I
High Court
1. [2018-TIOL-24-HC-MUM-GST]
Builders Association of Navi Mumbai vs. Union of India.
Writ Petition No. 12194 of
2017 dated 28th March, 2018
One time lease premium is
liable for GST
Facts
The Appellants are
builders/developers, constructing residential and commercial properties. The
projects are undertaken after the City Industrial and Development Corporation
of Maharashtra Ltd. (CIDCO) exercises the statutory function of town planning etc.
under the MRTP Act, 1966. CIDCO invites offers from entities to acquire on
lease residential cum-commercial plots allotted on long-term lease of 60 years.
One such plot of land was allotted to the Appellants and in addition to the
one-time lease premium, GST on the said amount was demanded separately and the
same is challenged. It was argued that the long-term lease of 60 years
tantamounts to sale of the immovable property, since the lessor is deprived of
the right to use, enjoy and possess the property and therefore section 7 of the
CGST Act has no application. Further, CIDCO discharges a Government/statutory
function and therefore should not be liable for GST. On the other hand, the
department argued that the law does not make any distinction between governmental
and non-governmental agencies and CIDCO cannot be treated as Government.
Held
The Hon’ble High Court
referred to section 7 of the CGST Act defining the term ‘supply’ and noted that
the definition includes activities specified in Schedule I made or agreed to be
made without consideration and activities to be treated as supply of goods or
services specified in Schedule II would be included in the definition of
supply. Section 7(1) of the Act includes all forms of supply of goods or
services or both such as sale, transfer, barter, exchange, license, rental,
lease or disposal made or agreed to be made for a consideration by a person in
the course or furtherance of business. It was observed that CIDCO is a person and in the course
or in furtherance of its business, it disposes of lands by leasing them out for
a consideration styled as one-time premium. Therefore, considering Schedule II,
section 7, Item No. 2 styled as land
and building and any lease,
tenancy, license to occupy land is a supply of service. It is a settled law
that the provisions have to be read together and harmoniously to understand the
nature of levy. It was noted that once the law and the schedule treats the
activity as supply of goods or supply of services, particularly in relation to
land and building and includes a lease, then, the consideration therefor as a
premium/one-time premium is a measure on which the tax is levied, assessed and
recovered. Accordingly, GST on one time premium is upheld.
2. [2018-TIOL-23-HC-MUM-GST]
JCB India Ltd. vs. Union of India dated March 19 & 20, 2018
Clause (iv) of section
140(3) prescribing a time limit of twelve months on stocks prior to which
credit cannot be availed is not arbitrary or unreasonable
Facts
The petitioner challenges
the validity of the time period mentioned in clause (iv) of section 140(3) of
the CGST Act. The said section allows a registered dealer to avail input tax
credit of goods held in stock as on 01.07.2017 and clause(iv) of the said
section provides that such credit can be availed only when goods are purchased
after 30.06.2016. It was argued that a person who is not in possession of a
duty paying document e.g. a trader is also eligible to avail input tax credit
on a presumptive basis, but the petitioner who is in possession of all the duty
paid documents is barred from availing CENVAT credit where the invoice is
issued on or prior to 30.06.2016. This is unreasonable and results in
inequality. The ineligibility of such credit results in cascading effect of tax
and violates the mandate of Article 14 of the Constitution of India. On the
basis thereof, the present petition is filed.
Held
The Court noted that CENVAT
credit is a mere concession and it cannot be claimed as a matter of right.
Under the existing law as well there are conditions stipulated in Rule 4(7) of
the CENVAT Credit Rules, 2004 for availment of CENVAT credit. if right to
availment of CENVAT credit itself is conditional and not restricted or
absolute, then, the right to pass on that credit cannot be claimed in absolute
terms. Thus, there is no promise which was absolute and unconditional which was
breached by the executive or the State. Therefore, the impugned condition
mentioned in the transition provision does not defeat any accrued or vested
right and is accordingly not arbitrary or unreasonable. Accordingly, the
petition is dismissed.
3. [2018] 91 taxmann.com
282 (Kerala) Ascics Trading Company vs. Assistant State Tax Officer
Detention on the ground
that the transportation of goods in the course of inter-state trade was not
accompanied by the prescribed documents under IGST Act / CGST Act / CGST Rules
could not be sustained in view of the fact that the power to prescribe documents
is conferred on the Central Government and no documents were prescribed by the
Central Government on that date
Facts
The goods belonging to the
petitioner and the vehicle carrying the goods were detained by the State
Authorities on the ground that the transportation was not accompanied by the
documents prescribed under CGST Act / IGST Act / CGST Rules. The issue for
consideration was whether the State Government was empowered to detain goods
for non-compliance with the requirement of carrying the prescribed documents
under the IGST Act.
Held
The Hon’ble High Court held
that the detention on sole reason that the transportation was not accompanied
by prescribed documents under IGST Act / CGST Act / CGST Rules cannot be
legally sustained on the ground that the power to prescribe documents that are
to accompany the transportation is conferred on the Central Government and not
on the State Government and the Central Government as on that date had not
prescribed such documents.
The Court noted that having
regard to sections 4 and 20 of IGST Act and sections 6, 129 read with Rule 138
of CGST Rules, neither the State Legislature nor the State Government would
have the power to prescribe documents to accompany transportation in the course
of inter-state trade.
4. [2018] 91 taxmann.com
210 (Allahabad) R. R. Agro Industries vs. State of U.P.
Where the power of seizure
is clearly traceable under the relevant Act, the order for seizure cannot be
held bad in law merely because wrong provision of Act had been mentioned while
passing the same
Facts
The petitioner was engaged
in manufacturing and sale of an agriculture implement, “Tasla”. The goods and
the conveyance were detained and seized u/s. 129(1) of the Uttar Pradesh Goods
and Services Tax Act, 2017. It was submitted that since the transportation was
in the course of inter-state trade, the goods and the conveyance were not
liable to be seized under the
State Act.
Held
The Hon’ble High Court held
that the impugned order of seizure could not be held to be bad in law merely by
reason that wrong provision of the Act was mentioned in the said order as
similar provisions for power of seizure exist in CGST Act and as per section 20
of the IGST Act, in respect of matters of inspection, seizure, search and
arrest, the provisions of CGST Act shall apply mutatis mutandis. Accordingly,
the Court held that the impugned order shall be treated to have been passed
under IGST Act read with section 129 of the CGST Act.
II. Authority
for Advance Ruling
5. [2018-TIOL-01-AAR-GST]
Caltech Polymers Pvt. Ltd.
Recovery of canteen
expense from employees liable for GST.
Facts
The Applicant preferred an
application for Advance Ruling on whether recovery of food expenses from
employees for the canteen service provided by them comes under the definition
of outward supplies and are taxable under Goods & Service Tax Act. It was
submitted that the expenditure incurred by them in preparing the food is recovered
without any profit margin as a deduction from their monthly salary. The
facility is provided as mandatorily provided under the Factories Act, 1948. It
was contended that the activity does not fall within the scope of ‘supply’, as
the same is not in the course or furtherance of its business. They are only
facilitating the supply of food to the employees, which is a statutory
requirement, and is recovering only the actual expenditure incurred in
connection with the food supply, without making any profit. The Mega Exemption
Notification under the Finance Act, 1994 providing an exemption to food and
beverages supplied in a factory was also referred.
Held
The Authority noted that
there is no similar exemption provision under the GST law as under the Finance
Act. Further, the definition of business was analyzed and it was concluded that
the supply of food by the applicant to its employees would definitely come
under clause (b) of section 2(17) as a transaction incidental or ancillary to
the main business. It was further noted that under Schedule II to the GST Act,
supply by way of or as a part of service of goods being food is a declared
supply of service. Though there is no profit on the supply of food, the
transaction is considered to be a supply within the meaning of section 7(1) of
the CGST Act and is therefore taxable as a supply of service under GST.
