Log in Register

Login to your account

Username *
Password *
Remember Me

Create an account

Fields marked with an asterisk (*) are required.
Name *
Username *
Password *
Verify password *
Email *
Verify email *
Captcha *

Consult Construction

Consult Us For Construction

Recent blog posts

2017-VIL-500-CESTAT-CHE-ST

M/s SHAPOORJI PALLONJI INFRASTRUCTURE CAPITAL COMPANY LIMITED Vs COMMISSIONER OF SERVICE TAX, CHENNAI

Service Tax - The appellants engaged in operation of power plant - demand of service tax on services provided for maintenance and repair of power plant, on the Major Maintenance Reserve and on activities of operation of power plant to produce electricity - appellants had split the ‘Operation Fee’ received by them as ‘Operation Charges’ and ‘maintenance charges’ in the ratio 55% and 45% respectivelywhether the appellants are liable to pay service tax on the activities of maintenance and repair of power plant as well as operation charges and the MMR deposit

whether the appellants are liable to pay service tax on the activities of maintenance and repair of power plant as well as operation charges and the MMR deposit

HELD – for the purposes of the service tax law, deduction of cost of materials and consumables can be permitted only if there is a sale involved and there being no sale involved in the entire exercise, appellant has necessarily to discharge tax liability on the entire gross value of the maintenance or repair services on the full amount demarcated by them as maintenance or repair service, being 45% of the total amount paid to them

No infirmity in the confirmation of tax liability on this score in the various impugned orders.Further, when the appellants themselves have vivisected the contract by apportioning 45% towards maintenance charges and 55% as operation fee, the contention raised by them that it is a composite contract is only to be brushed aside - the demand of service tax on operation charges is not sustainable

The Major Maintenance Reserve can by no stretch of imagination be considered as a part of the maintenance or repair fees paid or payable to the appellants. Therefore, they cannot be considered as taxable value under this head - there cannot be any service tax liability on the said MMR account - the penalties imposed in the orders impugned are set aside - since the appellants did not disclose the entire gross value of taxable services in the ST-3 returns and the returns reflected the value only after deduction of cost of materials, the notice issued invoking extended period is right and proper – assessee appeal is partly allowed

Further, when the appellants themselves have vivisected the contract by apportioning 45% towards maintenance charges and 55% as operation fee, the contention raised by them that it is a composite contract is only to be brushed aside - the demand of service tax on operation charges is not sustainable - the Major Maintenance Reserve can by no stretch of imagination be considered as a part of the maintenance or repair fees paid or payable to the appellants.Therefore, they cannot be considered as taxable value under this head - there cannot be any service tax liability on the said MMR account - the penalties imposed in the orders impugned are set aside - since the appellants did not disclose the entire gross value of taxable services in the ST-3 returns and the returns reflected the value only after deduction of cost of materials, the notice issued invoking extended period is right and proper – assessee appeal is partly allowed

Therefore, they cannot be considered as taxable value under this head - there cannot be any service tax liability on the said MMR account - the penalties imposed in the orders impugned are set aside - since the appellants did not disclose the entire gross value of taxable services in the ST-3 returns and the returns reflected the value only after deduction of cost of materials, the notice issued invoking extended period is right and proper – assessee appeal is partly allowed

Hits: 41 0 Comments
Rate this blog entry:
0

SC grants special leave to Siemens Ltd to appeal against Telangana & AP HC judgment that ruled on inter-state supply of goods under lumpsum turnkey projects; Issue before HC pertained to interpretation of what would constitute 'in-transit sale', 'inter-state works contract' and 'intra-state works contract'; Assessee challenges the judgment on ground that HC exceeded its jurisdiction by expressing opinion on valuation of sales made from outside the State of Andhra Pradesh; While granting leave, SC directs that assessment orders passed in other States will not be influenced by observations made in said judgment

Hits: 28 0 Comments
Rate this blog entry:
0

Posted by on in VAT

2017-VIL-294-KER

M/s LARSEN & TOUBRO LTD Vs THE DEPUTY COMMISSIONER, COMMERCIAL TAXES

Kerala General Sales Tax Act, 1963 – Section 45A – penalty for suppression of taxable turnover – Work Contract - inter-state sale under section 3 (a) of the CST Act - deemed sale in terms of Explanation 3A of Section 2(xxi) of the KGST Act - Petitioner company entered into a contract with Cochin Refineries Ltd for execution of the work for DHDS/Hydrogen plant and other utilities - work involving transactions by way of importing hightech equipments, inter-state purchases etc. – HELD - Though it is stated that the terms of the contract clearly envisages that the goods are brought to the State by interstate movement, it gets terminated at the work site resulting in completion of interstate sale envisaged under the CST Act. The petitioner however would submit that only a few terms of contract had been considered by the authorities whereas the contract contains other terms and conditions which are relevant for a proper adjudication in the matter. Further, this is a case in which penalty had been imposed on the assessee under Section 45A of the KGST Act. Penalty can be imposed only if there is deliberate suppression of turnover - the question to be considered is whether there was deliberate contumacious conduct on the part of the assessee in declaring the goods as exigible for tax under the works contract. Such an aspect of the matter had not been considered by the authorities – the impugned order is set aside and the matter is remitted back to the respondent for fresh consideration – assessee petition allowed by remand

Hits: 37 0 Comments
Rate this blog entry:
0

2017-VIL-291-ALH

M/s ANSAL HOUSING AND CONSTRUCTION LTD Vs COMMISSIONER OF COMMERCIAL TAX

U.P. Trade Tax Act - Whether the construction work of building done by the assessee over its own land, falls under the definition of works contract on behalf of the prospective purchaser of the property – assessee submits that there was no works contract since the assessee was the owner of land in question and had raised constructions and that although allotment was made but no transfer deed was executed as yet, and, therefore, raising of construction cannot be treated to be a works contract

HELD - Since it is found that an agreement was duly arrived at between the parties for carrying out construction activities and pursuant to such contract the developer had also received money, the existence of works contract is clearly established

The Tribunal, as well as the authorities, were justified in treating the construction work undertaken to be works contract – answered in favour of revenue

Hits: 82 0 Comments
Rate this blog entry:
0

2017-VIL-275-RAJ

ASSISTANT COMMISSIONER, ANTI-EVASION Vs M/s LARSEN & TOUBRO LTD

Rajasthan VAT Act - assessee was awarded works contract for establishing LPG pipe line - The respondent-assessee though gave certain works contract to the sub-contractors

Show cause notice for payment of tax subject to payment being made by the sub-contractors of the same amount and certificate to be produced but assessee failed to produce any certificate - Revenue challenge to deletion of penalty levied u/s 65

HELD - the Tax Board noticed that the respondent-assessee gave a full description of sub-contractors in the books of account, but the Assessing Officer has not specifically spelt evasion in this regard - in the assessment order there is no specific finding even reached by the Assessing Officer to levy penalty u/Sec. 65 of the Act except where the tax & surcharge is computed, the Assessing Officer has not even uttered a word as to why he intends to levy penalty u/Sec.65 of the Act.

Besides, penalty u/Sec. 65 of the Act is quasi criminal action - the findings reached by the Tax Board do not call for interference - revenue petition is dismissed

Hits: 75 0 Comments
Rate this blog entry:
0

The real estate sector in the country is set for a major change. The Real Estate Regulatory Authority (RERA) will come into force in each State, as mandated by the law passed by Parliament in 2016.

Finally, the Real Estate (Regulation and Development) Act came into force across the country on May 1, to the immense relief of homebuyers and investors alike. This will usher in a new era of transparency in the real estate sector in the country and, perforce, corporatise the operations of all developers.

Once the Real Estate Regulatory Authority (RERA), mandated by the Act, is established by every State, experts expect projects covered under RERA to be completed on time, that too without any deviation from the original proposed plan. This is likely to improve the confidence of buyers in the system and entice them to buy in projects under construction.

Uttar Pradesh and Maharashtra have already notified RERA rules. Karnataka and Haryana are likely to notify the rules soon, so that it is implemented on time. A government source said the Union government has asked State governments to include all current projects, where completion certificates have not been given out, under the ambit of RERA. All current projects have been given three months up to July 2017 to comply with RERA regulations.

A senior government official said that even those States which have not notified the RERA rules and appointed an authority will be required to do so before July 2017, so that all the current projects may be registered as required by the law.

RERA does not permit developers to launch new projects before registering them with the regulator. This will be a major shift from the current practice where developers sell a part of their project through a soft launch or pre-launch activities, said CRISIL, the credit-rating agency.

Developers will now have to refund or pay compensation to allottees for any delay in projects, with an interest at the State Bank of India's highest marginal cost of funds based lending rate plus two percent, within 45 days of its becoming due. This will come to around 11-12 percent.

According to the rules, which the central government is pushing all State governments to follow, developers of current projects should deposit 70 percent of the amount collected and unused for the completion of these projects within three months of applying for registration of a project with RERA in a separate bank account.

The rules also makes it mandatory for developers to disclose project-related details, including project plan, layout, and government approval-related information to buyers like sanctioned FSI, the number of buildings and wings, the number of floors in each building etc. However, buyers will pay only for the carpet area of an apartment which does not include the common area of a condominium, on a pro rata basis. This will force developers to quote higher rates per square feet for the carpet area. In almost all the State government rules, consent of two-thirds of the allottees is a must for any major addition or alteration in a project.

Effective implementation of RERA will improve transparency and timely delivery of residential units. RERA is also expected to put an end to fund diversion, and transform the realty sector into a more organised and trustworthy industry, instilling confidence in end-users, CRISIL said in a report. Developers also say that RERA will bring back buyers into the market.

From now on, developers will have to work under an onerous mandate with 70 percent of all the money collected from the sales of units in a project to buyers transferred into an escrow account, which will be used for the construction and meeting the land cost of the project.

Withdrawal from the account will be in proportion to the completion of the project and must be certified by the engineer, architect, and a practising chartered accountant. So, any diversion of funds from a project is not possible.

Any structural defect, or any other obligations of the promoter as per the agreement of sale, brought to the notice of the promoter within five years from possession have to be rectified free of cost. The rules also provides for buyers to comply with the payment schedule mentioned in the model sale agreement.

Manoj Gaur, Vice President, CREDAI National, said that RERA will bring transparency in the system. But, until the time that authorities are not made responsible for timely approvals, the cost of real estate may go up, Gaur said. Every developer will have to remodel his business processes now. At the CREDAI level, the apex body of developers is holding training sessions for developers to educate them on the changes expected in the new business environment.

Gaur said that as a project can now be launched only after securing all the approvals, it should make buyers confident to buy in projects under construction. To that extent, it is a welcome move

Hits: 70 0 Comments
Rate this blog entry:
0

With RERA coming into force, the realty landscape of the country is not going to be the same anymore.

Indian real estate has seen significant changes in the last year, especially with regards to government policies, the major ones being demonetisation, Real Estate Regulatory Authority (RERA), FDI relaxations, Benami Transactions (Prohibition) Amendment Act 2016, and Goods and Services Tax (GST).

RERA was passed by the Parliament in March 2016.All States are expected to meet the deadline of implementing RERA, i.e. May 1, 2017. This being a major pro consumer law, it is expected to bring in transparency within the sector along with establishing an adjudicating mechanism for speedy dispute redressal and also establishing an Appellate Tribunal.

The Appellate Tribunal will directly help in hearing appeals from the decisions, directions or orders of RERA and the adjudicating officer(s) and for matters connected therewith or incidental thereto. RERA is expected to ensure that real estate projects are completed and delivered on time to key stakeholders. Provisions in the Act, such as the imposition of similar penal interest for developers and buyers, will encourage timely delivery of projects.

Based on key observations and discussions, one can see RERA impacting in these ways:

Unorganized sector to organized RERA

coupled with the recent demonetisation move is expected to bring in discipline within the real estate sector, which should lead to a significant consolidation and clean-up. Developers and promoters must adapt to the changing environment and make suitable changes to the business model while adhering to compliances.

Increased transparency

Pre-launches and soft launches of projects before obtaining adequate approvals and permissions have been a common phenomenon during the last few years. The Act attempts to address this issue by prohibiting sales and marketing of the units before registering the project with the regulatory authority. With developers disclosing approval status, project layout and timeframe for project completion to regulators and buyers, RERA is set to increase transparency in the real estate sector.

Today, aggrieved homebuyers must reach out to consumer courts, which are already loaded with cases from various sectors. Once the real estate authorities are set-up, buyers can expect faster redressal of their complaints as these authorities will handle only real estate related matters.

Change in investor approach

While investors are expected to show an increased interest in the real estate sector in the coming times, there might a change in their approach, to accommodate risks and legal aspects in their contracts with developers. Many investors are showing concern on the RERA provisions that might define them as 'promoter' and, hence, may increase their responsibility towards legal contractual obligations.

The investors would now be more careful while finalizing contracts with developers, thus keeping a check on their (investor) liabilities in case of non-compliance with RERA. They might also be looking to dilute their stakes in existing troubled investments contracts and might renegotiate terms to limit liabilities.

Empowerment of consumers

Minister of Housing and Urban Poverty Alleviation, M Venkaiah Naidu said, "Real Estate Act is one of the most consumer-friendly laws passed by the Parliament and States have no power to dilute its provisions. This law, which was widely welcomed and appreciated benefits both, the buyers and sellers of real estate properties besides enhancing the credibility of the sector".

Also, the preamble to the Act says, "An Act to establish the Real Estate Regulatory Authority for regulation...and to protect the interest of consumers in the real estate sector". The Act includes multiple provisions to protect and empower real estate buyers. It wouldn't be wrong to say that consumer empowerment and protection would be the most important themes of RERA.

The key provisions empowering a real estate buyer include, refund of the amount paid along with interest and compensation if the promoter fails to comply with the terms and conditions of the agreement for sale or is unable to give possession of the unit purchased; prior written consent of at least two-thirds of the allottees for any structural changes, or transfer assignment of the majority rights and liabilities by the promoter; defect liability period of five years from the date of possession.

Sound real estate market

There might be a possibility of a reduction in new launches of projects, as developers aim to complete existing projects and take a pause to clearly understand RERA implications before launching new projects.

While it's a long road ahead with several opportunities for improvement, RERA signals towards a path leading to a more sound and robust real estate market in India. Much, however, will depend on the government avoiding past mistakes and the success of implementing RERA.

Hits: 69 0 Comments
Rate this blog entry:
0
  • There has been a long history of litigation on the issue of classification of works contract activities that whether it is to be considered a service or to be treated as the sale of goods. The reason behind it was that the constitution of India classifies the work contract activity as the sale of goods and so does the state VAT laws.
  • But in 2007, the Central Government introduced works contract service in the service tax net too. The service tax on works contract is continued in the negative list tax regime also by way of deeming fiction under section 66E (h) under declared list of services. Consequently, the activities became taxable under both VAT and service tax laws.
  • The centre of the litigation was the valuation of such service. Both the laws provided independent valuation measures and that is why the situation of double taxation occurred. VAT and service tax was being paid on the same value. Various judicial pronouncements having immense significance were rendered from time to time like the decision given in the case of Bhayana Builders 2013-VIL-31-CESTAT-DEL-ST-LB where it was concluded that free supply of material will not be added to the taxable value of service for calculating the service tax.
  • Reference may also be made to the landmark larger bench decision rendered by the Supreme Court in the case of Larsen and Toubro 2015-VIL-88-SC-ST where it was held that vivisection of services prior to 2007 is not allowable. The decisions pronounced are evidence of the prolonged litigation on this service and this has increased with time. However, it appears that the ruling of Bhayana Builders 2013-VIL-31-CESTAT-DEL-ST-LB is overruled in the proposed GST regime as section 15(2)(b) of the GST Act, 2016 pertaining to value of supply seeks to include amount that supplier is liable to pay in relation to supply but which has been incurred by the recipient.
  • It was obvious that this litigation will also continue in the new regime of GST as well because even though the VAT and Service tax has been merged, it will be important to classify the activities into sale and service for the purpose of taxation. It is pertinent to note that in the new regime, the works contract service has been specifically classified as service in the schedule II which refers to the classification of certain activities as sales/services.
  • Although, the intention of the government by declaring works contract as a service was to remove confusion as regards classification of composite contracts such as works contracts in the GST regime but this clarification may further add fuel to the fire of litigation. This is for the reason that as per Article 366(29A) of the Constitution pertaining to transactions to be treated as deemed sales for the purpose of levy of taxes by State Government, works contract finds specific mention. Therefore, as per Constitution, works contract is a deemed sale whereas for the purpose of GST, works contract is a deemed service. The question that remains unanswered is whether deeming fiction created by an Act can override the provisions of the Constitution of India.
  • This loophole wherein contrary deeming fiction is sought to be created by the new GST regime provides a scope for challenging the vires of Schedule II and thereby challenging the levy of GST on works contract. Hence, it is hoped that the government may make suitable amendment in the proposed GST law so that unnecessary litigations are avoided.

 

CA Pradeep Jain

Source: - Vatinfoline.com 

Hits: 111 0 Comments
Rate this blog entry:
0

2017-VIL-252-MAD

KIRAN INFRA ENGINEERS LIMITED Vs ASSISTANT COMMISSIONER

Tamil Nadu Value Added Tax Act, 2006 - Section 13(1) - Deduction of tax at source in works contract – inter-state work contract - Petition seeking for a direction to the department to issue Form "S" and restraining from deducting any tax at source – issuance of No Liability Certificate - The petitioner is in the business of undertaking "Works Contract" for Indian Railways – petitioner’s Head Office at Rajasthan purchased all the goods at Rajasthan and moved the goods to Tamil Nadu for executing the works contract

HELD – the petitioner has produced the statement of purchase made by the Head Office from various dealers for the purpose of supplying goods to the work site at Chennai. But the details of purchase does not disclose as to when these materials were supplied to the petitioner and the proof of supply and receipt of the same.

In the absence of any details, it cannot be presumed that those goods were actually moved from various places as specified in the details, to the petitioner, at Tamil Nadu - it is clearly seen that as per the statement of the petitioner, they have neither purchased any goods within the State of Tamil Nadu nor produced any proof of interstate movement to the State of Tamil Nadu and not even a scrap of transit pass produced before the authority - lastly, the petitioner has not shown any connection to the works contract that has executed by the Head Office at Rajasthan through them.

The petitioner has filed NIL returns every month. In the absence of accrual of the right to raise a cause of action for the petitioner, this Court is not inclined to delve into the merits of the matter - Therefore, it is for the petitioner to approach the revisional authority with valid materials which entitled them to get "S" Form.

When there is an alternative remedy available under the Act, this Court cannot deal with the factual aspects under Article 226 of the Constitution of India. Under these circumstances, the writ petition is not maintainable – the petition is dismissed

Hits: 102 0 Comments
Rate this blog entry:
0

Posted by on in VAT

2017-VIL-233-ALH

THE COMMISSIONER, COMMERCIAL TAX Vs AMBUJA CEMENT LTD

U.P. Value Added Tax Act, 2008 - Admissibility of input tax credit in respect of goods utilized for construction of silo - Section 2(f), 2(m) - capital goods, goods, plant, input tax credit – distinction of movable or immovable nature of goods

HELD - A perusal of the definition of 'capital goods' clearly goes to show that plant, machine, machinery, equipment apparatus and tools or appliances and electrical installation, which are used for manufacture or processing of any goods for sale by the dealer, would be included

The mere fact that machine, machinery, equipment, apparatus, tools or appliances etc. are generally understood to be movable property, would not mean that plant also has to be necessarily treated as movable property only. There does not appear to be any rational to import the concept of movable or immovable goods while interpreting Section 2 (f) of the Act, when the provision does not say so - the Tribunal was justified in allowing the benefit of Input Tax Credit on purchase of M.S. Sheets used in construction of silos, treating it as 'capital goods' – revenue appeal dismissed

Hits: 99 0 Comments
Rate this blog entry:
0

Like us on facebook

Twitter Feed

Address

Address:
304, Super Plaza, Sandesh Press Road, Vastrapur, Ahmedabad
Gujarat-380054
Tel:
+91 - 079 - 40032950
E-Mail:
This email address is being protected from spambots. You need JavaScript enabled to view it.
Website:
www.consultconstruction.com

markerFind on Google Maps

Who we are

We are Ahmedabad based professional consulting firm. We are providing various services to Construction, Real Estate and Project Companies in various areas like Indirect Taxation – Service Tax & Multi state VAT consultancy, ERP implementation, Site & Management audit, Designing Tender & other related contractual documents etc.