2021 (6) TMI 1093 - AAAR - GST

Valuation - Statutory charges i.e. External Development Charges and Infrastructural Development Charges recovered by the Applicant from buyers and paid further to respective Government Authorities - forming part of value of taxable supplies being made by the Applicant or not - HELD THAT - In the Appellant's case however the under relevant law viz. the HDRUA (Haryana Development and Regulation of Urban Areas) Act 1975, the External Development and Infrastructure Development charges are meant to meet, respectively, the cost of external development work to be carried out in respect of an individual infrastructure project viz. a colony, and the cost on developing infrastructure projects development in the State - As per the Act, it is charged 'per square metres of the gross area and of the covered area of all the floors in case of flats proposed to be developed by him into a colony'. Further it is to be paid 'in two equal installments. The first installment shall be deposited within 60 days from the date of the grant of the license and the second installment to be deposited within six months from the date of grant of license'. It is not related to the sale of the flats. Similarly for the EDC the Licensee has 'to pay proportionate development charges if the external development works as defined in clause (g) of section 2 are to be carried out by the Government or any other local authority. The proportion in which and the time within which, such payment is to be made, shall be determined by the Director - Both are not related with the number of flats to be constructed/sold or are to be paid even if the some/all flats kept for personal use. Since, the 'External Development' and 'Infrastructure Development' do contribute to the value of the flats, the charges for these beyond doubt form a constituent of the value of the construction service provided to the flat owners by the Appellant. The GST shall be applicable, as also provided under Section 15(2). Appeal dismissed.

Summary

Issues involved:
1. Interpretation of whether statutory charges like External Development Charges and Infrastructural Development Charges form part of the value of taxable supplies.
2. Compliance with statutory provisions and principles of natural justice in passing the impugned order.

Issue 1: Interpretation of statutory charges in taxable supplies:
The case involved an appeal by M/s Ashiana Housing Ltd. against an Advance Ruling that held External Development Charges (EDC) and Infrastructural Development Charges (IDC) as part of the value of taxable supplies. The Appellant contended that these charges, recovered from buyers and paid to government authorities, should not be included in the value of supply. The Appellant argued that EDC and IDC are statutory charges under the HDRUA Act, not for supply of services, and thus should not be part of transaction value under Section 15(1) of the CGST Act. The Appellant cited legal precedents to support their position, including a CESTAT order and a Supreme Court decision. However, the Appellate Authority upheld the ruling, stating that EDC and IDC charges are mandatorily recovered and contribute to the value of construction services provided to flat owners, making them taxable under Section 15(2) of the CGST Act.

Issue 2: Compliance with statutory provisions and principles of natural justice:
The Appellant raised concerns about the timing of the Advance Ruling order, received over a year after the pronouncement, alleging a violation of Section 98(6) and principles of natural justice. They argued that such delay impacted their ability to challenge the ruling effectively. However, the Appellate Authority found that the delay did not invalidate the ruling's substance. The Authority emphasized the clear legal framework under the GST laws, specifically Section 15(2)(a), which includes taxes, duties, fees, and charges under any law in the taxable value. The Authority distinguished the Appellant's cited legal cases, stating that the specific nature and purpose of EDC and IDC charges under the HDRUA Act necessitate their inclusion in the taxable value. Therefore, the Appellate Authority dismissed the appeal and upheld the Advance Ruling, concluding that the ruling was legally sound and compliant with the GST laws.

This detailed analysis of the judgment provides a comprehensive overview of the issues involved, the arguments presented by the parties, and the legal reasoning behind the Appellate Authority's decision.