2016 (11) TMI 280 - AT - Service Tax

Tribunal Overturns Service Tax Liability Order, Emphasizes Statutory Provisions & Natural Justice

The Tribunal set aside the Order-in-Original confirming service tax liability under 'Works Contract Services' and 'Construction of Residential Complex ... Taxability - classification of service under the head “Works Contract Services” or “Construction of Residential Complex Services”? - Held that: - the issue raised needs to be reconsidered by the adjudicating authority after the judgment of the tribunal in the case of Krishna homes Vs. CCE [2014 (3) TMI 694 - CESTAT AHMEDABAD] and also after the amendment to the statuary provision from 1.7.2010. The adjudicating authority has not addressed to the points raised by the appellant in their written submissions and the findings are also sketchy as to the issue that from 1.7.2010 “Works Contract Services” gets attracted for the services as rendered by the appellant. In our view this, these two issue needs reconsideration by the adjudicating authority. Accordingly, without expressing any opinion of the merits of the case leaving all the issues open, we set aside the impugned order to that extent and remit the matter back to the adjudicating authority to reconsider the issue afresh after following the principle of natural justice. Service tax liability - amount collected as “Management, Maintenance or Repair Services” - Held that: - the issue is no more res-intigra as this bench in the case of Kumar Behary Rathi [2013 (12) TMI 269 - CESTAT MUMBAI] has held that service tax is not leviable on such amounts which are collected as maintain charges for up keep of the apartment’s premises. Since the issue is covered directly by the order of the tribunal, we find that service tax liability on this issue is settled in the favour of the assessee. Accordingly, that portion of the order which confirmed the demand of services tax liability, interest thereof and penalties imposed are set aside. Appeal disposed off - decided partly in favor of assessee. Issues involved:1. Service tax liability under 'Works Contract Services' or 'Construction of Residential Complex Services' for the period October 2008 to 2012-13.2. Service tax liability on the amount collected as 'Management, Maintenance or Repair Services' by the appellant before handing over the complex to regular societies.Analysis:Issue 1 - Service Tax Liability under 'Works Contract Services' or 'Construction of Residential Complex Services':The appeal challenged the Order-in-Original confirming the demand raised under 'Works Contract Services' and service tax liability on the amount collected for 'Management, Maintenance or Repair Services.' The appellant argued that pre-2010, their activities did not fall under 'Works Contract Services' as they were engaged in constructing residential complexes and selling flats. They contended that post-2010, the statutory provisions deemed construction as a taxable service unless full payment was made after completion. The Tribunal found merit in the appellant's arguments, citing the need for reconsideration by the adjudicating authority in light of relevant case law and statutory amendments. The impugned order was set aside for further review, emphasizing adherence to principles of natural justice.Issue 2 - Service Tax Liability on Maintenance Charges:Regarding the service tax liability on amounts collected for maintenance of common facilities, the Tribunal referred to precedent cases where it was held that service tax is not leviable on such charges. Citing specific cases like Kumar Behary Rathi, Goel Nitron Constructions, and Hiranandani Constructions Pvt. Ltd., the Tribunal concluded that the issue was settled in favor of the assessee. Consequently, the portion of the order confirming the demand for service tax liability, interest, and penalties was set aside. The appeal was disposed of accordingly, aligning with the established legal position on this matter.This judgment highlights the importance of considering statutory provisions, case law, and principles of natural justice in determining service tax liabilities related to works contracts and maintenance services in the construction sector. The Tribunal's decision underscores the need for a thorough review of relevant legal aspects before confirming tax liabilities, ensuring fairness and compliance with established legal principles.