Bundled construction services and uncorroborated cash receipts cannot sustain separate tax demands without proof of distinct liability.

Preferential location charges were treated as part of a naturally bundled construction transaction because no separate consideration or independent service was proved, so the demand was unsustainable. Amounts collected for club construction and facilities were held to form part of construction value, not a separate club or association service, as no club existed during the relevant period. A differential demand under the Point of Taxation Rules could not survive after tax and interest had already been paid. Alleged unaccounted cash receipts based on loose papers failed for want of corroborative evidence, and the demand on cancelled bookings also fell once payment was acknowledged.

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Issues: (i) Whether preferential location charges were separately taxable as a distinct service or were part of the composite construction service and eligible for abatement; (ii) Whether amounts collected towards club construction/facilities were taxable under club or association service or formed part of construction value; (iii) Whether differential demand under the Point of Taxation Rules, 2011 could survive when tax and interest had already been paid; (iv) Whether the demand based on loose papers marked as cash receipts over and above agreement value was sustainable without corroborative evidence; (v) Whether the demand relating to retained tax on cancelled bookings was sustainable.

Issue (i): Whether preferential location charges were separately taxable as a distinct service or were part of the composite construction service and eligible for abatement.

Analysis: The charging provision for preferential location service required an extra advantage, separate consideration, and service over and above the basic construction transaction. The agreements showed a single transaction for sale of flats, with no separate service or distinct additional consideration proved for preferential location. After 01.07.2012, the classification of services had to be tested on the principle of bundled services, and a naturally bundled element takes the character of the principal service. The preferential location component was treated as an element of construction and not an independent taxable service. The separate bifurcation in cost sheets did not establish a separate levy.

Conclusion: The demand on preferential location charges was not sustainable and was rightly set aside in favour of the assessee.

Issue (ii): Whether amounts collected towards club construction/facilities were taxable under club or association service or formed part of construction value.

Analysis: Taxability under club or association service required an existing club or association providing services to members for subscription or other consideration. On the facts, there was no club or association in existence during the relevant period; the collection was only towards construction cost of club-related facilities within the housing complex. That amount was therefore part of the construction value and not a fee for a separate club service. The claim for abatement followed from its character as construction consideration.

Conclusion: The demand under club or association service was unsustainable and was set aside in favour of the assessee.

Issue (iii): Whether differential demand under the Point of Taxation Rules, 2011 could survive when tax and interest had already been paid.

Analysis: The dispute concerned timing of payment, since the assessee had paid tax on receipt basis rather than due basis. However, the record showed that the tax had eventually been paid on the taxable amounts and interest for delay had also been deposited. In such circumstances, a fresh demand on the same amounts would result in double taxation. The Point of Taxation Rules operate to secure timely payment, but they do not justify sustaining a further demand where the tax liability and interest have already been discharged.

Conclusion: The differential demand based on the Point of Taxation Rules was set aside in favour of the assessee.

Issue (iv): Whether the demand based on loose papers marked as cash receipts over and above agreement value was sustainable without corroborative evidence.

Analysis: The allegation rested on loose sheets bearing entries under the head "INTT". No cash excess, third-party verification, or corroborative material established that the entries represented unaccounted receipts from buyers. The burden to prove taxability and clandestine receipt lay on the Revenue, particularly where the demand was founded on private papers not forming part of the books of account. In the absence of a proven chain of events linking the documents to actual cash receipts, the allegation could not be sustained.

Conclusion: The demand based on alleged unaccounted cash receipts was not proved and was set aside in favour of the assessee.

Issue (v): Whether the demand relating to retained tax on cancelled bookings was sustainable.

Analysis: The assessee accepted this component and stated that the amount along with applicable interest had already been paid. The demand did not survive once the payment was adjusted against the liability.

Conclusion: The demand relating to cancelled bookings was set aside in favour of the assessee.

Final Conclusion: The entire confirmed demand and all consequential penalties were set aside, and both appeals were allowed with consequential relief.

Ratio Decidendi: A levy cannot be sustained as a separate taxable service where the disputed amount is only an element of a naturally bundled construction transaction and no separate consideration or independent service is proved; likewise, a demand based on alleged clandestine receipts must be supported by corroborative evidence, as the burden of proving taxability lies on the Revenue.

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