Business liable for Rs. 47,95,217 service tax demand, Tribunal orders Rs. 20,00,000 predeposit

The Tribunal confirmed a demand of Rs. 47,95,217/- against a business for not paying service tax under 'Construction of Residential Complex Service' for the period December 2009 to September 2010. The applicant's argument that advance amounts and activities for prospective buyers might not be taxable services was rejected. The Tribunal directed the applicant to predeposit Rs. 20,00,000/- within six weeks for appeal admission and stay on balance dues collection, with adjustment of the amount already paid. Compliance was required by a specified date, and upon deposit, the remaining dues collection was stayed pending appeal.

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Issues Involved:
1. Liability of service tax for construction of residential flats.
2. Interpretation of the Explanation under 67(105)(zzq) regarding taxable services.
3. Requirement of predeposit for admission of appeal and stay on collection of balance dues.

Issue 1: Liability of service tax for construction of residential flats:
The case involved a business engaged in constructing residential flats and facilitating registration of undivided share of land for prospective buyers. The Revenue contended that service tax should have been paid under the category of 'Construction of Residential Complex Service' for the period December 2009 to September 2010. After adjudication proceedings and appeal, a demand of Rs. 47,95,217/- was confirmed against the applicant, along with interest and penalties.

Issue 2: Interpretation of the Explanation under 67(105)(zzq) regarding taxable services:
The applicant argued that the Explanation inserted under 67(105)(zzq) implied that collection of advance amounts and activity for prospective buyers might not constitute a taxable service. The applicant had paid service tax from 1.7.2010 to September 2010, amounting to Rs. 7,99,643/-, and requested this amount to be considered sufficient for the appeal's admission. However, the Revenue contended that the Explanation applied to a different scenario where construction was on land owned by the developer, unlike in this case where construction was on UDS registered in the buyer's name.

Issue 3: Requirement of predeposit for admission of appeal and stay on collection of balance dues:
The Tribunal, considering arguments from both sides and referring to a previous case, directed the applicant to predeposit Rs. 20,00,000/- within six weeks. The amount already paid, Rs. 7,99,643/-, would be adjusted if certified by the authorities. Upon such deposit, the predeposit of the remaining dues from the order would be waived, and collection stayed during the appeal's pendency. Compliance was to be reported by a specified date.

This judgment addressed the liability of service tax for construction activities, the interpretation of the Explanation under 67(105)(zzq) in relation to taxable services, and the procedural requirement of predeposit for appeal admission and stay on the collection of balance dues pending appeal.

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