Mazars Tax Update | Edition 05.21

Indirect Tax Updates for the period 01^st September 2021 to 15^th September 2021. (CENTRAL BOARD OF INDIRECT TAXES AND CUSTOM)

Supreme Court upholds constitutional validity of Section 54(3) of GST Act on Refund of unutilised input tax credit & Rule 89(5)

In the case of VKC Footsteps India Pvt. Ltd. Vs. Union of India Ors. Supreme Court confirmed the judgement of Madras High Court which upheld that exclusion of unutilised ITC accumulated on “Input Services” from calculation of refund on account of inverted duty structure is a valid exercise of legislative power and it does not infringe the article 14 of the constitution. Further, Supreme Court urged GST council to reconsider the formula as the same suffers from “inequities”.

Registration under GST cannot be cancelled without proper enquiry by GST Authority

In the case of FR TRADE LINKS vs. THE STATE TAX OFFICER, Writ Petition was filed before the Hon’ble Kerala High Court challenging the orders cancelling his GST registration under the CGST/SGST Act and rejection of his application for revocation of cancellation of registration certificate.

Kerala High Court has held that registration under GST cannot be cancelled without proper enquiry in the matter from GST Authorities. Kerala High Court directed GST Authorities to restore the registration of petitioner which was cancelled by state tax officer based on the report of an intelligence officer without conducting any enquiry himself.

Centre to set up central body to revamp the advance ruling mechanism in GST

Centre proposes to replace current Advance Ruling mechanism in GST with a Central Board to eliminate the issue of different rulings from Authorities of Advance Ruling in different states. Incorporation of central Board for Advance Ruling will help taxpayers in avoiding disputes.

Proposal is to establish Board for Advance Ruling (BAR) located at the central level with operational centres in Delhi and Mumbai in place of AAR. The state-level AAR mechanism may function in the interim with the BAR to address contradictions in orders on applicability and quantum of tax. 

“Other charges” other than construction services collected by real estate developers will attract 18% GST

In an advance ruling application filed by M/s Puranik Builders Ltd. before the Maharashtra Authority of Advance Ruling, authority held that “Other Charges” collected by real estate developers such as installation of electricity meter, water connection, club house maintenance and development charges etc. cannot be treated as consideration for construction services as the same is not naturally bundled.