2022 (2) TMI 1448

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.... section 65(105)(zzg) of Finance Act, 1994. Though show cause notice dated 19th October 2011 proposed recovery of Rs. 547,70,96,738/- towards these, and 'support services of business or commerce, on the basis of particulars reflected under several heads in the balance sheet and financial reports of M/s Karnataka Housing Board that, to tax authorities, was not credibly justified as non-taxable, the adjudicating authority dropped demand of Rs. 1,84,74,169/- pertaining to rentals received from exempted entities and Rs. 4,51,35,716/- pertaining to 'support services of business or commerce' in its entirety. Penalties imposed under section 76, section 77 and section 78 of Finance Act, 1994 are also challenged in this appeal. Learned Counsel for appellant submitted that the appellant does not dispute the chargeability of the tax of Rs. 1,98,16,579/- confirmed on rental income which has been paid without demur. 2. It is the contention of Learned Counsel that the activities undertaken by the appellant are statutory in nature and, therefore, beyond the scope of a tax that devolves on commercial activity. Explaining the role of the appellant, he submits that they execute projects approved ....

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....f receipts enumerated in the impugned order did not immunize the activities from coverage of tax and that the adjudicating authority has justified the reasons for confirmation of the demand of Rs. 4,35,91,083/- for rendering of 'management, maintenance and repair service' in the properties built and managed by them. 5. Having heard both sides and perused the records, we take up each of the disputed demands for ascertainment of legality and propriety in the findings of the adjudicating authority. 6. The impugned order has confirmed demand of Rs. 533,62,07,090/- as payable on receipts from allottees of residential units. It is seen from the records that, much like housing work undertaken as part of programmes of several state governments, the appellant acquires land, supervises the contractors who are awarded the projects and seeks applicants for completed units which are allotted by draw of lots or other approved process. These constitute sale of immovable property and not services rendered to the allottees who evince their interest in acquiring the units only after completion. Consequently, fastening of tax liability in terms of section 65(105)(zzzh) of Finance Act, 1994 in t....

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.... the total of schedule - Other Income and the same has also been classified under Business Support Services. The balance sheet for the said period has been examined. The assessee's contention is right. As per Schedule - Other income for the financial year ending 31.03.2011 (containing the details for both the periods ending 31.03.2010 and 31.03.2011), the total of the other income for the year 2009-2010 is Rs.17,19,49,167/- and for the year 2010-11 is Rs.12,17,14,651/-....'. and noting the erroneous inclusion of the entirety of 'other income' reported in the schedule comprising receipt on sale of application forms, forfeiture of EMD/FSD of contractors, centage, bid documentation charges and penalties, which are not covered within the allegations in the show cause notice, as well as 'supervision charges', 'service charges', 'registration charges', 'water charges' and 'miscellaneous receipts', which were proposed to be subject to levy of tax chargeable on 'support service of business or commerce' in the computation of 'consideration' of 'maintenance charges' for the last two years of the period of dispute, the adjudicating authority concluded that the five of the heads of account ....

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....ty held that the appellants performed the service of fund management. One crucial aspect, missed by the Original Authority, is fund which is managed by the appellant is to the benefit of employees whose welfare is entrusted to the appellant, by law. The employers do not get any benefit out of such fund management. The administrative charges and other charges paid by the employers, therefore cannot be attributed to any service received by them from the appellant. As already noted, the employers have no choice and are compulsorily mandated by law to contribute to the fund and also pay the administrative charges/inspection charges, etc., in terms of the EPMF & MP Act. The employees who ultimately benefit, have not paid any consideration to the appellant. They only contributed their part of fund, through the employer, to the appellant. The contribution to the fund is not the subject matter of disputed tax liability. The other charges like administrative charges, inspection charges paid by the employers, are being subjected to service tax. We find that in the absence of a service provider and service recipient relation between the appellant and the employers, no service tax liability ca....