Notification No.11 of 2017-Central Tax (Rate) dated 28.06.2017, Notification No. 4 of 2018-Central Tax (Rate) dated 25.01.2018 and Notification No. 4 of 2019-Central Tax (Rate) dated 29.03.2019 hereunder for a ready reference:- [TO BE PUBLISHED IN THE GAZZETE OF INDIA, EXTRAORDINARY, PART II SECTION 3, SUB-SECTION (1)] Government of India Ministry of Finance (Department of Revenue) Notification No. 11/2017-Central Tax (Rate) New Delhi, the 28th June, 2017 G.S.R......(E). In exercise of the powers conferred by subsection (1) of section 9, sub-section (1) of section 11, sub-section (5) of section 15 and sub-section (1) of section 16 of the Central Goods and Services Tax Act, 2017 (12 of 2017), the Central Government, on the recommendations of the Council, and on being satisfied that it is necessary in the public interest so to do, hereby notifies that the central tax, on the intra-State supply of services of description as specified in column (3) of the Table below ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... form of development rights referred to in clause (b) above, shall arise at the time when the said developer, builder, construction company or any other registered person, as the case may be, transfers possession or the right in the constructed complex, building or civil structure, to the person supplying the development rights by entering into a conveyance deed or similar instrument (for example allotment letter). [F. No.354/13/2018-TRU] (Ruchi Bisht) Under Secretary to the Government of India (underline is mine) (TO BE PUBLISHED IN THE GAZZETE OF INDIA, EXTRAORDINARY, PART II, SECTION3, SUB-SECTION (i)] Government of India Ministry of Finance (Department of Revenue) Notification No. 04/2019-Central Tax (Rate) New Delhi, the 29 March, 2019 G.S.R (E). In exercise of the powers conferred by sub-section (1) of section 11 of the Central Goods and Services Tax Act, 2017 (12 of 2017), the Central Government, on being satisfied that it is necessary in the public interest so to do, on the recommendations of the Council, hereby makes the following further amendments in the notification of the Government of India, in the Ministry of Finance (Department of Revenue), No. 12/2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... x payable in terms of the first proviso hereinabove shall not exceed 0.5 per cent of the value in case of affordable residential apartments and 2.5 per cent. of the value in case of residential apartments other than affordable residential apartments remaining un-booked on the date of issuance of completion certificate or first occupation. The liability to pay central tax on the said portion of the development rights or FSI, or both, calculated as above, shall arise on the date of completion or first occupation of the project, as the case may be, whichever is earlier. 41B Heading 9972 Upfront amount (called as premium, salami, cost, price, development charges or by any other name) payable in respect of service by way of granting of long term lease of thirty years, or more, on or after 01.04.2019, construction for of residential apartments by a promoter in a project, intended for sale to a buyer, wholly or partly, except where the entire consideration has been received after issuance of completion certificate, required, where the by competent authority or after its first occupation, whichever is earlier. The amount of GST exemption available for construction of residential apart ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... buyers nearest to the date on which such development rights or FSI is transferred to the promoter. 1B. Value of portion of residential or commercial apartments remaining un-booked on the date of issuance of completion certificate or first occupation, as the case may be, shall be deemed to be equal to the value of similar apartments charged by the promoter nearest to the date of issuance of completion certificate or first occupation, as the case may be." (iv) in paragraph 3 relating to Explanation, after clause (iv), the following clause shall be inserted, namely: - "(v) The term "apartment" shall have the same meaning as assigned to it in clause (e) under section 2 of the Real Estate (Regulation and Development) Act, 2016 (16 of 2017). vi) The term "affordable residential apartment" shall have the same meaning as assigned to it in de notification No. 11/2017-Central Tax (Rate), published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (1) dated 28th June, 2017 vide GSR number 690(E) dated 28 June, 2017, as amended. (vii) The term "promoter" shall have the same meaning as assigned to it in clause (zk) under section 2 of the Real Estate (Regulation a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... occupancy, whichever is earlier. There would be no ambiguity in the above-mentioned notifications. Reliance placed by learned senior counsel for the petitioner on the judgment of Hon'ble Supreme Court in the case of M/S Govind Saran Ganga Saran (supra) seems to be misplaced. We reproduce paragraph '6' of the said judgment hereunder:- "6. The components which enter into the concept of a tax are well known. The first is the character of the imposition known by its nature which prescribes the taxable event attracting the levy, the second is a clear indication of the person on whom the levy is imposed and who is obliged to pay the tax, the third is the rate at which the tax is imposed, and the fourth is the measure or value to which the rate will be applied for computing the tax liability. If those components are not clearly and definitely ascertainable, it is difficult to say that the levy exists in point of law. Any uncertainty or vagueness in the legislative scheme defining any of those components of the levy will be fatal to its validity." 41. In our opinion, all the essential components of tax which have been noticed by Hon'ble Supreme Court are present in this case. 42. In t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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