• Notification Date: 09-05-2022
  • Notification No: N/A

Gujarat High Court Grants GST Refund to Service Recipient

The Gujarat High Court Bench consisting of Justice J.B.Pardiwala and Justice Nisha M.Thakore, has come to the decision that a recipient is entitled to claim for a refund if they are suffering from the burden of tax under Section 54 of the CGST Act. The individual forwarding this writ application is a practicing advocate in the High Court. He entered into an agreement regarding the matter of purchasing a plot with the respondent, Navratna Organizers and Developers Pvt. Ltd. The agreement was formulated regarding the construction of a bungalow on that plot by the respondent and encompassed for the writ application.

The two parties had filed separate agreements regarding the sale of the plot of land and for the construction of a bungalow on that plot. The applicant was liable to pay all the taxes, such as Income-tax, GST, and other taxes that are applicable on the plot according to the agreement. The writ applicant had believed that he was responsible for paying the taxes under the Central/Gujarat Goods and Services Tax Act, 2017 on the consideration that is payable for building the bungalow by the virtue of the agreement. He believed the supply of construction services would be constituted under the GST Acts by this agreement.

The respondent had previously informed the writ applicant that he would be responsible for paying 18% GST applicable on the plot of land as well as for constructing the bungalow. The tax payable by the petitioner on the plot purchase and bungalow construction after deducting one-third of the value of the plot is mentioned under entry no. 3(if) of Notification No. 11/2017-Central Tax (Rate) drafted on June 28, 2017 read with paragraph 2 of the notification. The respondent has challenged the writ applicant and raised an invoice against him to collect tax from the petitioner.

The writ applicant states that the schedule to the property mentions distinctively about the area of land that the respondent had agreed to sell to him. The schedule clearly contented that the agreement was severable. According to the writ petitioner, the agreement for the sale of land was separately made. The agreement was separately made for the consideration for the purchase of plot and for entire amount of consideration regarding the land is outside the scope and purview of the Acts under GST. The writ applicant also claims that the booking agreement was entered into after the land was verified to be totally developed. It was ensured that there were no further modifications required to be done on the plot by the landowner after the agreement was formulated by the respondent with the writ applicant.

The court has concluded that the writ applicant has borne the tax and he is eligible to receive the refund along with the statutory interest. He would receive interest at the rate of 6 per cent every annum, calculated from the date of excess payment made by him. The Court has ordered that the process of granting refund to the writ petitioner must get done within 12 weeks.