TaxTMI 
TaxTMI 
2023 (9) TMI 1563
X X X X Extracts X X X X
X X X X Extracts X X X X
.... Two Thousand Seven Hundred Seventy Seven only) amounting to total Rs. 28,99,67,059/-(Rs. Twenty Eight Crore Ninety Nine Lacs Sixty Seven Thousand Fifty nine only) not paid/short paid during the period 01.07.2010 to 31.06.12 under section -73(2) of the finance Act, 1994 as amended. Since the total amount of Service Tax of Rs. 28,99,67,056/-(Rs. Twenty Eight Crore Ninety Nine Lacs Sixty Seven Thousand Fifty Six only) has already been deposited by them(as per SCN), therefore the said amount of Rs. 28,99,67,056/- (Rs. Twenty Eight Crore Ninety Nine Lacs Sixty Seven Thousand Fifty Six only) is here by appropriated against the proposed demand. (ii) I confirm the demand of Interest amounting to Rs. 95,24,690/- (Rupees Ninety Five Lacs Twenty Four Thousand Six Hundred Ninety) as leviable on the above referred late payment of Service Tax under with Section 75 of the Finance Act, 1994 as amended. Since the amount of interest of Rs.95,24,690/- has been deposited by the party(as per SCN),hence I hereby appropriated against the proposed demand. (iii) I order to recover the amount of Interest amounting to Rs 5,67,35,452/- (Rs Five Crore Sixty Seven Lac Thirty Five Thousand Fou....
X X X X Extracts X X X X
X X X X Extracts X X X X
....amended Since the total amount of Service Tax of Rs. 28,99,67,056/-(Rs Twenty Eight Crore Ninety Nine Lacs Sixty Seven Thousand Fifty Six only) due on M/s Jaypee Green has already been deposited by them, therefore the said amount of Rs. 28,99,67,056/- (Rs. Twenty Eight Crore Ninety Nine Lacs Sixty Seven Thousand Fifty Six only) should not be appropriated against the proposed demand. (ii) Interest amounting to Rs. 95,24,690/- (Rupees Ninety Five Lacs Twenty Four Thousand Six Hundred Ninety) as leviable on the above referred late payment of Service Tax under Rule-6 of the Service Tax Rules, 2002 read with Section-75 of the Finance Act, 1994 as amended and the amount of interest Rs.95,24,690/-so deposited by them should not be appropriated against the proposed demand. (iii) Interest amounting to Rs 5,67,35,452/- (Rs Five Crore Sixty Seven Lac Thirty Five Thousand Four Hundred Fifty Two Only) as leviable on the above referred late payment of differential Service Tax amounting to 21,52,42,777/- in respect of differential value of EDC, IDC and ESSC should not be demanded and recovered under Rule-6 of the. Service Tax Rules, 2002 read with Section-75 of the Finance Act, ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e under both residential complex service and preferential location service, it will be classified under residential complex service as per section 65A. * It is settled position in law that department cannot challenge the classification subsequently as has been held in case of Tata Tech [2008 (11) STR 449 (SC)] * Charges For Parking Spaces Are Not Taxable under the category defined by 65 (105)(zzzzu) as has been clarified by D.O.F no 334/1/2010-TRU dated 26.02.2010. Appellant entertained a bonafide belief that these charges are not subject to service tax. * Extended Period Of Limitation Under Section 73(1) is Not Invokable - Demand Is Partially Time Barred. * Entire Tax has been deposited prior to issuance of show cause notice Therefore no SCN should have been issued to them in terms of Section 73 (3) * Interest is not Recoverable and Penalty is not Imposable 3.3 Arguing for the revenue learned authorized representative reiterates the findings recorded in the impugned order. 4.1 We have considered the impugned order along with the submissions made in appeal and during the course of argument. 4.2 The issues for our consideration i....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ludes permitting the complex for use as residence by another person on rent or without consideration; (b) "residential unit" means a single house or a single apartment intended for use as a place of residence." 65 (105) "taxable service" means (zzzh) any service provided or to be provided, to any person, by any other person, in relation to construction of complex; Explanation. - For the purposes of this sub-clause, construction of a complex which is intended for sale. wholly or partly, by a builder or any person authorised by the builder before, 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 a person authorized by the builder before the grant of completion certificate by the authority competent to issue such certificate under any law for the time being in force) shall be deemed to be service provided by the builder to the buyer. (zzzzu) to a buyer, by a builder of residential complex or a commercial complex, or any person authorized by such builder for providing preferential location or development of such complex but does not include services which are cover....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... this service." 4.5 Commissioner has in the impugned order observed as following for determining the classification of the services in dispute: "(III) On the perusal of the definition of residential complex service, the parking space is categorically specified in the category of facilities or services at para (iii). In view of categorical specification of parking space, it is observed that there is no scope for any other interpretation except to consider that parking space is covered under the definition of residential complex service. Accordingly, I find that the parking space is part and parcel of/ covered under the Residential Complex service and the service tax is leviable on the abated value as specified therein. (IV) The preferential location and development service under Section 65 (105)(zzzzu) was introduced with effect from 01.07.2010 vide Notification m No 24/2010-ST dated 22.06.2010. On the perusal of the definition and the explanation appended to the definition of this service, it is observed that if the builder gets the amount on account of providing preferential locations having extra advantage or development of such complex, which attrac....
X X X X Extracts X X X X
X X X X Extracts X X X X
....charge separately for them. These charges do not form part of the taxable value for charging of tax. These facilities include - (i) Prime/preferential location charges for allotting a plot or commercial space according to the choice of the buyer; (ii) Internal or external development charges which are collected for developing and maintaining parks, laying of sewage water pipelines, providing access roads and common lighting and other like charges. Since these charges are in the nature of service provided by the builder to the buyer over and above the construction service, they were brought within the purview of clause (zzzzu). In the affidavit in reply that has been filed in these proceedings reference has been made to the fact that builders as a matter of fact charge separately under diverse heads. A special value addition service includes the provision of a flat on a preferred floor to a prospective buyer, a flat facing a particular direction or a particular room in a particular direction. This involves a locational choice of a prospective buyer having an extra advantage for which additional payment is made by the buyer to the builder over and above the basic sale price. ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nt of residential complex and cannot be distinguished from the price paid by the buyer of residential unit as being for any separate service. These charges should also come under the taxable category of construction of residential complex service as charges collected as EDC are in the nature of cost of construction of residential complex. 4.10 The provision of common area and other facilities provided by the builder to prospective buyers are integral part of the sale price of the residential units as the residential unit cannot be sold on a standalone basis without common area or other facilities. Even though the sale price of residential unit and charges for common area and other facilities are shown separately, they form a single and integrated whole to provide the buyer of residential unit with the right to own and enjoy residential unit. The IDC/EDC/ESSC services are integrally connected with the sale of particular residential unit. 4.11 We perused the provisional allotment letter Ref: 30590/352305/ KUB0020102 dated 22.02.2012 issued to Mr. Ashfaq Hussain Marazi having Customer I D JGNKUB020102, wherein following has been stated "we have pleasure in provisionally allottin....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 1.No. @ Rs 200000 200000 Electric Sub Station Charges @ Rs 40.00 Per Sq Ft 83200 Internal Development Charges @ Rs 75.00 Per Sq Ft 156000 Total 8137280 From the perusal of the above allotment letters it is evident that the charges collected by the appellant towards IDC, EDC, ESSC and Parking Slots etc are nothing but part and parcel of the consideration for the residential unit being sold by the Appellant. 4.8 Inn case of BSNL [2006 (2) STR 161 (SC)] Hon'ble Supreme Court has explained the concept of dominant nature in a contract, by stating as follows: "43. ........ The test therefore for composite contracts other than those mentioned in Article 366 (29A) continues to be - did the parties have in mind or intend separate rights arising out of the sale of goods. If there was no such intention there is no sale even if the contract could be disintegrated. The test for deciding whether a contract falls into one category or the other is to as what is the substance of the contract. We will, for the want of a better phrase, call this the dominant nature test. 48. What are the "goods" in a sales transaction, therefore, r....
X X X X Extracts X X X X
X X X X Extracts X X X X
....lly considered the submissions made by both the sides and perused records. As regards the first issue, on Preferential Location Charges and natural bundling thereof with main service under Section 65(3) of the Finance Act, 1994, we find that the issue on hand is no more Res Integra, and stands concluded in favour of the Appellant vide the following decisions : (a) SJP Infracon Ltd. v. CST, Noida - 2018 (12)-TMI253-CESTAT ALLAHABAD "2. Brief facts of the case are that the appellants were engaged in Construction of Residential Complex and were paying service tax at abated value as abated under Notification No. 26/2012-S.T., dated 20-6-2012. Appellant were paying service tax on the entire consideration received for construction of residential complex. The consideration also included charges on account of External Development Charges, Club Building Charges, Fire Fighting Charges, Electrification Fitting Charges, Park Facing Preferential Location Charges, Electrical Sub-Station Charges and such other charges. It appeared to Revenue that above stated charges are not part of the consideration for construction of residential complex service and, therefore, the same were n....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ackage of service then such naturally associated service is treated as bundled service and the said bundled service is to be treated as single service which gives the entire package its essential character. In the present case construction of residential complex service is the service which gives essential character to the package of the service and, therefore, the charges as stated above are essentially required to be bundled with the single service namely construction of residential complex service. We, therefore, do not find any merit in the stand taken by Revenue." (b) Logix Infrastructure Ltd. - 2018 (11) TMI-462- CESTAT ALLA-HABAD 3. Heard the Learned Chartered Accountant for appellants. He has submitted that provisions of Section 66F of Finance Act, 1994 provide for Bundled Service. He has explained that w.e.f. 1-7-2012 Section 66F was introduced to the statute which has provided that when there are various elements of services then they are to be bundled together and shall be treated as provision of the Single Service which gives such bundle its essential character. He argued that the charges collected by the appellant such as External Development Charges,....
X X X X Extracts X X X X
X X X X Extracts X X X X
....buildings, having more than twelve residential units; (ii) A common area; and (iii) Any one or more of facilities or services such as park, lift, parking space.............. 7. As seen from the above definition of "Residential Complex Service", parking space specifically stands included in Serial No. (iii) of the definition. If that be so, it has to be held that parking space is a part and parcel of the services falling under the category of "Residential Complex Services". As regards the contention of the learned advocate that a new category of services were introduced with effect from 1-7-2012 as "Preferential Location Services & Development of Complexes", which has been defined as under :- "Taxable service" means any service provided or to be provided to a buyer, by a builder of a residential complex, or a commercial complex, or any other person authorized by such builder, for providing preferential location or development of such complex but does not include services covered under sub-clauses (zzg), (zzq), (zzzh) and in relation to parking place. Explanation. - For the purposes of this sub-clause, "Preferential Location" means any location having extra....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... taxed at same rates as main service are discussed. The relevant portion of the judgment is reproduced below : "24. It has been contended on behalf of the respondents that sub-section (3) of Section 66F of the Finance Act would not apply where the single service which gives the bundle of services its essential character is exempt from the levy of service tax. In the opinion of this Court, there is nothing in the language employed in sub-section (3) to Section 66F to read into it a requirement that such service should not be exempt from tax. All that the sub-section provides is that taxability of bundled services shall be determined in the manner provided therein. The term taxability means liability to taxation. Thus the term taxability would take within its sweep not being taxable also inasmuch as liability to taxation would also mean not being liable to any tax. Thus, the liability to tax of a bundled service has to be determined in the manner provided under sub-section (3) of Section 66F of the Finance Act. If the services are naturally bundled in the ordinary course of business, the bundle of services shall be treated as provision of the single service which gives the b....
X X X X Extracts X X X X
X X X X Extracts X X X X
....lance sheet/P&L account/trial balance. Thus, we hold that service tax is not payable on such hypothetical calculation, there being no actual consideration towards these, which is an admitted fact. We hold that service tax levied in this manner based on the price list is wrong, when there is no actual receipt of consideration under these heads. Accordingly, we set aside the demand as follows:- 1 Preferential Location charges 2,35,56,977/- 2 Car parking charges 95,00,700/- 3 Club Membership charges 31,66,900/- 4 Interest Free Maintenance Security charges 17,59,052/- 5 Security Charges - separate ledger 1,44,599/- 6 External and Internal Development charges 52,77,158/- 7 Power back up charges 53,31,460/- 4.13 Undisputedly appellants had obtained registration for providing the taxable services as defined under 65 (105) (zzzh) and were paying service tax payable under that category after claiming abatement as provided for. It is also an admitted fact that the these charges were included in gross amount for the computation of the taxable value and for determination of tax payable and tax paid. Appellant had been filing the....