GST TIMES

Vol. I ; Issue - V ; 5 th August, 2020.

Editor’s Note: Notifications No 60 and 61 of 2020 laid

Dear Readers,
Greetings!
In the fifth edition of our newsletter, we
are pleased to inform you all that we have
added three new features:
Data on select economic indicators
A GST-specific cartoon.
A GST-specific crossword.
We should thank CA Vinayak Pai for the
cartoon. Besides being a competent
professional, he is also a very good
cartoonist. His cartoons appear regularly
in the Bombay Chartered Accountants
Society, Newsletter of the Bangalore
Branch and Karnataka State Chartered
Accountants Association. The crossword is
by yours truly- it is very rudimentary and
simple but we thought we should make a
beginning.
out the nitty-gritties of the e-invoicing
system that is proposed to be introduced
from October 1, 2020. Thankfully, the
threshold turnover criteria has been
enhanced to Rs 500 crores from Rs 100
crores and SEZ units have been added to
the list of entities who would not come
under the e-invoicing system. The
Scheme for the GST INV-1 form given in
Notification No 60/2020 looks complex
enough for companies to start interacting
with their ERP vendors immediately.
We do hope you enjoy this issue.
Continue to stay safe and send in your
thoughts to info@gstgarage.com
Mohan R Lavi
Editor
GST TIMES

Covid-19 has also disrupted our

comparison of GST revenue figures. The
Press Information Bureau released July
2020 collections as Rs 87,422 crores. But
this figure should also include revenues of
April, May and June since filings and
payments were extended. Monthly
collections are expected to be muted for
some more time. The GST Council will
have to meet and come out with some sort
of a plan to compensate the State
Governments for their loss of revenues. It
is clear that the 14% growth estimated
while fixing the compensation has never
been a reality – it would be interesting to
see how the GST Council takes this
forward.
Page. 1
► Table of Contents:

GST Revenues for the month of July, 2020 3-4

Summary of Notifications / Circulars / Orders issued during July, 2020 5

Analysis of Case laws & Decisions (Section 129 – CGST Act, 2017) 6-8

GST Update – Penna Cement Industries Ltd. 9-11

GST Update – Hitachi Power Europe Gmbh 12-13

Monthly Article - Tax implication on transfer of Land Development 14-21

Rights – An analysis

GST Crossword Puzzle 22

DASHBOARD
STOCK MARKET COMMODITY MARKET

Nifty 50, NSE GOLD (22 Carat/10g)

30 thJune 2020- 10,302.10 30 th June 2020- 44,480
st
31 July 2020- 11,073.45 31 st July 2020- 49,229
Change (%)- 7.49 % Change (%)- 10.68 %

SENSEX, BSE SILVER (1 Kg)

30 th June 2020- 34,915.80 30 th June 2020- 48,600
31 st July 2020- 37,606.89 31 st July 2020- 63,975
Change (%)- 7.71 % Change (%)- 31.64 %

Source: India Bullion and Jewellers

Source: www.moneycontrol.com Association Ltd (www.ibjarates.com)

Page. 2
 GST Revenues – July, 2020

GST Collected – July, 2020 Amount [Rs. In crores]

CGST 16,147
SGST 21,418
Total CGST+SGST 37,565

IGST-Imports 20,324
IGST-Others 22,268
Total IGST 42,592

Cess-Imports 807
Cess-Others 6,458
Total Cess 7,265

Total 87,422

Settlement (from IGST)

CGST 23,320
SGST 18,838

Revenues after Settlement

CGST 39,467
SGST 40,256
1.1. GST Revenues (Rs. in crores)

Page. 3
The revenues for the month are 86% of the GST revenues in the same month last year.
During the month, the revenues from import of goods were 84%and the revenues from
domestic transaction (including import of services) were 96% of the revenues from these
sources during the same month last year.

The revenues for the last month were higher than the current month. However, it is
important to note that during the previous month, a large number of taxpayers also paid
taxes pertaining to February, March and April 2020 on account of the relief provided due
to COVID-19. It may also be noted that the taxpayers with turnover less than ₹ 5 core
continue to enjoy relaxation in filing of returns till September 2020.

The chart shows trends in monthly gross GST revenues during the current year. The
table shows the state-wise figures of GST collected in each State during the month of
July 2020 as compared to July, 2019 and for the full year.

April May June July

Page. 4
 Summary of Notifications/ Circulars/ Orders, July, 2020

May-20
Area Notifications Circulars Orders ROD Orders

Central Tax 4 0 0 0
Central Tax (Rate) 0 0 0 0
Integrated Tax 0 0 0 0
Integrated Tax (Rate) 0 0 0 0
Union Territory Tax 0 0 0 0
Union Territory Tax (Rate) 0 0 0 0
Compensation Cess 0 0 0 0
Compensation Cess (Rate) 0 0 0 0

Total 4 0 0 0

Total 4

► Tabulated below is a summary of significant recent updates:

▪ Central Tax Notifications:

Sl. No. Notification No. Date Essence of the Notification

Eighth amendment (2020) to CGST
1. 58/2020 01-07-2020 Rules- Furnishing of FORM GSTR-3B
and FORM GSTR-1 through SMS and
verification by OTP.
The due date for filing FORM GSTR-4
2. 59/2020 13-07-2020 for financial year 2019-2020 is
extended from 15 th July 2020 to 31 st
August 2020
Ninth amendment (2020) to CGST
3. 60/2020 30-07-2020 Rules- Format/Schema for e-Invoice
under FORM GST INV-1
Amendment of Notification No.
4. 61/2020 30-07-2020 13/2020 – Central Tax dated
21.03.2020:
• amendment the class of registered
persons for the purpose of e-
invoice.
• the threshold limit for e-invoicing
increased from “one hundred crore
rupees” to “five hundred crore
rupees”.

Page. 5
 Analysis of Case Laws & Decisions
Detention of Vehicles
Section 129 of CGST Act, 2017 :

K.P. SUGANDH LTD. V. STATE OF CHHATTISGARH & Ors. [2020 (3) TMI 890]

▪ Facts:

• The petitioners are the manufacturers of 'Pan Masala and Tobacco Products’. The
petitioners dispatched goods to its customer. When the vehicle was intercepted the
person In-charge of the conveyance was in fact carrying the requisite documents,
which he was supposed to carry in the course of transportation of the goods. As
regards the discrepancy found in the course of inspection, the only observation made
by the authorities concerned is that the valuation does not seem to have been properly
conducted.

▪ Issue:

• Merely because the manufacturer sells his products to its customer or dealer at a price
lower than the MRP, as such cannot be a ground on which the product or the vehicle
could be seized or detained.

▪ Decision:

• This Court is of the opinion that under valuation of a good in the invoice cannot be a
ground for detention of the goods and vehicle for a proceeding to be drawn under
Section 129 of the Central Goods and Service Tax Act, 2017 read with Rule 138 of the
Central Goods and Service Tax Rules, 2017 - Petition allowed.

M/S SANJIVANI NON FERROUS TRADING PVT. LTD.

V.
STATE OF HARYANA & ANOTHER
[2020 (3) TMI 141]

▪ Facts:

• Assistant Excise & Taxation Officer during road side checking checked a vehicle
carrying aluminium scrap. Goods detained were admittedly accompanied by all the
required documents as per the provisions of Section 31(2) of the HVAT Act.

▪ Issue:

• Whether imposition of penalty just on the basis of statement of the driver, even though
the goods are accompanied by genuine documents is justified?

Page. 6
▪ Held:

• The case set up by the appellant before the Tribunal is not acceptable. In case it was
sale made in transit, there would have been endorsement. No interference is called for
in the order of the Tribunal. No question of law much less a substantial question of
law arises. Appeal dismissed.

FS ENTERPRISE V. STATE OF GUJARAT [2019 (4) TMI 916]

• Facts:

• Detention on the ground that the lorry receipt issued by the transporter was a
photocopy without computerized serial number and contact number details.

▪ Issues:

• Whether carrying Lorry Receipt issued by the transporter is not a requirement

prescribed under rule 138A(1) of the rules?

▪ Held:

• Grant of interim relief as prayed for in the petition. The respondents are directed to
forthwith release the truck along with the goods contained therein. Direct Service is
permitted.

TVL. RK MOTORS V. STATE TAX OFFICER [2019 (2) TMI 125]

▪ Facts:

• After generating that bill dated 1 st October, it had the goods loaded into a transport
vehicle. But it could not transport them during night hours. The next day, 2nd
October, was a holiday. So it could transport the goods only on 3 rd of October.

▪ Issues:

• Expiration of E-way Bill

▪ Held:

• The petition was said to be re-examined as it was contended that there was genuine
difficulty in transporting the goods with the e-way bill generated. The writ petition
stands disposed of.

Page. 7
❑ Analysis of the cases:

Level Till July, 2020

Supreme Court 6
Supreme Court Orders 29
High Court 1856
AAAR 157
AAR 1165
NAA 151
Commission 2
Session 10
Commissioner 6

Total 3382

High Courts and AAR continue to hear the most number of cases.

Page. 8
 GST Update

M/s Penna Cement Industries Limited

[2020 (6) TMI 162 –AAR, Hyderabad]

► Whether ex-factory sales made to customers located in another state would tantamount
to interstate or intra state sales?

In a recent ruling in case of M/s Penna In a particular transaction undertaken by

Cement Industries Limited the question
before the Authority of Advance
Ruling, Hyderabad, Telangana
revolved around the nature of taxes i.e.,
intra state or interstate when the
transportation of goods culminated in
one state by the vendor on ex-factory
basis but the goods were moved
onward by the recipient to a certain
point in another state i.e., the final
destination.
A brief summary of the said ruling is as
follows:
1. Facts of the case:
The Applicant are manufacturers of
cement having two cement plants in
Telangana.
the Applicant, the goods are made
available by the Applicant to the recipient
at the factory gate, but this is not the point
where movement terminates.
That is to say, the recipient subsequently
assumes charge for transportation of the
goods up to the actual destination in
another state.
Thus, the actual termination of supply
from the vendors end apparently takes
place at the factory gate after which the
goods are consigned to the recipient
location and such movement is effected
by the recipient to their billing address or
by any other person such as transporter
authorized by the recipient.

Goods handed over by

the supplier to the
Recipient’s Recipient
recipient’s transporter
Supplier’s factory Transporter
(Penna Cements)
Supplier’s Factory Gate

1.2. Pictorial Representation of the above facts.

Page. 9
2. Question raised by the Applicant before
the Telangana AAR:
▪ What tax should be charged on ex-factory
inter-State supplies made by the Applicant
on ex-factory basis?
• Accordingly, the place of supply in
3. Findings of the Telangana AAR:
• For evaluation of the appropriate place of
supply which is a determining factor for
inter state or intra state levy, the
Telangana AAR at the outset refers to
Section 10(1)(a) of the IGST Act, 2017.
• As per Section 10(1)(a) of the IGST Act,
2017 the place of supply in respect of
goods (where supply involves movement
of goods), shall be the location of goods at
the time when movement of goods
terminates for delivery to the recipient as
follows.
• This is apparent from the aforesaid
provision stating, ‘where the supply
involves movement of goods, whether
by the supplier or the recipient or by
any other person ‘
respect of goods where the supply
involves movement of goods
whether by the supplier or by the
recipient or by any other person
authorized by him has to be
determined with reference to the
location where the movement of
goods ultimately terminated ie, the
recipients billing address.

“10. (1) The place of supply of goods, other than

supply of goods imported into, or exported from
India, shall be as under–

a. where the supply involves movement of

goods, whether by the supplier or the
recipient or by any other person, the place of
supply of such goods shall be the location of the
goods at the time movement of goods terminates
for delivery to the recipient.”

• While there may be a scope of inference that

in case of ex-factory sales, since the delivery
of goods to recipient takes place at the
factory gate, the location of the supplier’s
factory can be reckoned as place of supply, a
careful appraisal of the provisions of Section
10(1)(a) does not suppose such an inference.

• This is apparent from the aforesaid

provision stating, ‘where the supply involves
movement of goods, whether by the supplier
or the recipient or by any other person ‘

Page. 10
Author’s Note:
→ Ex- factory supplies has always been a subject matter of reservation in so far as the
place of supply is concerned.

→ Given the same, a large quantum of hesitant tax payers have adopted a rather
conservative stance for payment of IGST for all those ex- factory supplies where the
supplier’s factory is located in one state and the buyers premise in another.
→ While a logical interpretation of Section 10(1)(a) of the IGST Act, 2017 may lead to an
inference that the supply of goods culminates at the factory gate at the time the
goods are handed over to the recipient/recipient’s transporter/or any other person
on behalf of the recipient, a strict interpretation suggests otherwise.
→ The legislative intent behind the terms ‘involves the movement of goods’ and ‘whether
by the supplier or the recipient or by any other person’ in Section 10(1)(a) warrants it be
read in conjunction. That is to say, a unified reading would implicate any such
supply that involves movement of goods in the same state or otherwise, to be
covered under the ambit of Section 10(1)(a).
→ While in case of B2B sales, it is fairly suggestive that the address of the recipient
would tantamount to location of delivery in wake of Section 10(1)(a), in case of B2C
sales where the recipient undertakes over the counter purchases and moves the
goods at his behest to another state would need further analysis.
→ Whereas the Law committee by way of a draft circular recommended the
applicability of IGST on such ex-factory sales, a conflict in the states opinions on the
instant transaction has warranted a re-consideration.
→ A concrete stance on transactions of this nature is necessary and like in case of many
other issues, the tax payers would continue to be on the receiving end of penalties
either in the form of locking of credits, excess outflow of taxes or advisory charges.

Page. 11
 GST Update
Hitachi Power Europe Gmbh
[2020 (6) TMI 162 –AAR, Hyderabad]

Whether salary cost of expat employees accounted in the books of the Project Office
would be liable to GST?

In a recent ruling rendered in case of M/s • Pertinently, as most of these expat

Hitachi Power Europe Gmbh (hereinafter employees have their primary bank
‘HPEG’), the Authority of Advance accounts outside India, salary is paid to
Ruling, Maharashtra, ruled that the these employees from the HO’s bank
salary cost of expat employees merely account located abroad, for
depicted as accounting entries in the administrative convenience.
books of the Project Office of the same
• Further, to adhere to the provisions of
entity established in India, without any
the Indian Companies Act 2013, any
element of supply in actuality, would not
project office of a Foreign Company is
be liable to GST.
required to maintain its financial books
A brief summary of the said ruling is as of accounts in in a manner which
follows: would reflect a true and fair view of the
business of the Company in India a
1. Facts of the case
manner which would reflect a true and
fair view of the business of the
• HPEG, a company incorporated in
Company in India.
Germany, has been awarded contracts
for supply of goods and supervisory
• Further, in order to keep record of the
services in relation to certain power
expenses of salary cost of Expat
projects located in India.
employees working from India, the
Project Office merely makes an
• In accordance to the Foreign Exchange
accounting entry in its financial books
Management Act, 1999, (hereinafter
of accounts in India to account for the
‘FEMA’) a foreign company is
salary cost of the Expat employees.
permitted to open an office in India to
undertake such project, commonly
• The Applicant clarifies that the project
referred to as “Project Office”. Given
office established in India is not a
the same, HPEG has incorporated in
separate legal entity and is merely an
India project offices for undertaking
extension of the head office located
onshore activities.
outside India.
• For undertaking the contracted
activities in India, these project offices
have expat employees employed from
the HO.

Page. 12
 • The applicant further clarifies:
− The visa has been issued to the
employees with the name of HO i.e.,
‘Hitachi Power Europe GmbH’ under
the column ‘Organizational Name’ with
the address of the Project Office in
India;
− Applicant has deducted TDS under the
head ‘Income under Salaries’ for these
employees under the Income Tax Act,
1961 in India;
− Form 16 under the Income Tax Act, 1961
has been for these employees by the
Applicant for FY 2018-19;
− The quantification of the above salary
cost and payment of the same to most of
these Expat employees were made from
the Head Office’s bank accounts to the
employees’ bank account situated
outside India.
2. Question raised by the Applicant before
the Maharashtra AAR
Whether an accounting entry made for the
purpose of Indian accounting requirements
in the books of accounts of Project Office
for salary cost of Expat employees would
be subject to GST?
3. Observations and Findings of the
Maharashtra AAR
• A foreign company can establish a project
office in India either on a temporary basis or
a permanent project office, provided the
foreign company has been awarded a
project to be executed by them in India from
the government or private sector.
• The project office is merely an
extension of the foreign Head Office
and qualifies as a branch office set up
with the limited purpose for
executing a specific project and to
carry on all activities relating and
incidental to execution of the Project
in India.
• The expat employees are employees
of the employer viz. the Head Office
and since the Project Office is an
extension of the Head Office, there is
a relation of employer and employee
between the Project Office and the
expat employees.
• Manifestly, for GST to be applicable
on the accounting entry warranted
by the Indian accounting
requirements in the books of
accounts of Project Office for salary
cost of Expat employees paid by the
Head Office, the said accounting
entry should qualify as a supply of
goods, services or both in the first
place.
• In the given scenario, there
apparently is an employer-employee
relationship between the Project
Office and the expat employees. This
warrants that the transaction be read
in light of Schedule III of the CGST
Act whereby any services rendered
by an employee to the employer in
the course of or in relation to his
employment will not be considered
as a supply and therefore will not
attract GST.
• This answers the applicants question
in negative.
Page. 13
 Monthly Article

Analysis | Tax implication on transfer of Land Development Rights

The real estate sector has been one of the most significant sectors in terms of global
economic growth and the conservatively the backbone of Indian economy. The real
estate sector in India is expected to reach a whopping market size of close to a trillion
(in $) and largely contribute to the country’s GDP in the coming years. The primary
contributing factors to this growth is the evergreen demand for offices, residential
spaces etc. According to data released by Department of Industrial Policy and
Promotion (DIPP), the construction development sector in India has received Foreign
Direct Investment (FDI) equity inflows to the tune of US$ 25.04 billion in the period
April 2000-March 2019.

India being a country with fast growing population and inclined standard of living, the
need for more space is fathomable. In metropolitan cities, as the concept of
‘independent’ houses are gradually hazing these are suitably being replaced by taller
structures leading to growth in the construction industry.

In India it is a common practice for land owners who are not in a position to
develop/construct properties to transfer the development rights to a developer to do
so.

Through this article we would be casing the GST implication on such development
rights transferred by the land owner to the developer.

► What are development rights?

As the name suggests, development rights are rights on the land transferred by the
landowner on the developer. Simply put, the land owner gives the developer a right
over the land to develop/construct a complex or building or structure on the land
owner’s property (land). In lieu of this right to develop, the developer would interalia
compensate the landowner with predetermined amount of flats in the constructed
property. Further, for such share in property the land owner would not make any
payments to the developer apart from the right to develop and transfer proportionate
share in land.

Furthermore, the developer would also enter into an agreement with the landowner for
transfer of proportionate share in land which would entitle the developer to sell the
constructed property upon development of such land.

Page. 14
• Therefore, the following details of receipt emerges:

While the GST law has not explicitly defined the term ‘development right’, as per the
definition awarded section 2(9A) of the Maharashtra Regional and Town Planning
Act,1966, ” Development right” means right to carry out development or to develop the
land or building or both and shall include the transferable development right in the form
of right to utilise the Floor Space Index of land utilisable either on the remainder of the
land or partially reserved for a public purpose or elsewhere, as the final Development
Control Regulations in this behalf provide.

► What are the tax implications on transfer of Development Rights under GST?

1. Supply under GST:

• To understand the GST implications on the transfer of development right, it would at

the outset be appropriate to evaluate the definition of supply under ‘GST’.

• Section 7(1) of the CGST Act, 2017 has been drafted in a manner so as to include all
forms of supply of goods or services or both such as sale, transfer, barter, etc.

• In this regard, Clause 5 of Schedule III interalia renders any sale of land to be outside
the purview of supply. Relevant extract for the same is as follows:

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

Page. 15
• The above stated disqualification results in a certain degree of ambiguity in so far as
the GST implication on transfer of development rights are concerned. This is
elaborated further through this article.

2. Overview of relevant provisions and significant notifications issued under

the GST law

Sl Notification Nature of Notification Summary

No. Reference

1 Notification Reverse charge applicability By virtue of this Notification,

5/2019-CT on supplies in the nature of
(Rate) transfer of development rights
dated March 28, or Floor Space Index (FSI)
2019 (including additional FSI) on
or after April 1, 2019 for
construction of a project by a
promoter*.
the transfer of development
rights or floor space on or
after April 1, 2019 by the
landowner for construction
of projects intended for
sale * either wholly or partly
by a promoter would be
liable to GST on reverse
charge by the promoter
(service recipient)

2 Notification A promoter who is in receipt* The said notification defers

No 6/2019 of development rights the liability for payment of
Central Tax transferred by the Landlord GST on the transfer of
(Rate) dated (for construction of development rights to the
March 28, 2019 commercial or residential date of issuance of
units), would be required to completion certificate or
pay GST at the time of provision of occupation
obtaining completion certificate whichever is
certificate where required or earlier.
on its first occupation.

*The GST law adopts the term ‘promoter’ from the Real Estate (Regulation and Development) Act,
2016 (16 of 2016) (i) a person who constructs or causes to be constructed an independent building
or a building consisting of apartments, or converts an existing building or a part thereof into
apartments, for the purpose of selling all or some of the apartments to other persons and
includes his assignees; or (ii) a person who develops land into a project, whether or not the person
also constructs structures on any of the plots, for the purpose of selling to other persons all or
some of the plots in the said project, whether with or without structures thereon.

Page. 16
 3 Notification Exempts transfer of This means that the benefit
4/2019-CT development rights on or of exemption would be
(Rate) dated after April 1, 2019 for available only on
March 29, 2019 construction of residential construction of residential
apartments intended for sale apartments meant for sale
wholly or partly except where excepting where the entire
the entire consideration has consideration has been
been received after issuance received after issuance of
of completion certificate or completion certificate or
after its first occupation, first occupation, whichever
whichever is earlier is earlier
4 Notification Taxability on transfer of The said notification defers
4/2018-CT development rights by a taxes liable on the transfer
(Rate) dated registered person to a of development right on
January 25, 2018 developer liable to GST on forward charge basis where
forward charge such transfer is by a
registered person

3. Timeline & Taxability

Page. 17
3.1. July 1, 2017 – January 24, 2018:

• For the said period, the taxability on transfer of development rights by the
landowner to the developer was chargeable at the time of transfer of the said right.

• The transferor of the said right i.e. the landowner ought to be a registered person
(either by limit or voluntarily) for applicability of GST.

• The said transfer of development rights by the landowner to the developer during
the given period would be liable on forward charge basis.

• Therefore, where the consideration receivable for the transfer of such right (whether
in cash or kind) exceeds the threshold limit (which would largely be the case), the
landowner would be responsible for payment of tax at the time of such transfer.

3.2. January 25, 2018 – March 31, 2019:

• The transferor of the said right i.e. the landowner ought to be a registered person
(either by limit or voluntarily) for applicability of GST.

• Any transfer of development rights by the landowner to the developer during the
given period would be liable on forward charge basis in the hands of the registered
landowner.

• By virtue of Notification 4/2018-CT(R), the tax on transfer of such right is deferred to

the time of transfer of possession or right in the constructed unit.

3.3. April 1, 2019 onwards:

• Taxability: Effective April 1, 2019, by virtue of Notification 5/2019-CT(R) the tax

liability on transfer of development rights has been brought to tax on reverse charge
basis. Therefore, the tax on such transfer would be leviable on RCM basis payable by the
service recipient i.e. the promoter. Effectually, the burden of registration and payment
of taxes would no longer be laden on the landowner on or after April 1, 2019 as the
liability to pay taxes would now reside in the hands of the promoter.

• Time of supply: Further, as per Notification 6/2019-CT(R), the time of supply for
transfer of development rights would be the time of issuance of completion certificate or
first occupation whichever is earlier. In respect of monetary consideration received for
the transfer of such development right, the said Notification interalia renders the time of
supply as above, only in case of construction of residential apartment and the same
would not be applicable for commercial apartments.

Page. 18
-Therefore, the monetary consideration received for transfer of development rights in case
of commercial apartments the time of supply would be independently evaluated as per
Section 13(2) of the CGST Act, 2017.

• Exemption: Notification 4/2019-CT(R) effective April 1, 2019, exempts services by

way of transfer of development rights for construction of residential apartments
intended for sale except where the entire consideration has been received after the
issuance of completion certificate or first occupation whichever is earlier.

− It would be significant to note that transfer of development rights for construction of

commercial apartments has been excluded from the ambit of this exemption.

− Appositely, for assuming the benefit of exemption, the underlying supply for which the
development right is obtained ought to be taxable. Simply put, the exemption would
not be available if the receipt of consideration for the constructed unit is after the
completion of construction of such property.

► Computation of exemption on transfer of development rights in common projects :

Carpet area of the residential

GST payable on transfer of
development right for construction of
the project
apartments in the project
Total carpet area of the residential
and commercial apartments in the
project

• When the intention is otherwise than sale: Significantly, going by the definition of
the term ‘promoter’, where the constructed property is not intended for sale by the
developer/promoter (i.e. by way of renting, leasing, own use etc.) for the period
effective April 1, 2019, the same would not fall within the ambit of RERA Act. This
would therefore disqualify the provisions of Notification 4/2019-CT(R) and 6/2019-
CT(R) on such transfers as the said notifications deal with activities undertaken by a
promoter who undertakes construction with an intention of sale.

• Having said that, the term ‘intention of sale’ is rather relative and in a scenario
wherein few or all constructed units are not sold for whatsoever reason, this would
not disregard the intent of sale. Given the same, this would have to be evaluated
and defended appropriately on case to case basis.

Page. 19
3.4. Valuation of transfer of development rights:

Value of supply of service by way of Value of similar apartments charged by the

transfer of development rights promoter from the independent buyers*
nearest to the date on which such
development right is transferred to the
promoter

Note* - Where units are not intended to be sold (i.e. are rented, leased etc.) in such a
scenario, the valuation mechanism would be adopted on the residuary valuation
provisions viz. Rule 30 of the CGST Rules, 2017 i.e. 110% of cost.

For the un-booked residential or commercial apartments, the valuation would be based on
the unsold residential or commercial apartments on the date of the issuance completion
certificate or occupancy certificate.

3.5. Valuation of transfer of development rights:

Rate of Tax

Residential Apartment Commercial Apartment

Affordable Others

18% 18%
The tax payable The tax payable
shall not exceed shall not exceed
1% of the value of 5% of the value of
development development 18%
rights rights on value of residential apartments
remaining unsold on the date of
issuance of Completion
Certificate/ Occupation Certificate
On the constructed units remaining
un-booked on the date of issuance of
Completion Certificate/
Occupation Certificate

Page. 20
 In Summary

→ Under the erstwhile regime, service tax was not levied on transfer of development
rights owing to the same being excluded from the definition of ‘service’ being
transfer of title in immovable property as land includes benefits arising out of the
land.

→ The said non-applicability has been done away with under the GST regime as the
same is brought to tax explicitly under the GST regime.

→ However, the law provides specific exemption against tax on transfer of

development rights after April 1, 2019 only to those constructed residential units on
which consideration is received prior to the issuance of completion certificate or
first occupation whichever is earlier. In the said case, intention of sale is mandatory

→ Before parting, we wish to imply that in cases where the development of land is
naturally bundled or coupled with the sale of land, a reasonable position could be
adopted that the principal supply in the bundled transaction may be construed as a
composite supply. This however is litigative and would have to be evaluated on
case to case basis.

Page. 21
 GST Crossword Puzzle

1 11 12 13 14

2 3

6 15 7

10

Across:

1. Opt for this for ease of compliance in filing returns (11)

2. A very important part of the structure of GST, tobacco Company (1,1,1)
3. You can file your returns through this if you have a Nil Turnover (1,1,1)
4. Abbreviation for the backbone of GSTIN (1,1)
5. Decisions coming from this authority are good, bad & ugly (1,1,1)
6. Abbreviation for refund as per the forms atleast (3)
7. Want to export without charging IGST, file this (1,1,1)
8. Input tax credit can be taken for furtherance of this (8)
9. Abbreviation for the person we meet for assessment (1,1)
10. This transaction (mostly relating to stock) was not taxable under VAT, but taxable
under GST (8)

Down:

11. First table of GSTR 1 – we provide details of this manner of supply (7)
12. Abbreviation for a register on the basis of which input tax credit is claimed (1,1)
13. What Section 7 of CGST Act deals with (6)
14. Not CGST/SGST ? (4)
15. A type of note in GST laws, what comes in as per accounting journal entry (5)

Page. 22
 GST Garage – Service Offering

Online GST Training

One of our service offerings has been in-house bespoke GST training sessions at client
places. Both our co-founders, CA Mohan R Lavi and Shashank Bhat have conducted more
than 100 training sessions on GST for a wide variety of clients. Our Content Manager,
Renuka Mirji has worked in the GST division of a multinational accounting firm and is
also a trainer. You can see a sample list here. With Covid-19 and the resultant WFH
phenomenon, GST Garage offers bespoke Online GST Training to clients. Here are the
pluses:

1. We need not cover all the 179 Sections of the CGST Act and the 162 Sections of the
CGST Rules. Ditto for IGST Act and Rules. The training will be client-specific and
would focus on what would be applicable to the client.
2. Specific content for the course developed by the GST Garage team.
3. Training would be for upto 4 hours a day. Number of days would depend on the
content.
4. Responses to queries for 1 month after the training is over. No charge.

If your organisation or any one else you know is interested, please send a mail to
shashank@gstgarage.com. We generally respond to mails within 3 hours.
 Disclaimer

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to the views expressed by any other party. The information cited in this newsletter has been drawn
from various sources. Every effort has been made to keep the information cited in this newsletter error
free.

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solely. The views may not necessarily subscribe to the views
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newsletter has been drawn from

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