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of <h1>Tribunal rules in favor of appellant on tax exemption for IFMS and EDC payments</h1> <h3>M/s KDP Infrastructure Pvt. Ltd. Versus Commissioner of Central Excise & Service Tax, Ghaziabad</h3> M/s KDP Infrastructure Pvt. Ltd. Versus Commissioner of Central Excise & Service Tax, Ghaziabad - 2019 (22) G.S.T.L. 450 (Tri. - All.) Issues: Valuation of services regarding 'Interest Free Maintenance Security' (IFMS) and 'External Development Charges' (EDC)Issue 1: Valuation of IFMSThe appellant, engaged in providing taxable services under 'Construction of Residential Complex,' faced a dispute regarding the inclusion of charges collected for IFMS in the valuation of services. The Revenue argued that IFMS falls under 'Management Maintenance and Repair Services' and should be separately taxed. The appellant collected IFMS as security for maintenance and default payments by flat owners, refundable within six months of agreement termination. The Adjudicating Authority doubted the refund terms' genuineness but failed to consider that the amount was refundable only upon agreement termination. Precedent decisions supported that security deposits for maintenance services are not taxable. The Tribunal upheld this view, setting aside the demand and penalty.Issue 2: Valuation of EDCThe second issue involved the demand of service tax on EDC received by the appellant from flat owners, taxed under 'Special services provided by Builder' introduced in 2010. The Adjudicating Authority acknowledged the funds were given to Ghaziabad Development Authority but deemed it taxable as the Authority was not considered part of the government. The Circular clarified that development charges paid to state governments or local bodies are excluded from taxable value. The appellant argued that the Authority, under the Uttar Pradesh Urban Planning and Development Act, is part of the state government, making the payments equivalent to state government payments. The Tribunal agreed, holding that the demand was not sustainable. Consequently, the impugned order was set aside, and the appeal was allowed with consequential relief to the appellant.
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