TaxTMI 
TaxTMI 
TaxTMI 
2016 (2) TMI 774
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.... that the vendor is the owner of the entire land and had obtained approvals for execution of a group housing scheme comprising 50 bungalows, 108 apartments and 14 shops with common facilities. One such three-storied bungalow, along with proportionate undivided `interest' in the common areas and facilities, was sold to the appellants jointly for a consideration of Rs. 70,00,000. The agreement also insisted upon issue of two cheques for discharge of service tax and VAT liability for Rs. 2,59,700 and Rs. 70,000 respectively. From the records, it appears that M/s AM Patel Infra Private Ltd has been registered as a provider of "construction of residential complex service" since 10th August, 2010. 3. The appellant sought refund of tax claiming that this transaction was not liable to tax. The Assistant Commissioner rejected the refund claim on the ground that the joint application did not enclose proof that the tax paid by them had indeed been deposited to the credit of the government by the vendor of the property; that the plan of the house was such that, with minor alterations, it could altered in such a way that it could become three separate units; and on the further ground....
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....be expected to insist upon being furnished with proof of subsequent deposit of the amount in government account. Tax authorities are also surely not oblivious that consolidated remitting of tax by service provider subsumes the tax collected from each recipient; that no marker can ever identify the contribution of the appellant to the tax kitty. Insistence upon on such evidence, especially in a scheme that bars the taxpayer from claiming refund when the incidence is borne by another, appears to be without purpose. It is, therefore, mystifying that the original authority conceived of this objection while processing the claim for refund. An applicant for refund can only establish that tax has been included in the amounts made over to the supplier; the tax authority, with its spread and reach, is empowered by statute to initiate action for recovery of the tax that was collected by the supplier if there be any dereliction in deposit. Recovery of tax collected but not deposited and sanction of refund of tax collected are independent actions the former does not lend itself as pre-condition for proceeding with the latter. Evidence of payment of tax is a necessary condition for refund but n....
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....eement. In the absence of such an agreement, attempt to rely on section 65 of Finance Act, 1994, which had ceased to be in force after June 2012, is not legally sustainability. The wisdom of an erstwhile legislation may, undeniably, provide insights into a prevailing legal provision but recourse to that erstwhile statute to refute contentions of a disputant is without authority of law. Presumptions of construction having occurred prior to the date of transaction is neither relevant nor acceptable in tax determination. 7. Casting aside the above issues that were relied upon to dispose the claim, denial of the refund by the two lower authorities appears to rest on two main planks: (a) that the house purchased by the applicant is part of a housing scheme and (b) that the purchase price was paid by the applicants before the competent authority issued a completion certificate and hence taxable. 8. Refuting the grounds relied upon by the lower authorities, the appellant contends that service tax can be levied only in relation to construction of buildings comprising more than twelve residential units and will not ap....
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....t' regime, service providers, being uncertain about coverage under the definition of taxable service in section 65B (44) of Finance Act, 1994, prefer to avoid the risk of being burdened with recovery proceedings on a later date. Such collection is never to their detriment and the person who bears the incidence of tax is entitled to claim a refund. More so, when the tax liability, such as in housing ventures, is not likely to be negligible 11. The size of the construction industry and the multifarious services that have emerged to cater to that sector is such as cannot be ignored in public finance. More so, with the emergence of the developer as an intermediary - an enlargement of the business of `contractor'. Developers are a one-point interface between the ultimate user and the various providers that at one time had to be contracted individually, whether for residential or commercial purposes. Ease of taxation was a `spinoff' from this emergence. The levy of tax under Finance Act, 1994 has seen many `repairs' to the statutory provisions to plug the various leakage points that were found while ....
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....truction" includes additions, alterations, replacements or remodeling of any existing civil structure; This includes the services availed by the developer as well as the service rendered to the potential owner of the built-up property. The transaction between the developer and the intended owner is placed outside the ambit of `declared service' if no consideration is rendered to the developer before issuance of completion certificate. Impliedly, such a buyer has not availed of any of the bundled services that are provided by the developer. The issuance of completion certificate is thus considered to be the legal deadline for service having been rendered. Even where consideration has been paid before the issuance of completion certificate, exemption is provided by notification no. 25/2012-ST dated 20th June 2012 to 14. Services by way of construction, erection, commissioning, or installation of original works pertaining to, - (b) a single residential unit otherwise than as apart of a residential complex; Single residential unit and residential complex is defined as: (zc) "residential complex" means any complex comprising of a building or buildings....