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2023 (9) TMI 236
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.... of audit of accounts, it was noticed that the appellant was engaged in providing construction services for a project viz. "Metro Zone" at Anna Nagar, Chennai. Later, the appellant did not provide the services and also had to return the advance received along with compensations. 1.2 The Department was of the view that the appellant was liable to pay Service Tax on the advance received; further, that the appellant had engaged various services for residential construction to be handed over to an assessee Shri G.N. Pandian, for which also Service Tax was not paid by the appellant. For the period from August 2009 to June 2010, there was belated payment of Service Tax for which the appellant had to pay interest. Again, the appellant had colle....
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....essee to construct "Metro Zone" project at Chennai is classifiable under 'Works Contract Service' or 'Commercial Construction Service' and whether service tax is payable on the advance amount of Rs.85 crores received from M/s. Himadri Enterprises Private Limited towards construction of 2,50,00,000 sq. feet of commercial construction or otherwise. (ii) Whether the service tax is payable on the 1,10,000 sq. feet of constructed area of residential construction to be handed over by the assessee to Shri G.N. Pandian? (iii) Whether interest is payable on the belated payment of service tax for the period from August 2009 to June 2010? (iv) Whether electricity charges, water / CMWSSB charges and infrastructure charges rea....
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....egard to issue No. (vii), the appellant is not contesting the issue. 4.5.1 The main contest in this appeal, as submitted by the Ld. Counsel for the appellant, is with regard to the demand of interest on the advance returned by the appellant in respect of "Metro Zone" Project. Paragraph 14.1 of the impugned order was referred to by the Ld. Counsel to submit that the appellant had received an amount of Rs.85 crores as advance for the aforesaid project; since the project failed, the advance was returned to the client and no services were provided and that the adjudicating authority has dropped the demand of Service Tax raised in the Show Cause Notice in respect of such advance amount of Rs.85 crores received by the appellant but, interest o....
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....be dismissed. 6. Heard both sides. 7.1 The first issue is with regard to demand of interest in respect of advance of Rs.85 crores for the project namely, "Metro Zone" received by the appellant and returned to the client. The discussion made by the adjudicating authority in paragraph 14.1 of the impugned order reads as under: - "14.1 As per Section 67 of the Finance Act, 1994, service tax is chargeable on any taxable service with reference to its value and such value shall be the consideration received and to be received by the provider of the service. Whereas in the present case as already discussed in detail in preceding paragraphs, the assessee has received an advance amount of Rs.85 crores from M/s. Himadri for the service....
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.... confirmation." 7.2 From the above, it can be seen that the adjudicating authority has categorically held that there is no tax liability on the advance amount of Rs.85 crores received by the appellant and returned thereafter. However, the adjudicating authority has proceeded to confirm the demand of interest on such Service Tax. We do not understand how the liability of interest would arise when there is no liability to Service Tax. Hence, the same is required to be set aside, which we hereby do. 8.1 The second issue is with regard to the demand on reimbursable expenses. It is brought out from the discussion at paragraph 17.0 in the impugned order that these are nothing but electricity charges, water charges, sewerage charges and othe....