TaxTMI 
TaxTMI 
2014 (9) TMI 1044
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....ks Contract Services. The registration got amended to the present name on 29-10-2010. They filed an application for Settlement admitting Service Tax liability amounting to Rs. 88,97,511/- out of demand amount of Rs. 1,14,43,420/- and admitting interest amount of Rs. 9,45,972/-, in respect of show cause notice dated 26-3-2013. 1.2 Briefly stated the facts of the case are that : (a) based on an intelligence that the applicant were not discharging the Service Tax on the residential complex services, the officers of Madurai Regional Unit of DGCEI visited the office of the applicant on 7-7-2011 and initiated investigation under summon proceedings; (b) vide Summon dated 7-7-2011, the applicant was asked to produce documents. The applicant on 8-7-2011, admitted the tax liability and made part payment of Rs. 18,15,253/-; including their past liability; (c) in response to the summons dated 7-7-2011/4-10-2012, the applicant submitted copies of (i) General ledgers for the years 2008-09 to 2010-11, (ii) copies of Income Tax Returns for the years 2008-09 to 2010-11 and (iii) copies of agreement entered into with customers, e....
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....er referred to as "Act") respectively. Besides differential interest of Rs. 8,16,303/- was demanded. Penal provisions were invoked under Sections 76, 77 and 78 of the Act. Applicant's Disclosure 2.1 The application for Settlement was filed before the Commission on 16-12-2013 and was numbered as SA.ST/70/2013. On the basis of the reply to the notice, the application was allowed to be proceeded with vide order dated 3-1-2014. The applicant, made the following disclosure : • the applicant contended that "Aiswaryam Enclave" Project was carried out prior to 1-7-2010 and not taxable under "Construction of Residential Complex" Service, in view of the C.B.E. & C. Circular No. 108/2/2009-S.T., dated 29-1-2009 and Notification No. 36/2010-S.T., dated 28-6-2010; • prayed before the Hon'ble Settlement Commission to drop the demand raised in respect of the Project "AISWARIYAM ENCLAVE" which was executed and completed prior to 1-7-2010; • regarding "AISWARYAM GRAND PROJECT" blocks A and B, this Project was commenced during December, 2009 and the applicant registered themselves under "Construction of residential complex service" during August, 201....
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....wise are as follows :- Description of the Service Tax demanded in the Notice (in Rs.) Relevant Para & Annexure Sl. No. of the SCN Tax admitted in the Application (excluding the admitted additional liability) (in Rs.) Mining Service 2,029 Para 6.1 and Annexure III No reply Industrial Construction 9,789 Para 6.1 and Annexure III 9467 Supply of Tangible Goods 13,89,546 Para 6.9 and Annexure III 13,89,255 Real Estate Agents Service 4,59,086 Paras 8.2 and 8.3 and Annexure VIII 4,59,086 Construction of Aiswariyam Enclave Project 1 24,55,070 Para 9.4.5 and Annexure VII Nil Construction of Aiswariyam Grand Project Blocks A & B 71,27,898 Paras 9.4.3 and 9.4.4 and Annexure V & VI 69,19,112 Total 1,14,43,418 87,76,920 • as regards tax of Rs. 2,029/- demanded in the show cause notice under 'Mining Service', the applicant has neither admitted nor denied their liability; • as regards, the tax liability of Rs. 9,467/- as against Rs. 9,789/- demanded in show cause notice, which can be permitted by treating the charges as cum-tax value, provided the tax is not collected s....
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....voice value. He mentioned that except for these issues they have accepted the entire liability along with interest and have paid the same and extended full cooperation during the proceedings. According to him they have also made true and full disclosure of their liability, and therefore, pleaded for leniency in penalty and immunity from prosecution. 4.3 The representative of the department confirmed the payments made and submitted that they have no objection in allowing the benefit of cum-tax valuation in this case. As regards the issue raised in respect of levy of Service Tax for the period prior to 1-7-2010, he submitted that the Board's clarification is not applicable to the applicant's case as the UDS (Undivided Share) was sold before taking up the construction. He cited CESTAT's judgment in the case of LCS City Makers (P) Ltd. v. Commissioner of Service Tax, Chennai reported in 2012 (05) LCX 0086 = 2013 (30) S.T.R. 33 (Tri.). He also submitted that Hon'ble Commission may not have jurisdiction to decide the question of levy and the rate of taxation for the period prior to 1-7-2010, in terms of judgment of Hon'ble Madras High Court cited by the Commissioner in his report....
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....igibility to Service Tax is not excluded from the purview of the jurisdiction of Hon'ble Settlement Commission. Therefore, the issue to be resolved vests with the Hon'ble Settlement Commission and the decisions of the Hon'ble High Courts cited by the department are not relevant. 5.5 The applicant also drew the attention of the Hon'ble Settlement Commission, New Delhi in the case of M/s. Alchem International Ltd. - 2009 (247) E.L.T. 864 (Sett. Comm.) wherein Hon'ble Bench has observed that "Further, the Bench is of the view that the objective of settlement is to determine the liability of the applicant in an equitable, just and fair manner, without giving undue importance to technicalities" 5.6 The applicant prayed before the Hon'ble Settlement Commission for complete waiver of penalties. Findings of the bench and decision 6.1 The Bench has examined the records of the case, and the submissions made by the applicant in the application as well as during the proceedings of the hearing. The Bench has also perused the reports and submissions of the Revenue. 6.2 The issue of filing of ST-3 returns was considered in the light of the amended proviso of Sec....
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....the present case. In support of their contention, they relied on CESTAT judgment in the case of LCS City Makers (P) Ltd. v. Commissioner of Service Tax, Chennai reported in 2012 (05) LCX 0086 = 2013 (30) S.T.R. 33 (Tribunal). In the LCS City makers case, the demand was for the period 16-6-2005 to 31-3-2007 and it was held that the Board's clarification dated 29-1-2009 dealt with the cases where flats were sold after construction and not where UDS is sold first and an agreement for construction is entered into later and went on to hold the activity as taxable for the period prior to 1-7-2010 where UDS was sold first. This view taken by the Hon'ble CESTAT seems to be contrary to the view taken by Hon'ble Gujarat High Court in the case of Commissioner of Service Tax v. Sujal Developers reported in 2013 (31) S.T.R. 523 (Guj.). 6.6 In the instant case, the applicant was issued with the show cause notice demanding Service Tax of Rs. 1,14,43,420/- for the period April 2009 to December 2012. It appears that C.B.E. & C. after appreciating various practices of transaction prevalent in construction industry, had set at rest all the grey areas in taxing the service by issuing clarifica....
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.... the period prior to 1-7-2010 : construction service provided by the builder/developer will not be taxable in terms of Board's Circular No. 108/2/2009-S.T., dated 29-1-2009 [2009 (13) S.T.R. C33]. (ii) For the period after 1-7-2010, construction service provided by the builder/developer is taxable in case any part of the payment/development rights of the land was received by the builder/developer before the issuance of completion certificate and the Service Tax would be required to be paid by builder/developers even for the flats given to the land owner". This Circular dated 10-2-2012 makes it clear that even in the cases where builder/developer receives consideration for the construction service provided by him from land owner in the form of land/development rights, the service would not be taxable for the period prior to 1-7-2010. In the instant case, even if there is any agreement for sale of UDS of land prior to agreement for sale of flat, the activity for the period prior to 1-7-2010 would not be taxable in terms of Circular dated 10-2-2012 as discussed above. 6.7 The distinct facts brought out contrasted with the facts dealt with....
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....complexes undertaken prior to 1-7-2010 is not liable for Service Tax. Therefore, the Bench holds that the liability of the applicant requires to be decided only for the period commencing from 1-7-2010 onwards and not earlier to that. (d) The Bench in the light of the above Board Circulars, Judicial pronouncements supra holds that services rendered by the applicant prior to 1-7-2010 under Construction of Residential or Complex Service is exempted from payment of Service Tax. (e) The Bench holds that the demand of Rs. 24,55,070/- on the Service rendered under 'Construction of Residential Complex Services' before 1-7-2010 is squarely hit by the clarification given by C.B.E. & C. Circular No. 151/2/2012-S.T., dated 10-2-2012. In the light of the above, the Bench holds that Service Tax demanded prior to 1-7-2010 under 'Construction of Residential (Complex Service' is not payable. 6.9 The Commissioner in his report (sic) confirmed payment of Rs. 89,86,318/- towards- Service Tax and Rs. 9,62,384/- towards interest. The Bench notes that the applicant has made full and true disclosure. Accordingly after allowing the benefit in terms of Board's clarifications in respe....