2018 (12) TMI 1355 - AAR - GST

Maintainability of Advance Ruling application - admissibility u/s 97 (2) of CGST Act - Levy of GST - retention of amount on cancellation of flats - What is the legal procedure for cancellation of flat which is booked in pre-GST Regime and cancelled in post-GST Regime? Held that - The questions posed before us are not the questions in respect of which an Advance Ruling can be sought under the GST Act. In view thereof, the impugned application is not maintainable - No proceedings of Advance Ruling under the GST Act lie in the instant case. Ruling - The application for advance ruling is rejected being non-maintainable.

Summary

Issues Involved:
1. Legal procedure for cancellation of flat booked in pre-GST regime and cancelled in post-GST regime.
2. GST liability when a small amount is retained for cancellation.
3. Availability of GST input tax credit of Service Tax and State VAT paid at the time of booking.
4. Methodology to avail Input Tax Credit on the said taxes paid.
5. Whether cancellation of flat can be equated with the downward revision of price.
6. Applicability of time limitation for refund as specified under section 11B of Central Excise Act.

Detailed Analysis:

1. Legal Procedure for Cancellation of Flat:
The applicant, engaged in the construction of residential and commercial complexes, sought clarification on the legal procedure for cancellation of flats booked in the pre-GST regime and cancelled in the post-GST regime. The flats were booked with the applicable service tax and MVAT deposited. The cancellation of flats post-GST implementation raised questions about the availability of input tax credit for the developer and the methodology to avail it.

2. GST Liability When a Small Amount is Retained for Cancellation:
The applicant acknowledged that retaining a small amount for cancellation is considered a service, and GST is discharged on this amount. The contention was not about this scenario but rather about cancellations without any retention amount.

3. Availability of GST Input Tax Credit of Service Tax and State VAT Paid:
The applicant argued that under Section 142(2) of the CGST Act, a credit note can be raised if there is a downward revision of price, which they equated with the cancellation of flats. They suggested that the developer should reduce GST to the extent of service tax or VAT paid at the time of booking. However, the concerned officer pointed out that input tax credit of service tax while booking of flat is not available to the developer as the service was not ultimately provided, and the amount might have been refunded to the customer.

4. Methodology to Avail Input Tax Credit on the Said Taxes Paid:
The applicant suggested two scenarios: (a) Cancellation equated with downward revision of price, allowing the issuance of a credit note under Section 142(2) of the CGST Act, and (b) Refund eligibility as per Rule 6(3) of Service Tax Rules, 1944. The concerned officer, however, emphasized that there is no provision like Rule 6(3) in GST, and the only remedy is to file an application for refund of excess service tax paid as per Section 11B of the Central Excise Act, 1944.

5. Whether Cancellation of Flat Can Be Equated with Downward Revision of Price:
The applicant argued that cancellation could be equated with downward revision of price, thus allowing the issuance of a credit note under Section 142(2) of the CGST Act. They cited various legal principles and judicial pronouncements to support their claim. However, the concerned officer contended that cancellation of flat cannot be equated with revision of contract price as the contract itself is cancelled, not revised.

6. Applicability of Time Limitation for Refund as Specified under Section 11B of Central Excise Act:
The applicant argued that the time limit for claiming a refund should be considered from the date of cancellation of the flat, not from the date of payment of service tax. They cited various judicial pronouncements supporting this view. The concerned officer, however, maintained that the refund claim should be disposed of in accordance with the provisions of the existing law, and the relevant date for claiming the refund will be as per the provisions of Section 11B of the Central Excise Act, 1944.

Conclusion:
The Authority for Advance Ruling concluded that the questions posed were not within the scope of an advance ruling under the GST Act. The application was rejected as non-maintainable, and no further proceedings of advance ruling under the GST Act were warranted. The applicant was advised to seek a refund of the excess service tax paid by filing an application as per the provisions of the existing law.