TaxTMI 
TaxTMI 
2014 (9) TMI 1044
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.... 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, etc.; (d) the Managing Director Shri S. Ashok Kumar ....
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....licant'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, 2010. The applicant maintained receipt of service charges on running account basis and no Service Tax was charged separately; * the correct tax liability worked out by the applicant on the above Project works out t....
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....gible 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 subsequently; * under "Supply of Tangible Goods Service", there is a difference of Rs. 289/- which is due to the difference between the figures furnished by the applicant in the documents furnished to the Department and the figures shown in annexure to the application; * as regards tax demand of "AISWARIYAM ENCLAVE PROJECT", the applicant claimed that the services rendered is not taxable, and pertains to a matter under question of law; *....
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....his 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. At this stage, the advocate for the applicant submitted that he would like to make further written submission regarding the applicability of these judgments in the instant case. He requested for time up to 20th August, 2014 to make his final written submission. 4.4 The representative of the department submitted that the loss of revenue would have continued but for the investigation initiated by the DGCEI, and therefore, penalties as proposed in the SCN are required to be imposed. How­ever, as regards im....
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....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 Section 32E(l)(a) of Central Excise Act, 1944 made applicable to Service Tax matters under Section 83 of Finance Act, 1994, advented in the Finance Act, 2014. Accordingly, the facts of the case point to delay in filing of ST-3 returns. The applicant contested his Service Tax liability for the residential complex services he provided, for the period prior to 1-7-2010. However, he filed ST-3 returns before the issue of show cause notice, along with the late fees as envisaged under Rule 7(c) of Service Tax Rules, 1994. Bench finds that Service Tax being a sunrise tax....
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....riod 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 clarificatory Circulars from time-to-time. In addition, from 1-7-2010 vide Finance Act, 2010, the definition of taxable service was amended by insertion of following explanation : "Explanation. - for the purpose of this sub-clause the construction of a new building which is 'intended for sale, wholly or partly, by a builder or any person authorized by the builder before, during or after construction (except in cases for which no sum is received from or on behalf of the prospective buyer by the builder or the person authorized by the builder before grant of completion certificat....
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....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 by the Hon'ble CESTAT in LCST case supra, are that : * UDS proportionate to each of the flat was not sold prior to the commencement of construction and the sale of flat was gradual i.e. one by one as and when the prospective buyer was found; * any construction agreement by the possessor of the UDS of land cannot be made; * no absolute possession of the property rests with the buyer, meaning the buyer cannot sell the UDS independently without involving the flat nor he could sell the flat independently without involving the UDS; * till such time the construction is completed, no absolute possession of the property in UDS is co....
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..../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 respect of services rendered prior to 1-7-2010 of 'Construction of Residential Complex Services' and considering value after 1-7-2010 as cum-tax value for computation of Service Tax as communicated by Revenue, Service Tax liability works out to Rs. 88,45,406/-. As such the Bench settles the Service Tax liability at Rs. 88,45,406/-. The applicant is eligible for refund of Rs. 1,40,912/- which should be dealt with in accordance with law. The Jurisdictional Commissioner would work out the interest liability and communicate to the applicant. Penalty 6.10 This is a case of non-payment of Service Tax on the various services rendered during the period April 2009 to December 2012. Out of the demand, the major portio....