Taxman’s Fine Print: Ashiana’s Service Misstep Turns Costly

Image Source : Builders in India - 99acres.com

Ashiana Housing Ltd has received a GST order demanding both tax and penalty of ₹1.1 million each, stemming from alleged discrepancies in its service classification and input credit management. The order, issued by the Jaipur GST authority, follows a detailed audit of Ashiana’s financial records.

Key developments:

The dispute centers on interest income received from delayed customer payments, which authorities classified as exempt services
Ashiana was found not maintaining separate input credit accounts for taxable and exempt services, triggering reversal provisions under Rule 6(3) of the Cenvat Credit Rules
The company had previously reversed input credits worth ₹1.5 crore under pressure, but now faces additional liability and penalty
Ashiana argues that interest on delayed payments is excluded from taxable value under Rule 6(2)(iv) of the Service Tax Valuation Rules
Legal counsel has challenged the extended limitation period and penalty imposition, citing interpretational ambiguity

Sources: Indian Kanoon, SEBI, CPWD GST Orders, ICMAI Handbook, Economic Times, Business Standard, Moneycontrol