TaxTMI 
TaxTMI 
2019 (5) TMI 1135
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....Rs. 5,000/- or Rs. 200/- per day for each of failure under Section 77(1)(a) and also of Rs. 5,000/- under Section 77(2) of the Act. The demand has been confirmed against the Appellant for Construction of Complex Service (hereinafter referred to as the 'CCS') rendered by the Appellant to the Delhi Development Authority (hereinafter referred to as the 'DDA') in regard to the share of share of DDA (1/3rd of total flats) under the Project Development Agreement (hereinafter referred to as the 'PDA') dated 14 September, 2007. The value of such service has been considered as equivalent to the value of the Appellant's share of flats i.e 2/3rd of the total flats. 2. The Appellant, M/s Emaar MGF Construction Private Limited (hereinafter referred to as the 'Emaar') is a Private Limited Company inter alia engaged in providing various services including CCS and is registered with the Service Tax Commissionerate, Delhi. DDA was mandated by the Government of India, Ministry of Youth Affairs and Sports, to undertake the development of Commonwealth Games Village for the XIXth Commonwealth Games (hereinafter referred to as 'CWG') in Delhi from 03 October, 2010 to 14 October, 2010. A plot of land ....
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.... 1.1.19 "Project" means complete construction and development of the ready-to-use Residential Facility at the Project Site under a public private partnership model wherein the Project Developer pays an upfront bid amount to DDA and DDA transfers the two-third (2/3rd) of the Residential Apartments along with the rights in the undivided underlying land for onward transfer to the individual buyers by the Project Developer. 1.1.21 "Residential Apartments" means all types of Units and includes all associated facilities/amenities with the Unit, like parking, kitchen garden. It further includes rights to use the Common Facilities. 1.1.22 "Residential Facility" means all Units, building blocks, common areas, parking bays, roads, parks, landscaping etc. And other associated facilities like sewerage, water, power, internet, telephone arrangements etc. at the Project Site. 1.3 Priority of Documents The documents forming this Agreement are to be taken as mutually explanatory of one another. They shall have priority in the following order : (a) This Agreement 9including the Schedules); (b) Letter of Intent issued by DDA to the Project D....
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....ional) to be identified for transfer of the Project Developer in accordance with the terms, conditions and covenants contained in this Agreement and the Conveyance Deed to be executed by DDA after completion of the Project and post the Games Period..........................................." 6. The Appellant also entered into an agreement dated 05 May, 2009 with DDA by which it agreed to give up its rights in respect of 333 apartments out of its 2/3rd share in favour of DDA absolutely and unconditionally in consideration for Rs. 766,89,25,000/-. This financial package of Rs. 766,89,25,000/-was agreed to be paid by DDA to the Appellant in five instalments from May to November, 2009. 7. It will also be useful to reproduce the relevant clauses of RFP. It needs to be pointed out that RPF is included in Clause 1.3 of PDA which provides the priority of the documents forming PDA. Annexure II to RPF deals with controls, specifications and requirements. (A) Deals with Project Development Controls; (B) Deals with Accommodation requirements that gives the specifications relating to two rooms, bathrooms, living space, telecommunication and TV; (C) Deals with Minimum Technical Material Sp....
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....f Rs. 3,47,00,000/- (Rupees Three Crores Forty Seven Lacs only) and Secondary & Higher Education Cess of Rs. 1,74,00,000/- (Rupees One Crore Seventy Four Lacs only), totalling Rs. 1,78,93,00,000/- as detailed in para 7.4 above should not be demanded and recovered from them under proviso to Section 71(1) of Finance Act, 1994 read with Section 66 and 68 of the Finance Act, 1994 read with Rule 6(1) of the Service Tax Rules, 1994, further read with Section 91 and Section 95 of Finance Act, 2004 and Section 136 read with Section 140 of the Finance Act, 2007 for Education Cess and Secondary & Higher Education Cess respectively. 10. The Appellant submitted a detailed reply dated 18 January, 2013 denying the allegations made in the show cause notice. It may not be relevant to reproduce all the contentions raised by the Appellant in response to the show cause notice as they would be dealt with when the submissions advanced by Shri V. Lakshmikumaran, learned Counsel appearing for the Appellant, are summarised. Suffice it to state, at this stage, that the Appellant denied the liability to pay Service Tax. 11. The Commissioner of Central Excise by order dated 30 April, 2009 confirmed the....
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....Guntur, reported in 1999 (106) ELT 12 (SC) and Reckitt & Colman of India Limited vs Collector of Central Excise, reported in 1996 (88) ELT 641 (SC). 13. Apart from the aforesaid arguments submitted by the learned Counsel for the Appellant relating to CCS and Works Contract, number of other submissions were also advanced in the alternative, but these submissions would require consideration only if the first submission of the learned Counsel is not accepted. The submissions, so advanced, are : (i) The Appellant is not rendering any service to DDA as both the authorities have come together for a common purpose and none of them is working for the other. There is, therefore, no provision of service by the Appellant to DDA; (ii) The Appellant has undertaken development of the Residential Facility of its own and for itself and not for DDA since after the DDA transferred the development rights of the Project Site to the Appellant upon payment of upfront bid price, the Appellant undertook the development activity and, therefore, had not rendered any service; (iii) The valuation of the alleged service adopted in the impugned order is arbitrary; and (iv)....
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.... Appellant. 17. In order to examine this issue, it would be appropriate to refer to the various provisions of the Act. Section 65(30a) of the Finance Act defines "Construction of Complex" to mean : "65(30a) - Construction of Complex means - (a) construction of a new residential complex or a part thereof; or (b) completion and finishing services in relation to residential complex such as glazing, plastering, painting, floor and wall tiling, wall covering and wall papering, wood and metal joinery and carpentry, fencing and railing, construction of swimming pools, acoustic applications or fittings and other similar services; or (c) repair, alteration, renovation or restoration of, or similar services in relation to, residential complex." 18. Section 65(105) deals with "Taxable Service" and in relation to 'Construction of Complex', Section 65(105)(zzzh) is reproduced below : "65(105)(zzzh) - to any person by any other person in relation to construction of complex." 19. It is w.e.f. 01 June, 2007 that (zzzza) was inserted in Section 65(105) of the Act in relation to execution of 'Works Contract'. Taxable Service under Section 65(105)....
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....sive developer rights to the development of the Project on the Project Site as per the terms and conditions of the agreement. "Development Rights" has been defined to mean a right granted by DDA to the Project Developer under the Agreement to design, engineer, finance, procure, construct, operate and maintain the project. "Project" under clause 1.1.19 has been defined to mean complete construction and development of the ready-to-use Residential Facility at the Project Site under a Public Private Partnership model wherein the Project Developer pays an upfront bid amount to DDA and the DDA transfers two-thirds of the Residential Apartments along with the rights in the undivided underlying land for onward transfer to individual buyers by the Project Developer. "Residential Facility" has been defined under Clause 1.1.22 to mean all units, building blocks, common areas, parking bays, roads, parks, landscaping etc. and other associated facilities like sewerage, water, power, internet, telephone arrangements etc. at the Project Site. "Project Site" and "Project Development" have been defined under Clause (2) and (3). "Responsibilities and Undertakings of Project Developer" have been enume....
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....t portion of the judgment is reproduced below : "15. A reading of this judgment, on which counsel for the assessees heavily relied, would go to show that the separation of the value of goods contained in the execution of a works contract will have to be determined by working from the value of the entire works contract and deducting therefrom charges towards labour and services. Such deductions are stated by the Constitution Bench to be eight in number. What is important in particular is the deductions which are to be made under sub-paras (f), (g) and (h). Under each of these paras, a bifurcation has to be made by the charging Section itself so that the cost of establishment of the contractor is bifurcated into what is relatable to supply of labour and services. Similarly, all other expenses have also to be bifurcated insofar as they are relatable to supply of labour and services, and the same goes for the profit that is earned by the contractor. These deductions are ordinarily to be made from the contractor's accounts. However, if it is found that contractors have not maintained proper accounts, or their accounts are found to be not worthy of credence, it is left to the le....
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....nd not composite works contracts, such as are contained on the facts of the present cases. It will also be noticed that no attempt to remove the non-service elements from the composite works contracts has been made by any of the aforesaid Sections by deducting from the gross value of the works contract the value of property in goods transferred in the execution of a works contract." 23. It is, therefore, clear from the aforesaid judgment of the Supreme Court in Larsen & Toubro that a Composite Works Contract cannot be taxed under CCS under Section 65(105) (zzzh) as the scope is limited to cover contract of service simplicitor only. 24. What is also important to note is that the definition of CCS in Section 65(105)(zzzh) remained the same even after 01 June, 2007 when Works Contract Service was introduced. In the absence of any change in the definition of CCS, the judgment of the Supreme Court in Larsen & Toubro will apply to a period after 01 June, 2007 also. 25. The position that comes out very clearly, therefore, is that even prior to 01 June, 2007 and post 01 June, 2007, the nature of service rendered by the Appellant to DDA was Works Contract Service and not CCS. The s....