2016 (10) TMI 1098

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.... registered for payment of service tax under this category along with works contract service, maintenance and repair service, etc. It is the practice of the applicant to collect 'maintenance deposits' at the rate of Rs. 2/- lakh per apartment. The deposits are required to be paid by the customers at the time of receiving the possession of the property. These deposits amounts are retained by the applicant until such time the majority of the apartments in a residential complex are occupied, and a resident welfare association gets formed and takes over the responsibilities of maintaining the residential complex as required under the relevant laws of the State Government governing the construction of complex. These maintenance deposits were use....

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....ds for service tax were accordingly made and confirmed in the impugned order. 3. In the present appeal and stay application it has been argued that : (i)      The applicants are not providing any maintenance or repair service to the flat buyers. They are only carrying out their statutory obligations in terms of Karnataka Ownership Act, 1972. (ii)    Since the service of maintenance is provided to self, there should be no levy of service tax. (iii)   The expenditure incurred by the applicants is in the capacity of pure agent and no service tax will be payable by them. (iv)   There is no basis for arriving at the value of the taxable service by determining interes....

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....on becomes functional and takes over regular maintenance and repair of the complex. From the terms of the agreement, it is evident that the maintenance deposits have been paid by the buyers in terms of the agreement for carrying out the maintenance of the immovable property. From this, it is prima facie evident that the applicant is rendering service under Section 65(64) and service tax is required to be paid. 7.1 Now we turn to the quantification of the value of taxable service as well as the tax amount. The claim of the applicant is that they have already paid the service tax for the maintenance service rendered. In terms of the agreement with the buyers, applicant is required to add notional interest on the maintenance deposits a....