Dlf Limited vs. The Commissioner Of Central Goods And Service Tax And Ors

Facts

DLF Limited (the petitioner) sought an advance ruling on whether charges collected for preferential location of flats should be taxed independently or along with construction services. The Advance Ruling Authority, by order dated 28.08.2020, ruled that these charges should be taxed separately. The petitioner's appeal against this order was dismissed by the appellate authority on 28.03.2022. Subsequently, the GST Council, in its 54th meeting on 09.09.2024, recommended that preferential location charges are not to be taxed separately but along with construction services. Following this recommendation, the Government of India issued a clarification via Circular dated 11.10.2024, stating that such charges are an integral part of construction services and attract GST at the same rate.

Held

The Court held that the clarification issued by the Government of India through its Circular dated 11.10.2024, issued under Section 168(1) of the CGST Act, 2017, binds the respondent-authorities. The Court noted that this Circular, being in the nature of a clarification, would have retrospective application. It acknowledged that the GST Council's recommendation, accepted by the Government, clarified that charges collected by developers for preferential location of an apartment would attract GST at the same rate as applicable to construction services before the issuance of the apartment's completion certificate. Consequently, the impugned order of the Advance Ruling Authority dated 28.08.2020 and the order of the appellate authority dated 28.03.2022, which were contrary to this clarification, were quashed. The Court directed that necessary consequences should follow.

Key Issues

1. Whether the order dated 28.08.2020 passed by the Advance Ruling Authority and the order dated 28.03.2022 passed by the appellate authority, which held that charges collected for preferential location of flats are to be taxed independently of construction services, are liable to be set aside in light of the subsequent clarification issued by the Government of India. Petitioner's contention: The petitioner argued that both the Advance Ruling Authority's order and the appellate authority's order are contrary to the clarification issued by the Government of India through its Circular dated 11.10.2024, which accepted the GST Council's recommendation. Therefore, these impugned orders should be quashed. Respondents' contention: The judgment does not record any specific arguments made by the respondents.