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2021 (1) TMI 1095 - HC - GSTValuation - Independent transaction of purchase of land and construction contract for construction of bungalow on such land - Validity of Entry No.3(if) of the Notification No.11/217 -Central Tax (Rate) dated 28th June, 217 read with Para-2 of the said notification - HELD THAT - The writ applicant has been able to make out a strong prima facie case to have an interim order in his favour in terms of para-27(F) of the writ application. We, accordingly, grant such relief. We permit the writ applicant to deposit the amount of tax as raised under the invoice without prejudice to his rights and contentions as raised in this writ application. Mr. Sheth, the advocate on record, shall furnish one set of the entire paper-book to Mr. Devang Vyas, the learned Addl. Solicitor General of India at the earliest so that he can obtain necessary instructions in the matter by the next date of hearing.
Issues: Challenge to GST notification regarding tax liability on sale of land and construction of bungalow
Analysis: The writ applicant challenged Entry No.3(if) of Notification No.11/217 -Central Tax (Rate) dated 28th June, 217, along with Para-2 of the said notification. The challenge arose from an agreement with a developer for the purchase of a plot of land and construction of a bungalow on it. The agreement involved separate considerations for the sale of land and the construction of the bungalow. The contention was that the applicant was required to pay tax at 9% CGST plus 9% SGST on the entire consideration, including the land and bungalow construction, after paying 1/3rd value towards the land. The impugned notification deemed only 1/3rd of the total consideration as the value of the land, which was disputed as ultra vires section 7(2) of the GST Act and Entry No.5 of Schedule-III to the GST Act. Additionally, it was argued that the deeming fiction introduced by Para-2 of the notification contradicted Section 15 of the GST Act. The High Court, after hearing the arguments, found that the writ applicant had established a strong prima facie case for an interim order in his favor as per para-27(F) of the writ application. Consequently, the Court granted relief by permitting the writ applicant to deposit the tax amount raised under the invoice without prejudicing his rights and contentions raised in the writ application. Furthermore, the advocate on record was directed to provide the entire paper-book to the Addl. Solicitor General of India promptly for necessary instructions before the next hearing date.
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