2023 (5) TMI 389 - AT - Service Tax

Revenue appeal partially allowed on 'electrical energy' exclusion, 'water consumption' remanded for verification. 'Cum-tax' benefit upheld.

Commissioner of Service Tax – IV Mumbai Versus Habitat

The appeal of Revenue was allowed in part, specifically concerning the exclusion of Rs. 2,48,85,135 on account of 'electrical energy' and 'water ... Short collection of tax - cum-tax benefit - expenditure out of provisional outgoing for deposit and advance are not backed by actual billings - liability arising on corpus fund for club house and corpus fund for complex and apex body - HELD THAT:- Even if the computation in the notice was incorrect as claimed by the assessee, the negative balance for 2010-11 in both have not been substantiated by the adjudicating authority - We must confess to some difficulty in comprehending the intent of the said ground as the reviewing authority has not countered the findings in the impugned order on the basis of fund position as it should have been. Review is a process culminating in serious contentions to be made before the appellate authority and is not half-baked perception analysis. Neither is it an audit of adjudication order for compliance with some norms – real or imagined. In the absence of cogent deduction from ascertained figures, this ground does not merit further consideration. The performance of service devolving on cooperative societies must, necessarily, attach to the same activity undertaken by preceding developer; the adjudicating authority has rendered clear findings on that which have not been specifically discountenanced in the review. The manner in which statutorily assigned duties and obligations is in consonance with the transactional schema of section 65(105)(zzg) of Finance Act, 1994 is sorely lacking in the grounds to merit serious consideration in appeal. Cum tax benefit - HELD THAT:- The claim of Revenue that cum tax computation is not admissible fails and, more particularly, as the decision of the Hon’ble Supreme Court in AMRIT AGRO INDUSTRIES LTD. VERSUS COMMISSIONER OF C. EX., GHAZIABAD [2007 (3) TMI 14 - SUPREME COURT] arose from a dispute over exclusion of central excise duty in computation of assessable value and the difference between a levy at the stage of manufacture and a levy that is destination-based precludes that as precedent. This issue is, therefore, no longer res integra and the adjudication order passes muster on this score. Exclusion of ₹ 2,48,85,135, claimed to have been paid for electrical energy and water consumption on behalf of the owners by the respondent, from tax liability on ‘provisional outgoing paid in deposit and advance’ - appellant is aggrieved by the failure on the part of the adjudicating authority to verify actual disbursement under those heads - HELD THAT:- There is nothing on record to indicate that evidence of such was placed before the adjudicating authority. The appellant cannot be faulted for surmising that the impugned order has proceeded by accepting the summary furnished by assessee - such verification should have been done or got done for reinforcing the conclusion of non-taxability. To that extent, the impugned order requires remedying. The appeal of Revenue of not sustaining the exclusion of ₹ 2,48,85,135 on account of electrical energy and water consumption from assessable value, for the nonce are allowed - the issue regarding ascertainment of claim that this amount represents actual billings is remanded back - appeal disposed off. Issues Involved:1. Taxability of various collections made by M/s Habitat under different heads.2. Entitlement to 'cum-tax' benefit.3. Verification of actual disbursement for electrical energy and water consumption.Detailed Analysis:1. Taxability of Various Collections:The proceedings were initiated against M/s Habitat for collecting Rs. 50,70,30,410 from buyers of dwelling units between 2008-09 and 2011-12 under several heads, allegedly to suppress these as 'consideration' for 'taxable services' of 'management, maintenance and repair' and 'club and association'. The show cause notices demanded recovery of liabilities under the Finance Act, 1994. The Commissioner of Service Tax-IV, Mumbai, confirmed demands under section 73 of the Finance Act, 1994, along with applicable interest and penalties, while dropping significant portions of the demand. The appeal filed by the Committee of Chief Commissioners contested the dropping of certain amounts and the acceptance of 'cum-duty' benefit for other amounts.2. Entitlement to 'Cum-Tax' Benefit:The Tribunal noted that the 'cum-tax' computation principle is well established, as seen in Commissioner of Central Excise & Customs, Pune v. Advantage Media Consultant and subsequent cases. The gross amount received should be treated as inclusive of service tax unless it is collected separately. The Tribunal referenced decisions such as Idea Cellular Ltd v. Union of India and Godfrey Philips India Ltd v. Commissioner of Central Excise, Mumbai-I to affirm that the 'cum-tax' benefit is admissible. Consequently, the claim of Revenue that 'cum-tax' computation is not admissible was rejected.3. Verification of Actual Disbursement for Electrical Energy and Water Consumption:The dispute included the exclusion of Rs. 2,48,85,135 claimed to have been paid for electrical energy and water consumption from the tax liability on 'provisional outgoing paid in deposit and advance'. The appellant argued that the adjudicating authority failed to verify actual disbursement under these heads. The Tribunal agreed that verification should have been done to reinforce the conclusion of non-taxability. The case was remanded back to the original authority for verification limited to ascertainment of the claim that this amount represents actual billings. The assessee is required to furnish details to the adjudicating authority and will be liable to tax to the extent of inability to reconcile the claimed payment with actuals.Conclusion:The appeal of Revenue was allowed in part, specifically concerning the exclusion of Rs. 2,48,85,135 on account of 'electrical energy' and 'water consumption', which was remanded back for verification. The 'cum-tax' benefit extended to the respondent was upheld, and the other grounds raised by the Revenue were dismissed. The order was pronounced in the open court on 01/03/2023.