Bagmane Developers Vs Union of India (Karnataka High Court)
The Hon’ble HC, Karnataka in Bagmane Developers v. Union of India [W.P. No. 9430/2020 dated October 22, 2020] stayed demand of Rs. 62 crore in a writ petition challenging credit restriction under Section 17(5)(c) and (d) of Central Goods and Services Tax Act, 2017 (CGST Act) on construction of building used for letting out wherein GST is paid on rent.
Facts:
Bagmane Developers (“the Petitioner”) is engaged in taxable services such as commercial/industrial construction service, works contract services, repair services and renting of immovable properties. The Petitioner has filed returns in GSTR – 3B and GSTR – I for the period between July 2017 and April 2019 but without availing input tax credit (“ITC”) on goods and services utilized in construction of commercial complexes which are rented after completion. The Petitioner has filed GSTR – 3B for the month of May 2019 availing substantial ITC prompting the GST department to issue notice dated March 6, 2020 (“Impugned notice”) to show cause as to why ITC availed amounting to Rs. 62 crore (approx.) in GSTR-3B for the month of May, 2019 should not be held as ineligible and demanded and recovered from the Petitioner along with interest and penalty.
Issues:
