SC Ruling On User Development Fee Provides Guidance For GST,
SC Ruling On User Development Fee Provides Guidance For GST, Tax On Royalty
|
The SC had held that UDF collected by the DIAL is in the nature of statutory levy and the same would not be taken as consideration against any services.
A recent judgment by the Supreme Court (SC) on the user development fee (UDF) collected by the Delhi International Airport Limited (DIAL) may have ramifications on the goods and services tax (GST) as well as the income tax on royalty etc.
Last week, the apex court had held that UDF collected by the DIAL is in the nature of statutory levy and the same would not be taken as consideration against any services.
As such, no service tax is payable on UDF, the court ruled.
As such, no service tax is payable on UDF, the court ruled.
In determining that the fee collected by the DIAL is in the nature of statutory levy, the court had laid down some principles.
Firstly, UDF is collected for the development of future establishment at the airport and no additional benefit is accrued to passengers, visitors, traders, and airlines upon levy of this fee. Thus, the UDF is in the form of ‘tax or cess’, collected for financing the cost of future projects and the same cannot be taken as consideration for services provided to the customer, visitors, passengers, vendors etc.
Secondly, the collection is not premised on the rendering of any service.
Thirdly, the amounts collected are deposited in an escrow account, not within the control of the assessee.
Fourthly, the utilization of funds is monitored and regulated by law.
Though the ruling related to the pre-GST matter, experts said the principles laid down by the SC should be applied to the GST too.
“The impact of principles laid down in the judgment would need to be analyzed under the GST legislation which specifically provides that statutory levies other than GST collected by the supplier would form part of the value of supply,” said Saurabh Agarwal, tax partner at EY.
Besides, the principles may be used for determining whether the tax be paid on royalty etc, he said.
“These may be useful in determining whether the consideration in the form of fee, royalty, etc collected by the government from business entities would be in the nature of the statutory levy or the same would be considered as a consideration against any services,” he said.
Source..
Source..
Post Categories
Featured Posts
Latest Posts
Latest Posts
AI and Big Data in Legal Case Management
The integration of artificial intelligence (AI) and big data into legal case management is revolutionizing the way law firms and legal professionals operate. These technologies offer unprecedented opportunities to streamline processes, enhance decision-making, and improve client outcomes. The Role of ...
Legal Challenges in Cryptocurrency and Blockchain: Exploring the Evolving Legal Landscape
The rise of cryptocurrencies and blockchain technology has revolutionized the financial world, but it has also brought about a series of complex legal challenges. As more businesses and individuals adopt digital currencies and decentralized systems, governments and regulatory bodies are ...
NRIs and Taxation in India: Legal Tips for Compliance and Avoiding Disputes
Navigating the tax landscape in India can be challenging for Non-Resident Indians (NRIs). Understanding your tax obligations is crucial to avoid disputes and penalties. Here are some essential legal tips to help NRIs ensure compliance and protect their financial interests: ...
Supreme Court Has Prepared A “Handbook On Combating Gender Stereotypes”
Chief Justice of India DY Chandrachud announced today morning that the Supreme Court has prepared a “Handbook on combating Gender Stereotypes”, in order to identify and remove the use of words and phrases, which are loaded with gender stereotypes, in ...
Anti-Money Laundering (AML) Compliance: Best Practices for Law Firms
In today's globalized economy, money laundering poses a significant threat to financial systems and institutions, including law firms. As facilitators of various financial transactions, law firms are often targeted by money launderers seeking to legitimize illicit funds. Anti-Money Laundering (AML) ...
5 Mistakes People Make While Buying Property in India
Buying property is one of the biggest financial decisions in India.But are you sure you are not making a mistake that could cost you years of litigation or financial loss? Many buyers focus only on location and price, while ignoring ...
Speak With Our
Get a Appointment