AI Drafter 
TaxTMI 
TaxTMI 
2024 (3) TMI 130
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....licable from time to time on the amount of Rs. 41,37,775/- under Section 75 of the Finance Act, 1994 from M/s Supertech Realtors (P) Ltd., B-28 & 29, Sector-58, Noida, Dist. Gautam Buddha Nagar (UP). 3. I impose a penalty of Rs. 41,37,775/- on M/s Supertech Realtors (P) Ltd., B-28 & 29, Sector-58, Noida, Distt. Gautam Buddha Nagar (UP) under Section 78 of the Finance Act,1994. 4. The dues adjudged as above should be paid forthwith." 2.1 Appellant are providing service classifiable under taxable category of Construction of Residential Complex, Commercial Construction Service, Consultant Engineer, Architect Service, Maintenance & Repair Service, Membership of Club Service, Rent of immovable property Service & Preferential Location Charges Service falling under Section 65 of the Finance Act, 1994 2.2 Consequent upon the audit of books of account, it was observed by the revenue that appellant has short paid the service tax during 2011-12. 2.3 A Show Cause Notice dated 19.10.2016 was issued to appellant. 2.4 Assistant Commissioner vide his order in original referred in para 1 adjudicated the show cause notice. 2.5 Appellant filed appeal before Commission....
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....nce security (IFMS) was part of taxable value of the service provided or to be provided by them under the category of taxable service 'Management, Maintenance and Repair service' within the meaning of section 65(105) (zzg) of the Finance Act, 1994 and the appellant were liable to pay Service Tax on such amount under the provisions of the Finance Act,1994 read with the Service Tax Rules,1994. I find that in the grounds of appeal, the appellant have mainly contended that the amount received from the buyers of the flat was basically security amount which has been received and it was advance money received against maintenance services to be provided to the flat owners. It has further been contended that for levy of service tax, there has to be 'service or activity' and 'consideration' in terms of Section 65B (44) of the Finance Act, 1994 and without 'service or activity' and 'consideration', service tax cannot be demanded as it does not fulfill the ingredient of service. In their case there is no consideration for service and is basically returnable deposit in the nature of security and hence do not represent consideration and when there is no consideration for service; no ser....
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....aintenance/repair would be undertaken from the interest earned on such security deposits. Relevant rules clearly make such interest component as forming part of the colorable device (part of consideration for service). It has been clarified in CBEC Guide (Negative List) that if the deposit is in the nature of a colorable device wherein the interest on the deposit substitutes for the consideration for service provided or the interest earned has a perceptible impact on the consideration charged for service then such interest would form part of gross amount received for the service. Also security deposit should not be in lieu of advance payment for the service I observe that the amount taken by the appellant from the buyers of the flats on account of Interest Free Maintenance Security (IFMS) is clearly in lieu of advance payment for the maintenance service in respect of the residential complex. This is not philanthropy but part of consideration for the service to be provided by the appellant. Service tax, therefore, has rightly been demanded and confirmed against the appellant, once it is established that the deposits were sought and taken for maintenance. I, therefo....
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....e Act, 1994 "Immovable property", for the purpose of section 65(105)(zzzz), includes (i) building and part of a building, and the land appurtenant thereto; (ii) land incidental to the use of such building or part of a building; (iii) the common or shared areas and facilities relating thereto; and (iv) in case of a building located in a complex or an industrial estate, all common areas and facilities relating thereto, within such complex or estate, but does not include(a) vacant land solely used for agriculture, aquaculture, farming, forestry, animal husbandry, mining purposes; (b) vacant land, whether or not having facilities clearly incidental to the use of such vacant land; (c) land used for educational, sports, circus, entertainment and parking purposes; and (d) building used solely for residential purposes and buildings used for the purposes of accommodation, including hotels, hostels, boarding houses, holiday accommodation, tents, camping facilities. Explanation.- For the purpose of this sub-clause, an immovable property partly for use in the course or furtherance of business or commerce and partly for residential or any other purposes shall be deemed to be immovable ....
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....se, an immovable property partly for use in the course or furtherance of business or commerce and partly for residential or any other purposes shall be deemed to be immovable property for use in the course or furtherance of business or commerce I observe that the provisions of sub-clause (zzzz) of clause 105 of Section 65 of the Finance Act, Act, 1994 was in relation to "Renting of immovable property" service. Since the services related to 'Renting of immovable property' service are in the nature of service provided by the builder to buyer over and above the construction service, these were brought within the purview -of new category of service under sub-clause 22 of clause 105 of Section 65 of the Finance Act, 1994 Further I find that in the case of Suresh Kumar Bansal Vs. UOI 2016 (43) S.T.R. 3(Del.) the Hon'ble High Court of Delhi, "Construction - Preferential location charges - Section 65(105)(zzzzu) of Finance Act, 1994 - Preferential location charges levied by builder - Attributable to preferences of customer in relation to directions in which flat is constructed; floor on which it is located; views from unit; accessibility to other facilities provide in com....
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.....2005. As per Section 65(91a) of the Finance Act, 1994 "Residential Complex" means any complex comprising of: (iv) a building or buildings, having more than twelve residential units; (v) a common area; and (vi) any one or more of facilities or services such as park, lift parking space, community hall, common water supply or effluent treatment system, located within a premises and the layout of such premises is approved by an authority under any law for the time being in force, but does not include a complex which is constructed by the person construction directly engaging any other person for designing or planning of such complex is intended personal use as of the residence layout, by such and person. As per Section 65(30a) of the Finance Act, 1994 "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 f....
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....h its case for relief in terms of section 80 of the Act. The charge of suppression of material facts and intent to evade payment of tax are fully satisfied for charge of penalty in terms of section 78 of the Act by the original authority and does not call for any interference in the matter. The charge & recovery of interest in terms of section 75 of the Act is a logical corollary once it is established that service tax was not paid by due date In view of the consideration of material available on records, submissions of the appellant and in pursuance of the aforementioned findings, the impugned order is upheld and the appeal is rejected being devoid of al merit Tax." 4.3 Original authority has in order in original recorded the following findings: 4.1 "I find that the basic allegations against the party are as under a) the party did not pay service tax amounting to Rs. 5,39,546/- against the ITMS charges, which was liable to be paid them under the provisions of Finance Act, 1994. b) the party did not pay service tax amounting to Rs. 27,88,916/- against lease rent charges, which was liable to be paid them under the provisions of Finance Act,....
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....cation No. 29/2010-ST dated 22.06.2010. I find that the contention of the party that the 'capital replacement fund' of Rs. 78,57,408/- is `construction of residential complex service' does not appear to be correct. The party has not submitted any document/evidence which could reveal that the said fund was in any way related to the 'construction of residential complex service'. Therefore, it is nothing but an afterthought on the part of the party. I hold that the amount received against said fund is leviable to service tax under the category of Business Auxiliary Service and service tax was applicable was payable @10.3 % (including cesses). The service tax contended to have paid by the party for Rs 2,02.328/- under the Construction of Residential - Complex service cannot be taken as deposit against the 'capital replacement fund'. Therefore, I hold that the amount of Rs. 8,09,313/- is recoverable from the party under Section 73(2) of the Finance Act,1994 along with interest at applicable rates under Section 75 of the Finance Act, 1994 4.5 I further find that fact of nonpayment of service tax in respect of above said three categories of service by the party was under the know....
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.... 5,39,546/-( including cess) is liable to be demanded and recovered from the said party along with accrued amount of interest, under the provisions of Section 73(1) & Section 75 of the Finance Act, 1994 2.2 As per Para No. 6 of the said IAR, during the year 2011-12, the party had received an amount of Rs. 2,70,76,858/- as lease rent from the buyers but did not pay service tax on the same. Lease rent collected in advance from buyers is very much taxable. As such this is liable to service tax at the rate prescribed under erstwhile Section 66 in the manner prescribed under Rule 6 of Service Tax Rules, 1994 read with Section 68(1) of the Finance Act 1994. Thus, it became apparent that for the said period, service tax amounting to Rs. 27,88,916/- ( including cess) is liable to be demanded and recovered from the said party along with accrued amount of interest, under the provisions of Section 73(1) & Section 75 of the Finance Act, 1994 2.3 As per Para No. 6 of the said IAR, during the year 2011-12, similarly, the party had received an amount of Rs.78,57,408/- as Capital replacement fund from the customer but did not pay service tax on the same. As such this is liable to....
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....nerate, Noida (as was then in existence) and evidently the same was never revealed by the party on their own accord. Therefore it appears that the sald amount of Service Tax of Rs. 41,37,775/- is recoverable from the party under the provisions of Section 73(1) of the Finance Act, 1994 read with the proviso thereof by invoking extended period of limitation along-with the interest payable under the provisions of Section 75 of the Finance Act,1994. 5. Whereas it further appears that as the party has willfully and deliberately evaded payment of service tax amounting to Rs. 41,37,775/- in contravention of the provisions of Section 68(1) of the Finance Act, 1994 read with Rule 6 of Service Tax Rules, 1994, as discussed supra, with the sole intention to evade payment of Service Tax, they also rendered themselves liable for penal action under the provisions of Section 78 of the Finance Act, 1994." 6. Accordingly, the said M/s Supertech Realtors (P) Ltd., B-28 & 29, Sector-58, Noida are hereby required to show cause to the Assistant Commissioner, Service Tax Division-lll, Noida as to why:- (i) Service Tax amounting to Rs. 41,37,775/- (Rs. Forty one Lakhs Thirty Se....
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....ication lists themselves declared that the items were in the nature of cut-to-size sheets and for years together these were being cleared as such. It is shown also that during these years, they were held by different Excise officers as non-excisable sheets cut-to-size. In the absence of any subsequent evidence to the contrary, it is not at all clear as to how the Department could have raised demand merely in view of audit objections holding that the goods were metal containers in unassembled form. In reply to show cause notices, the appellants have unassailably urged this point of view and this is not answered at the level of either the Assistant Collector or the Collector (Appeals). In this connection, we have seen the two decisions of the Delhi High Court cited by the appellants in the cases of Poona Bottling Co. Ltd. and another v. Union of India and Others - 1981 E.L.T. 389, and Indian Aluminium Company Ltd. and another v. Union of India and Others -1983 E.L.T. 349, in which it was held that show cause notices issued on the basis of advice or directive by the Central Government of the Central Board of Excise and Customs, were illegal and void, as directives could not be issued ....
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.... a grievance of the fact that they were not associated with this investigation, nor given an opportunity to make their submissions on the outcome of these investigations. Failure to do so amounts to violation of principles of natural justice. 17. In sum - we find that there is no evidence whatsoever that the goods that were actually cleared by the appellants were metal containers in unassembled form and not, as claimed by the appellants and already approved by the Department, in the shape of cut-to-size sheets meant for bottoms and bodies of metal cans. 18. In the light of our foregoing findings alone, we are inclined to set aside the order of the lower authorities. We are, therefore, not going into the other arguments pertaining to technicalities as regards the invoking of the correct rules of Central Excise Rules for raising demand of duty or the alternative plea of liability to exemption under Notification No. 94/70, dated 1st May, 1970. 19. The Orders-in-Appeal are set aside and appeals allowed." 4.6 In case of Kirloskar Pneumatic Co. Ltd. [2011 (22) S.T.R. 121 (Tri. - Mumbai)] following has been held: "3. Firstly, the show-cause notice wa....
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....reement with the flat owners, the said amount is liable to be refunded to them within the period of Six months from the date of termination of the said agreement. The Adjudicating Authority observed that the genuineness of the said term is very much doubted inasmuch as the appellant had not produced any evidence to show that the said IFMS was ever refunded to anyone. We really fail to understand the said reasoning of the Adjudicating Authority. The amount is refundable in case of termination of the ownership agreement and if no such termination has taken place till date, the amount would not be refunded. As long as the provisions for refund of the said amount in the agreement itself is there, it has to be considered that the said amount is refundable and was towards security deposits and was not for the purpose of providing any services, so as to levy tax on the same. 4. In any case, we also note that the issue stands decided by precedent decisions of the Tribunal. Reference can be made to the Tribunal decision in the case of CCE & ST, Jaipur v. Sand Dunes Construction Pvt. Ltd. - 2018 (7) TMI-1383-CESTAT-New Delhi, whereby while taking note of the precedent decision of th....