GST WEEKLY UPDATE :13/2025-26 (29.06.2025) By CA Vipul Khandhar

-By CA Vipul Khandhar, Ahmedabad

1. The CBIC clarifies procedures for review, revision, and appeals of orders passed by Common Adjudicating Authorities (CAA) handling show cause notices from DGGI) Circular No. 250/07/2025-GST dated June 24, 2025:

To ensure uniformity in procedure for review, revision, and appeal against the Orders-in-Original (O-I-Os) adjudicated by Common Adjudicating Authorities, it is hereby clarified that:

1. a) Review under Section 107 of the CGST Act, 2017:The Principal Commissioner or Commissioner of Central Tax under whom the Common Adjudicating Authority (Additional/ Joint Commissioner) is posted shall be the reviewing authority in respect of such O-I-Os. 

1. b) Revisional Power under Section 108 of the CGST Act, 2017:The Principal Commissioner or Commissioner of Central Tax under whom the Common Adjudicating Authority (Additional/ Joint Commissioner) is posted shall be the revisional authority in respect of such O-I-Os. 

2017. c) Appeal Procedure under Section 107 of the CGST Act, 2017:Appeals against the order of Common Adjudicating Authority (Additional/Joint Commissioner) shall lie before the Commissioner (Appeals) corresponding to the territorial jurisdiction of the Principal Commissioner or the Commissioner of Central Tax, under whom the said Common Adjudicating Authority (Additional/ Joint Commissioner) is posted, as specified in Table III of notification No. 02/2017- Central tax dated 19th June, 2017. 

1. d) Department’s Representation in Appeals: The Principal Commissioner or Commissioner of Central Tax of such Commissionerate under whom the Common Adjudicating Authority (Additional/Joint Commissioner) is posted shall represent the department in appeal proceedings against the O-I-Os passed by such Common Adjudicating Authority (Additional/ Joint Commissioner) and accordingly may appoint any officer subordinate to him to be the designated officer for filing departmental appeals.

1. e) The reviewing or revisional authority for such orders may seek comments on the O-I-O from the concerned DGGI formation before proceeding to decide on the order passed by the CAA. 

2. The Telangana Commercial Taxes Department clarifying GST on lease rentals by hotel and convention center owners to exhibition or sales organisers (Circular vide CCT’s Ref: L-III/2/2025 dated June 19, 2025):

SGST clarifying GST on lease rentals by hotel and convention centre owners to exhibition or sales organizers. Leasing of premises for events like exhibitions or trade fairs is classified as “leasing of immovable property for business or commerce” under GST, attracting an 18% tax (9% CGST + 9% SGST). This transaction is distinct from accommodation or banquet services and must be properly documented.

The transaction involves:

• Hotel/Convention Owners (lessor) leasing/renting out space to
• Exhibition/Sales Organizers (lessee) for a limited duration for conducting business events, such as exhibitions, trade fairs, sales showcases, etc.
• This transaction is not a supply of service by the hotel as accommodation or banquet service, but as “leasing of immovable property for business or commerce” under GST.

Applicable GST Provisions: For the Hotel/Convention Owners (lessor) leasing/renting out the space

1. a) Classification of Supply

• As per Schedule II of the TGST/CGST Act, 2017, renting/leasing of immovable property for business or commerce is a supply of service.
• Leasing of exhibition halls, convention centers, or similar premises for commercial events falls under SAC 997212 – Rental or leasing services involving own or leased non-residential property for use in business or commerce.

1. b) Rate of GST

• The applicable GST rate is 18% (9% CGST + 9% SGST) on the rental amount.
• No abatement is provided in such leasing transactions.

1. c) Place of Supply

• As per Section 12(3) of the IGST Act, 2017, the place of supply of immovable property-related services shall be the location of the property.
• Accordingly, GST (CGST + SGST or IGST) will be levied depending on whether the supplier and recipient are in the same State/UT.

1. d) ITC Eligibility

• The lessee (exhibition organizer) may avail Input Tax Credit (ITC) on the GST paid, subject to the eligibility conditions under Section 16 of the TGST/CGST Act.
• Hotel/convention center owners must issue a valid GST invoice for the rental amount charged.

1. e) Other Compliance

• Lease agreements, even if short-term or for specific events, should be properly documented.
• Officers must verify that the premises are not being passed off as “exempt supply” by misclassifying the activity.
• Rental income must be disclosed in GSTR-1 under the appropriate HSN/SAC code.

1. f) Exemption Clarification

• Exemption under Entry 5 of Notification No. 12/2017 – Central Tax (Rate) is not applicable here. This entry covers renting of precincts of religious places meant for the general public and does not apply to commercial exhibitions.

 Applicable GST Provisions: for Lessee/Organizer Conducting Casual Business

1. a) As per Section 2(20) of the TGST/CGST Act, a Casual Taxable Person (CTP) is: A person who occasionally undertakes transactions involving supply of goods or services in the course or furtherance of business in a State or Union Territory where they do not have a fixed place of business.

Examples:

An organizer from Delhi conducts a 3-day exhibition in Hyderabad -he is a CTP in Telangana.

1. b) Mandatory GST Registration

• Section 24(i) of the TGST/CGST Act mandates compulsory registration for CTPs regardless of turnover.
• Registration must be obtained at least 5 days before commencing business in the said State/UT.
• Registration is State-specific and valid for a maximum of 90 days, extendable by another 90 days.

1. c) Form to be used:

• GST REG-01 for new registration
• GST REG-11 for extension (if required)

1. d) Advance Tax Payment

• CTPs are required to deposit advance tax equal to the estimated tax liability for the period of registration at the time of registration.
• This is adjusted against actual liability; any excess can be claimed as a refund.

1. e) Issuance of GST Invoices

• CTP must issue tax invoices for all supplies made at the leased premises.
• Must charge applicable GST (based on nature of goods/services).

1. f) Filing of Returns

CTPs are required to file the following returns:

1. g) Input Tax Credit (ITC)

• CTPs can claim ITC on eligible inward supplies, including:
  • Rent paid to the hotel/convention center
  • Goods/services used during the exhibition
• However, ITC is subject to normal conditions under Section 16, including possession of a tax invoice, actual receipt of goods/services, etc.

1. h) Penalty for Non-Compliance

• Conducting business without CTP registration is a violation.
• Liable for penalties under Section 122 of TGST/CGST Act (₹10,000 or tax evaded, whichever is higher).
• Officers are advised to take strict action in such cases and initiate recovery, including blocking of premises where needed.

1. I) Important Exemption Clarification

Organizers sometimes wrongly claim exemption under Notification No. 12/2017 – Services by unregistered casual vendors. This exemption does not apply to formal organisers conducting exhibitions or commercial sales.

3. AAR:

(i) Hon’ble Supreme Court Decision Regarding No negative blocking allowed in ECL by department)

(DGGI Versus Super Products)

The Supreme Court has dismissed the Special Leave Petition (SLP) filed by the Directorate General of GTS Intelligence (DGGI) challenging the Delhi High Court’s decision that set aside the negative blocking of a taxpayer’s Electronic Credit Ledger (ECrL) under Rule 86A of the CGST Rules.

In its judgment, the High Court not only quashed the negative blocking of the ECrL under Rule 86A but also referred to the Best Crop Science Ltd ruling, which clarified that past fraudulent availment of ITC does not warrant future replenishment of the credit ledger under Rule 86A(1).

AAR GST Applies on ‘Free’ Flats Given to Society Members in Redevelopment: Treated as Barter for Development Rights: AAR(M/s. SHARDA VASTU NIRMITEE PRIVATE LIMITED by MAH ) has ruled that Goods and Service Tax (GST) is payable on free area, amenities & charges under redevelopment deals.

The bench has observed that the Applicant has received Transfer of Development Rights (TDR), and in return he has supplied a constructed flats free of cost along with other benefits. Consequently, this transaction squarely falls under “exchange” as mentioned in Section 7 (1) (a) of MGST Act and thus within the purview of Scope of Supply under MGST Act, 2017.

The bench clarified that the supply of free residential units by the developer to the society members is not truly free, as it is in exchange for the transfer of development rights (TDR/FSI) provided by the society. This transaction is treated as an exchange/barter transaction under GST, and both sides of the transaction are liable to GST. Therefore the supply of residential units to the society members is considered a supply of construction services under Section 7 of the CGST Act, as it involves the construction of a building for the society in exchange for TDR/FSI. As per the relevant GST notifications, the developer is liable to pay GST on this supply at the effective rate of 1% (for affordable housing) or 5% (for non-affordable housing) without Input Tax Credit for projects commencing on or after April 1, 2019. The value of this supply is determined as per the open market value of similar apartments sold to independent buyers nearest to the date of the development agreement.

The applicant is engaged in the business of real estate Re-development of old buildings. The company has been awarded a Re-development project of a housing society. The old society is a fully residential building having 22 members. The existing members occupy an area ranging from 260 Sq. Ft. to 680 Sq. Ft. carpet. The Applicant has entered into a Development Agreement. The applicant sought clarity on whether GST would be applicable on various components offered free of cost to existing society members, including Area in lieu of their existing flats, Additional area, Amenities, Parking spaces, and Stamp duty and registration charges borne by the developer.

The second question addressed whether GST is applicable on monetary payments made to members as part of the redevelopment agreement, including Rent and brokerage for alternate accommodation, Shifting charges and Corpus paid to members and to the society. Finally, the applicant sought to determine the taxable value for GST purposes on the free supply of flats, additional area, and amenities to existing members.

The AAR ruled that GST is payable on all these components, even if they are provided free of cost, as they form part of the consideration for development rights transferred to the developer. The AAR stated that monetary payments made to members as part of the redevelopment agreement do not amount to “supply of services” by the members to the developer and hence are not liable to GST. The AAR noted that these form part of the consideration paid by the developer to acquire development rights, along with the free units. The value of supply shall be equivalent to the value of similar apartments sold by the developer to independent buyers closest to the date when development rights are transferred.

Disclaimer:

This publication contains information for general guidance only. It is not intended to address the circumstances of any particular individual or entity. Although the best of endeavour has been made to provide the provisions in a simpler and accurate form, there is no substitute to detailed research with regard to the specific situation of a particular individual or entity. We do not accept any responsibility for loss incurred by any person for acting or refraining to act as a result of any matter in this publication.

(The Author is a well known Chartered Accountant practising at Ahmedabad)