TaxTMI 
TaxTMI 
2018 (6) TMI 80
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....tment situated at 59, Itawad, Anand Nagar, Indore. It was agreed by Mr. Surana that he will provide 55% of saleable units to M/s. Prasant Sagar Builders & Developers Ltd. and remaining 45% would be retained by him. It was also agreed by them that they would be independent to sell their respective part of the share. A search was conducted at the premises of M/s. Prasant Sagar Builder & Developers Ltd. by the Officers of Central Excise and Service Tax Commissionerate, Indore on 11.03.2012 and it was observed that the appellant and the said builder have agreed that the flats as would be constructed by the said builder will be sold under a Single window on agreed terms, conditions and rates. It also came to the notice of the said authority that the appellant has sold 5 flats after completion of construction of residential complex, one flat was gifted vide Gift Deed dated 31st March, 2012 to his son and two of the flats were still unsold till 31.03.2014. Since the completion certificate was obtained by the builder on 20.03.2012, Mr. Surana invites no service liability as far as these flats are concerned, but as far as the sale of remaining flats Mr. Surana was observed to have the liabi....
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....ting, the Department has mentioned that the appellant has entered into an agreement with the developer with clear intention of selling the flats of his 45%, share under the common window and with the objective of earning profit. The amendment in Finance Act in the year 2007 is impressed upon, where-after the construction services were made taxable and the amendment of the year 2012 is impressed upon, where-after the work contracts including that of the contracts between land owner and a developer were made taxable. As far as, the element of service as being provided is concerned, it is impressed upon that in accordance of the above amendments the sale of flats by the appellant before obtaining the completion certificate from the competent authority, it was the land owner's liability to pay the tax. It is further impressed upon that the authorities below have appreciated the entire relevant case law and it is thereafter extra demand of Service Tax has been done away. However, the act of the appellant of not getting himself registered and of not paying the Service Tax liability prior the raid by the authorities in the premises of builder M/s.Prasant Sagar Builder and Developers Ltd. ....
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....er/developer in turn agrees to assign a portion of constructed area in the form of flats in favour of the land owner and the remaining flats are to be sold by the builder/developer himself to the various buyers, the builder/developer receives consideration for construction service provided by him from two categories of the service receivers, one from the land owner in the form of land/development right and another from the other buyers normally in the form of money. The value of construction service provided to such land owner will be the value of land, when the same is transferred and the point of taxation has also been determined accordingly, and such value is determinable in terms of Section 67 (1) (iii)read with Rule 3 (a) of Service Tax (Determination of Value) Rules, 2006. Accordingly, the value of these flats would be equal to the value of similar flats charged by the builder/developer from the second category of the service receivers. These kind of agreements were for the first time considered by the Hon'ble Apex Court in the case of Builders Association of India vs. Union of India - 1989 (2) SCC 645, where the Constitutional amendment to Article 366 by adding sub-clause (2....
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....ore, 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 authorised by the builder before grant of completion certificate by the authority competent to issue such certificate under any law for he time being in force) shall be deemed to be service provided by the builder to the buyer;]" 10. Thus, it becomes clear that the flats sold by the land owner before the completion certificate was obtained i.e. before 20th March, 2012 will invite the liability of Service Tax upon the land owner. However, the flats sold after the said date of receiving completion certificate, since no more construction services were rendered after the said date, the land owner will not invite any liability to the Service Tax. Also with respect to the one flat, which has been gifted by him to his own son vide Deed dated 30thOctober, 2012, the liabilities stand exempted under Section 65 (91A) of the Finance Act. Further, for the former category of the sale by the land owner i.e. the one prior to the date of receiving completion certificate since the flats handed over to the landowner were not different from those as ....
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....e appellant cannot be accused of suppressing the facts with an intention to commit fraud or wilful suppression. The Hon'ble Supreme Court in the case of Hindustan Steel - 1978 (2) ELT (J 159) S.C. held that: "Para-7: An order imposing penalty for failure to carry out a statutory obligation is the result of a quasi-criminal proceeding, and penalty will not ordinarily be imposed unless the party obliged either acted deliberately in defiance of law or was guilty of conduct contumacious or dishonest, or acted in conscious disregard of its obligation. Penalty will not also be imposed merely because it is lawful to do so. Whether penalty should be imposed for failure to perform a statutory obligation is a matter of discretion of the authority to be exercised judicially and on a consideration of all the relevant circumstances." The Hon'ble Supreme Court also in the case of Uniworth Textiles Ltd. vs. CCE, Raipur - [2013 (288) ELT 0161 (S.C.) held that: 24. Further, we are not convinced with the finding of the Tribunal which placed the onus of providing evidence in support of bona fide conduct, by observing that "the appellants had not brought anything on record" to prove their claim ....