PÀ£ÁðlPÀ ¸ÀPÁðgÀ (ªÁtÂdå vÉjUÉ E¯ÁSÉ)

GOVERNMENT OF KARNATAKA
(Department of Commercial Taxes)
ªÁtÂdå vÉjUÉUÀ¼À G¥À DAiÀÄÄPÀÛgÀ PÀbÉÃj, r¹¹n-Drmï.1.6, rfJ¸ïnN-01, ©.JªÀiï.n.¹,
5£Éà ªÀĺÀr, AiÀıÀªÀAvÀ¥ÀÄgÀ, ¨ÉAUÀ¼ÀÆgÀÄ-22.
Deputy Commissioner of Commercial Taxes, (Audit)-1.6, DGSTO -1,
B.M.T.C., 5th Floor, Yashwanthpur, Bangalore-560 022.
: E-Mail: [email protected] : Ph. No: 080-28361667
File No. DCCT (A)-1.6/DGSTO-1/2024-25 Dated 27-11-2024.
To,
GSTIN: 29ABEPR4178D1ZF
Trade Name: M/s. D. Rajaram,
Address: No 18a, 8th Main, Rmv Extn,
Sadashivanagar, Bangalore, 560080.
Email: [email protected]
Period - F.Y: -From April-2020 to March-2021.
1. Please find enclosed Show Cause notice issued for the period April-2020 to
March-2021.
2. Please reply to the points contained in the enclosed Show Cause notice within 30
days from the date of receipt of this notice, otherwise it will be deemed that you
choose not to make a reply and the matter will be proceeded with based on such
records as are available.
SHOW CAUSE NOTICE
Under Section 73 read with Section 75, of the Karnataka Goods and Services
tax act, 2017 (Herein afterwards referred to as The KGST Act, 2017) read with
Rule 142 of the Karnataka Goods and Services tax rules, 2017 (Herein afterwards
referred to as The KGST Rules, 2017) read with section 6 of Central Goods and
Services Tax Act, 2017 (Herein afterwards referred to as The CGST Act, 2017)
read with section 4 and 20 of Integrated Goods and Services Tax Act, 2017 (Herein
afterwards referred to as The IGST Act, 2017) and relevant provisions of Goods
and Services Tax (Compensation) Act, 2017. (Herein afterwards referred to as The
GST (Cess) Act, 2017).
References:
1.Adjudication assignment number issued by Joint-Commissioner of Commercial
taxes (Administration), DGSTO-1, vide assignment No.1783/2024-25 dated
07-10-2024.
2.This office Intimation in Form GST DRC-01A vide No. DCCT(A)-
1.6/DGSTO.1/Adjudication/2024-25 dated 14-11-2024.

1. M/s. D. Rajaram, (hereinafter referred to as the Taxable Person), Private Limited

Company concern, No 18a, 8th Main, Rmv Extn, Sadashivanagar, Bangalore, 560080 and
registered with GSTIN No.29ABEPR4178D1ZF under the jurisdiction of LGSTO-130,
Bengaluru. The Taxable Person has filed the returns in Form GSTR-3B for the tax period
April 2020 to March 2021.
 2. The Demand and Recovery proceedings under the provisions of Section 73 read with
Section 75, Section 122, Section 50 of the KGST Act, 2017 read with Rule 142 of
the KGST Rule, 2017 read with Section 6 of the CGST Act, 2017 read with Section
4 and 20 of the IGST Act, 2017 and relevant provisions of Goods and Services Tax
(Compensation) Act, 2017 and or the rules made thereunder were initiated by the
undersigned consequent to the aforementioned adjudication assignment number
issued by the Joint Commissioner of Commercial Taxes (Administration), DGSTO-
01, Bangalore for the tax period April 2020 to March 2021.
3.Accordingly, the undersigned has issued an intimation in Form DRC-1A in
electronically through GST Portal on 14-11-2024 and informed to the Taxable
Person to pay the balance tax along with interest within 22-11-2024 and failing
which Show Cause Notice will be issued under section 73(1). In response to this, the
Taxable Person has neither filed reply nor paid taxes along with interest to the
department till date.

INTRA- STATE SUPPLIES OF SERVICES MISCLASSIFIED AS INTER-STATE

SUPPLIES OF SERVICES:
3.1. The Taxable Person is supplying the following Services to the Registered Persons
located outside the State has classified the intra-state supplies of services as inter-
state supplies.
i. Services supplied directly in relation to an immovable property, including
services provided by architects, interior decorators, surveyors, engineers and other
experts or estate agents, supply of grant of rights to use immovable property (Rental
services, Lease services of immovable property).
3.2. The Registered Persons located in the State supplying Services under following HSN
(SAC) to the Registered Persons located outside the State are supposed to misclassify
the supplies as Inter State Supplies instead of Intra State Supplies though the place
of supply of service is in the State.
Sl. No. HSN (SAC) DESCRIPTION

1 997212 Rental or Leasing Services

3.3.As per Section 12(3) (a), (b), (c) and (d) of the IGST Act, 2017 the place of supply of
services is,
when supplied directly in relation to an immovable property, including services
provided by architects, interior decorators, surveyors, engineers and other experts or
estate agents, supply of grant of rights to use immovable property,
Section 8(2) of the IGST Act, 2017 is reproduced below,
“Subject to the provision of Section 12, Supply of services where the location of the
supplier and the place of supply of services are in the same State or same Union
territory shall be treated as Intra- State supply”.
In cases of supply of services as mentioned supra, the location of the supplier of
services and the place of supply of services are in the same State since the Taxpayers
supplying such services are in the same State.
 Therefore, as per Section 8(2) of the IGST Act, 2017 the services supplied by
the Taxpayers located in the State where the place of supply of services is in the same
State, such supplies of services are Intra-State supplies liable to CGST & SGST.
In view of the above, irrespective of the location of recipient of services, the
services as specified supra are intra-State supplies. Therefore, the Taxable Person
is supplying the above-mentioned services to the recipients of services namely
the Registered Persons located outside the State, shall collect the CGST & SGST
on such supply of services and not IGST since such supply of services are not
Inter-State supplies of services.
This is an important aspect where the SGST component is related to the State
of Karnataka and if IGST is charged mistakenly, the SGST portion in the IGST flows
to the State where the Registered Person being the recipient of services is located
which is contrary to the provisions of Section 8(2) of the IGST Act, 2017.
In respect of the Taxpayers who are charging IGST on Inter State Supplies
involving the above mentioned HSN (SAC) Codes, the veracity of transactions as to
whether they are Intra State Supplies in terms of the place of supply specified in Sec.
12 or Inter State Supplies involving the issues other than those specified in Sec. 12
need to be examined and the actual Intra State Supplies of Services misclassified as
Inter State Supplies of Services are to be identified for suitable necessary action.
In view of the above, on verification of the Form GSTR1 & GSTR3B it is noticed
that the Taxable Person has paid IGST instead of SGST & CGST. The details of IGST
tax paid in returns is as under:
Tax liability declared in GSTR-1 (other
Tax liability declared in GSTR- than reverse charge supply) during the
Tax 3B during the month [as per month [as per table 4A, 4C, 5, 6C, 7,
Period table 3.1(a)] 9A, 9B, 9C, 10, 11]

IGST IGST

Apr-20 18720 0

May-20 18720 0

Jun-20 17784 55224

Jul-20 17784 0

Aug-20 17784 0

Sep-20 18720 54288

Oct-20 60307 0

Nov-20 70704 0

Dec-20 49910 180922

Jan-21 0 18720

Feb-21 0 49910

Mar-21 102946 34315

Total 393379 393379

Therefore, the Taxable Person is liable to pay SGST of Rs.1,96,689/- & CGST of
Rs.1,96,689/- on the above said outward supplies on which wrong payment of IGST tax
made.
 Further, Sec.77 of the KGST /CGST read with Sec.19 at IGST act provides that:
(1) A registered person who has paid the Central tax and State tax or, as the case may
be, the Central tax and the Union territory tax on a transaction considered by him to be
an intra-State supply, but which is subsequently held to be an inter-State supply, shall
be refunded the amount of taxes so paid in such manner and subject to such conditions
as may be prescribed.
(2) A registered person who has paid integrated tax on a transaction considered by him
to be an inter-State supply, but which is subsequently held to be an intra-State supply,
shall not be required to pay any interest on the amount of central tax and State tax or,
as the case may be, the Central tax and the Union territory tax payable.
Therefore, the said provisions of GST Act provide that, the RTP has to pay the
tax on right head and then he is eligible to get the refund of wrongly paid taxes.
Further, he shall not be required to pay interest on the amount of IGST payable.
4.Summary of the CGST/SGST payable:

ACT Period Tax Interest Penalty Other

CGST Act 2020-21 196689 0 0

SGST/UTGST Act --- 196689 0 0

IGST Act --- 0 0 0

Cess --- 0 0 0

Total 393379 0 0

5. Now, Therefore, the Taxable Person is hereby required to show cause the
adjudicating authority, as to why; -
6.The CGST/SGST amount of Rs.3,93,379/- for the tax period from April-2020 to
March-2021 on the taxable value of Goods and Services for the above-mentioned
discrepancies should not be considered as payment of tax under the above said
provisions & discussions in audit findings No.3.3 of the KGST Act, 2017 read with
relevant provisions of the CGST Act, 2017, IGST Act, 2017.
7.The taxable person is also required to note that, if no show cause is shown FORM
GST DRC-06 against the aforesaid proposals within THIRTY (30) days of the date
of receipt of this notice, and or if fails to reply/appear before the adjudicating
authority, the proceedings as deemed fit may be initiated as per the provisions of
the Act and the rules made thereunder against the taxable person without making
any further correspondence in this regard.

MURTHY
Digitally signed by MURTHY
Date: 2024.11.27 18:11:59
+05'30'

Deputy Commissioner of Commercial Taxes,

(Audit)-1.6, DGSTO-01, Bengaluru.
Enclosures:1. Form GST DRC –01.