Service tax on construction receipts may apply before completion certificate, while genuine plot-sale proceeds remain outside the levy.
Deliberate non-production of basic records during audit and investigation may justify invocation of the extended limitation period where suppression of facts with intent to evade service tax is established. Sale proceeds from plots or land remain outside the service tax levy as transfer of immovable property, while receipts from construction activity are taxable where consideration is collected before completion certificate is shown to have been issued. In such cases, the applicable abatement notification may still reduce the taxable construction value, and tax must be worked out only on the construction component established on record. Interest and penalties follow where non-payment and suppression are sustained.
Issues: (i) whether suppression of facts with intent to evade service tax was established so as to justify invocation of the extended period of limitation; (ii) whether receipts from sale of plots were outside the service tax levy and whether the remaining receipts from construction activity were liable to service tax with the benefit of abatement under the applicable notifications; and (iii) whether the penalties and interest confirmed in the adjudication order were sustainable.
Issue (i): whether suppression of facts with intent to evade service tax was established so as to justify invocation of the extended period of limitation
Analysis: The record showed repeated non-cooperation during audit and investigation, non-production of basic documents such as customer ledgers, completion certificates and supporting records, and failure to explain the receipts reflected in the balance sheets. The conduct was treated as deliberate withholding of material facts necessary for assessment. In that background, the ingredients required for the longer limitation period were found to be satisfied.
Conclusion: The extended period of limitation was validly invoked and the finding is against the assessee.
Issue (ii): whether receipts from sale of plots were outside the service tax levy and whether the remaining receipts from construction activity were liable to service tax with the benefit of abatement under the applicable notifications
Analysis: Transfer by sale of land or plots was treated as excluded from the definition of service, and therefore not liable to service tax. At the same time, receipts relatable to construction of residential and commercial units were held taxable because the appellant did not establish receipt of completion certificate before collection of consideration. The Tribunal further held that the benefit of the applicable abatement notification was available on the construction value and that the demand had to be worked out on the taxable construction component after excluding the plot-sale consideration to the extent established on record.
Conclusion: Plot-sale receipts were not taxable, but the construction receipts remained taxable with abatement, and the issue is substantially against the assessee and against the revenue's challenge.
Issue (iii): whether the penalties and interest confirmed in the adjudication order were sustainable
Analysis: Since the underlying non-payment and suppression findings were upheld, the liability to interest followed as a consequence. The penalties under the penal provisions were also sustained in view of the established contravention and the deliberate withholding of information during investigation.
Conclusion: The interest and penalties were upheld, against the assessee.
Final Conclusion: The adjudication was upheld on the core question of taxable liability arising from construction receipts and suppression, while the exclusion of genuine plot-sale value was also recognised; no interference was warranted with the impugned determination.
Ratio Decidendi: Where a builder receives consideration before completion certificate and fails to produce documents necessary to verify the nature of receipts, the construction receipts are taxable under the service tax regime, plot-sale proceeds remain the levy as transfer of immovable property, and deliberate non-production of records can justify invocation of the extended limitation period and consequential penalties.