TaxTMI 
TaxTMI 
2026 (2) TMI 10
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....04/- in the Order-in-Original No. 73/Commr/ST-II/Kol/201617 dated 18.10.2016 passed by the Commissioner of Service Tax. As both the appeals emanate from the same Orderin-Original, both are taken up together for passing a common order. 2. The facts of the case are that the Appellant-assessee has taken registration under service tax on 24.12.2013 having Service Tax Registration No. AAECA2585RSD001 for providing services of (1) Management, Maintenance & Repairing Services (2) Renting of Immovable Property Services and (3) Real Estate Agent Services. They have filed a declaration under sub-section (1) of Section 107 of the Finance Act, 2013 read with Rule 4 of the Service Tax Voluntary Compliance Encouragement Scheme, 2013(VCES) in Form VCES-1 dated 30.12.2013. 2.1. A search was conducted by the officers of Directorate General of Central Excise Intelligence (DGCEI), Kolkata Zonal Unit at the office premises of the appellant-assessee on 19.12.2013. After investigation, a show cause notice no V(15)459/STII-Adjn/VCES/14/1046-47 dated 24.12.2014 was issued to the appellant demanding Service Tax amounting to Rs. 2,01,16,095/-, including Cesses, along with interest and penalty. The ....
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....to the owners' association, and the company only acts as a custodian, so no service tax is payable. The practice of collecting such deposits for future maintenance and handing them over to Resident Welfare Associations is well-established in the industry. Being refundable and without service provision, it qualifies as a non-taxable receipt. 3.3. In support of their contention, the appellant=assessee relied on the clarifications issued by CBEC vide Para 2.3.2 of the Service Tax Education Guide dated 20.06.2012, wherein it has been clarified as under:- "Returnable deposit is in the nature of security and hence do not represent consideration for service." 3.4. Further, the appellant-assessee relied on the following decisions in support of their contentions: • 2014 (34) S.T.R. 139 (Tri.-Mumbai) Kumar Beheray Rathi V/s Commissioner Of Central Excise, Pune-III, • 2019 (22) G.S.T.L. 450 (Tri. - All.) KDP Infrastructure Pvt. Ltd. vs Commr. OF C. EX. & S.T., Ghaziabad, • 2018 (19) G.S.T.L. 277 (Tri. - All.) P.V.S. Construction Pvt. Ltd. vs Commr. OF C. EX. & S.T., Ghaziabad, • M/s Shipra Estate Ltd. vs Commissioner....
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....ount for the same was reimbursed to them by the flat owners. They haven't provided any service to the flat owners in this regard. In support of this claim, the appellant submitted some sample copies of tax invoice for purchase of electric meter on which VAT has been charged by the respective vendors in this regard in the F.Y. 2009-2010 & 2010-2011. Accordingly, the appellant-assessee submits that the demand of service tax confirmed on this ground is not sustainable. 6. Regarding the demand of Service Tax of Rs. 20230/- on Advance Maintenance Deposits, the appellant-assessee submits that in the course of investigation by the DGCEI, the appellant came to know that maintenance service provided by them to flat owners is a taxable service. Thereafter, they opted for VCES scheme and declared and paid service tax on the total expenses incurred on account of this. Expenses incurred for maintenance Rs. 62,43,796 Less: Actual maintenance receipt from buyers (322111 sq. ft. *18/Sq. ft.) Rs. 57,97,998 Balance Amount to be received Rs.4,45,798/- They paid service tax on Rs. 62,43,796/- rather than on Rs. 57,97,998/-. For the first year, i.e. 2010-11, they ....
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....x demand, which has been rightly dropped by the adjudicating authority. Hence, Revenue's appeal on this count does not merit consideration. 7.2. Regarding the remaining dropped demand of service tax of Rs. 53,30,367/- on the amount received as 'advances from customers', the appellant-assessee submits that this amount has been shown as 'details of advances' standing as on 01.04.2008 to 31.03.2013. It has been alleged in the Show Cause Notice that the advances received from customers for the sale of flats, reflected under "Other Advances" were actually payments for services like electrical installation, maintenance, sinking fund, service charges, etc., and hence taxable under "Management, Maintenance & Repair Service." The appellant submits that these advances were wrongly classified and should have been grouped under "Advance against agreement" as they were payments toward the sale of flats. During the disputed period, the appellant-assessee was engaged in residential property development and sale. Since both Club Town Residency and Koyla Vihar projects received completion certificates before 1st July 2010, the advances received towards these flats are not taxable under the s....
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....nt has not been refunded to the party till date. 2011- 2012 6324000 651372 Amount received from prospective buyers against booking for sale of flats in a block in the Koyla Vihar project. However, that particular block in the Koyla Vihar Project could not be commenced in our company and the same was taken up by our sister concern. The advance so received from prospective buyers was eventually transferred to our sister concern (Koyla Vihar Developers LLP) during the F.Y 2012-13. Service tax on the said amount was paid by M/s Koyla Vihar Developers LLP. 12878838 1431580 7.6. In support of their claim, the appellant-assessee submits that a certificate from the Statutory Auditor, confirming that the amounts received were purely advances against the sale of flats, was furnished during the adjudication stage. This certificate, along with supporting documents such as the application forms, cheque details, ledgers showing transfer to M/s Koyla Vihar Developers LLP, and corresponding entries in their books, further substantiates that the transactions were not for any taxable service but purely related to prospective sales of residential....
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....ovide a reserve for the flat owners' association for future contingencies such as major repairs. Since the maintenance account has not been settled, the sinking fund has not been handed over to the association at that time and it remained with the appellant. The Ld. Counsel submitted that at present this amount has already been handed over to the Residential Welfare Association, which was formed later. Thus, we observe that this fund is a pure deposit without any service element. We also find that the said amount was shown as current liability in the balance sheet (Rs. 93,10,650/- in 2011-12 and Rs. 96,63,330/- in 2012-13) and not income. Thus, we observe that demand of service tax on such refundable deposit is not justified. 10.1. We observe that the Ld. Commissioner has upheld the demand of service tax under the category of maintenance service as defined under Section 65(105)(zzg)/65B(44) of the Finance Act, 1994. However, we observe that the said amount does not belong to the appellant-assessee as it belongs to the owners' association, and the company only acts as a custodian. The practice of collecting such deposits for future maintenance and handing them over ....
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.... any independent service. These charges were included as part of the total sale consideration for the flats. We observe that Para 3.2 of the agreement for sale makes it clear that the construction includes buildings and common portions as per specifications in the fourth schedule. The fourth schedule includes electrical works and generator facilities for common areas, indicating that such works are integral to the overall construction of the housing complex. Therefore, these charges form part of the composite construction service and not a separate taxable service. Since the sale of flats was not taxable prior to 01.07.2010, there can be no service tax liability on such amounts. 11.1. In support of their claim that the "Electric and Generator Charges" were included as part of the total sale consideration for the flats., the appellant-assessee submitted two nos. of certificate issued by a Chartered Accountant wherein it is categorically mentioned that the "Electric and Generator Charges" are included as a part of the sale consideration of the Flats for F.Y 2011-12 & 2012-13. For ready reference, copies of the Chartered Accountant Certificate are extracted below:....
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....sustainable and hence we set aside the same. As the demand of service tax is not sustainable, the question of demanding interest or imposing penalty does not arise and hence we set aside the same. 15. Regarding the issues on which demand has been dropped, we observe that the department has filed appeal in respect of an amount of Rs. 98,21,758/-. Out of which, demand of Rs. 44,91,391/-has been dropped in the impugned order, on account Calculation Error on the amount received as advances from customers. The appellant-assessee claimed that the demand in the show cause notice has been incorrectly calculated on cumulative closing balances of various customer advance accounts from FY 2008-09 to 2012-13, totalling to Rs.8,87,87,268. However, the actual total advance received during this period, including the opening balance as on 01.04.2008, was only Rs.4,42,22,416/-, as evidenced by the ledgers. This discrepancy shows that the demand has been erroneously calculated on an excess amount of Rs.4,25,12,066/-. We observe that the Ld. adjudicating authority has accepted the incorrect method of calculation adopted by the department and dropped the service tax demand raised in the....
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...., we reject the same. 18. In view of the above findings, we pass the following order: (i) We set aside the demand of service tax of Rs. 21,18,991/- confirmed in the impugned order along with interest. The penalty imposed on this demand is also set aside. The appellant is eligible for consequential relief, if any, as per law. (ii) The appeal filed by the Revenue is rejected. (iii) The appeals are disposed of on the above terms. (Order Pronounced in Open court on 22.09.2025) ============= Document 1 A.K. MEHARIA & ASSOCIATES Chartered Accountants 2, Garstin Place 5ª Floor, Kolkata - 700001 PHONE/FAX(033)22434659/4660 E-mail: [email protected] TO WHOM IT MAY CONCERN This is to certify that the breakup of the figures stated under the head "Sale of Flats and Others' in Note No. 18 of the Audited Balance Sheet as at 31" March, 2013 and Statement of Profit & Loss Account for the year ended 31" March, 2013 of M/s. A. B. Nirvan Builders Pvt. Ltd. of 5/1A, Hungerford Street, Kolkata - 700017 is as follows: Sale of Flats: Rs. 2,69,34,400.00 Sale of Car Parking: Rs. 14,00,000.00 Sale of Servant Quarters: Rs. . 3,00,000.00 ....