Article

Development Rights: A service or a condition precedent to sale of land

By Shivam Mehta and Shubham Vijay

The ongoing debate surrounding the imposition of GST on Development Rights through Joint Development Agreement (‘JDA’) continues, seeking resolution. The article in this issue of Indirect Tax Amicus notes that though there are judicial decisions, including the recent Telangana High Court decision, as well as advance rulings which have attempted to clarify the concept of Development Rights, yet there is no definite answer on this burning issue. The authors note that while one perspective regards it as a service to the landowner, others view it as an outright sale of land. They in this regard elaborately discuss the narrowed approach under the provisions of GST Law and alternative views on the taxability of transfer of development rights under GST law. According to them, while finality is anticipated from the constitutional courts, it is prudent for businesses to take an informed call on the taxability of development rights. The authors also highlight that as there is no universal approach for taxability of JDAs and their treatment depends on the nuances of each agreement, the legal examination of the underlying documentation assumes much importance.

Goods and Services Tax (GST)

Ratio decidendi

• Appellate Authority can condone delay beyond one month from prescribed period of 90 days - Application of Section 5 of Limitation Act is not excluded - Calcutta High Court
• E-way bill - Over dimensional cargo - Speed of vehicle is no criteria to determine nature of cargo - Allahabad High Court
• Non-availability of hard copy of e-way bill in the vehicle is a technical violation - Allahabad High Court
• Show cause notice to company already dissolved under IBC Section 59(8) is wrong - Directors of erstwhile company also cannot be proceeded against - Karnataka High Court
• Audit can be undertaken for prior period even if registration cancelled subsequently - Rajasthan High Court
• No penalty for wrong vehicle number in e-way bill when intention to evade is absent - Allahabad High Court
• Registration cannot be cancelled without substantiating allegation of violation of Rules - Allahabad High Court
• No ITC even if supplier registered on date of transaction if investigation reveals that supplier was non-existent - Allahabad High Court
• Appellate Authority can interfere with Adjudicating Authority’s discretion for imposing fine in lieu of confiscation - Kerala High Court
• Writ maintainable against order of Original Authority if appeal thereagainst before Appellate Authority was dismissed as time-barred - Karnataka High Court
• Non-uploading of summary of SCN in DRC-01 and Order-in-original in DRC-07 is not sufficient enough to entertain writ petition - Gauhati High Court
• Appeal to Appellate Authority - Pre-deposit of only 10% of tax is required - Uttarakhand High Court
• No ITC if GSTR-2B shows purchase during period when ITC not available, even if invoice pertained to subsequent period when same permitted - Telangana AAR
• Referral consultancy to foreign universities qualifies as export of service - Telangana AAR

Customs

Notifications and Circulars

• Advance Authorisations - Payments for regularisation of bona fide defaults clarified
• QCO compliance for import of inputs by Advance Authorisation holders, and EOU and SEZ units further relaxed
• All Industry Rates of drawback revised for certain products from 3 May 2024
• Bengal Gram (Desi Chana) and Yellow Peas - BCD exemption
• Onions exports ‘Free’ with USD 550/MT MEP and 40% export duty

Ratio decidendi

• Valuation (Imports) - Redetermination of MRP for purpose of CVD is wrong in absence of machinery provisions for same - CESTAT Chennai
• Valuation (Imports) - Royalty and licence fee when not includible in value of imports - CESTAT Kolkata
• Supplementary show cause notices could be issued under Section 124 before 29 March 2018 also - Calcutta High Court
• Export prohibition of non-basmati rice - Absence of reasons for denial of transitional arrangements is wrong - Bombay High Court
• Customs cannot recover duty until DGFT cancels scrips and cannot recover MEIS benefit by invoking Section 28(4) - CESTAT Mumbai
• Penalty - Finding of liability to penalty does not translate into imposition of same - CESTAT New Delhi
• Solar power generation under MOOWR is valid - CBIC Instruction dated 9 July 2022 quashed - Delhi High Court
• Duty-free shops are beyond customs frontiers, hence, no violation of Legal Metrology Act - Calcutta High Court
• Gold coins which are not legal tender, are classifiable under Customs Heading 7114 - CESTAT New Delhi
• Mushroom shelving is classifiable under Tariff Item 8436 99 00 and not under TI 7610 90 10 - Classification by foreign customs is not relevant - CESTAT New Delhi

Central Excise, Service Tax & VAT

Ratio decidendi

• Additional labelling of already labelled cocoa butter and powder amounts to ‘manufacture’ - Supreme Court
• No service tax on renumeration paid to whole-time directors, even if same is over and above the salary - CESTAT New Delhi
• Charter of rig when not covered under ‘Supply of Tangible Goods for Use’ service - CESTAT Mumbai
• Separating foot oil, pressed/paraffin wax from slack/residue wax just by tilting and then pressing is not ‘manufacture’ - CESTAT Kolkata