TaxTMI 
TaxTMI 
2026 (2) TMI 600
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....Associates (P) Ltd., Village-Bharala, N.H. 58, Daurala. Meerut. U.P. during the period from October, 2012 to March, 2017, under Section 73 of the Finance Act, 1994, (ii) I drop the remaining demand or Rs. 6,00,67,275/- demanded from M/s Gayatri under show cause notice dated 30.08.2018 holding it unsustainable (iii) I order for recovery of interest on the amount of service tax confirmed at sr. No.(i) above under section 75 of the Finance Act. 1994 (iv) I impose Penalty of 79,95,681/- (Rs. Seventy Nine Lakh Ninety Five thousand Six Hundred and Eighty one only) on M/s Gayatri Build Associates (P) Ltd.. under Section 78(1) of the Finance Act, 1994 for contravention of the provisions of the Finance Act, 1994, read with Section 174 of the CGST Act, 2017. However, I give an option to the party, under proviso to Section 78 to pay 25%'of the penalty amount imposed under the provisions of Section 78/78(1) of the Finance Act. 1994, provided the party pays the entire amount of Service Tax, as determined/confirmed, in para (i) above, alongwith interest payable thereon as ordered in para (i) above alongwith 25% of the penalty amount, within 30 days of the communica....
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....3.10.2016 & 03.11.2016 but they neither submitted the requisite information/documents nor submitted any response. Summons dated 18.11.2016, & 15.03.2017 were also issued to the party for submitting the following documents/information- (a) Balance Sheet for last five years: (b) Trial Balance for the financial year 2013-14 to 2015-16; (c) Total amount of advances received during the period 2013-14 to 2015-16 against providing construction service; (d) Statement of Bank Accounts: (e) Details/sales brochures in respect of payment plans for customers 2.4 As appellant did not submit the complete documents, they were issued another summon dated 05.05.2017, but neither any reply nor the requisite documents were submitted by the party 2.5 As the appellant was not cooperating in the enquiry initiated by the department Shri Anupam Ramesh & Associates, the Counsel of appellant as well as appellant were summoned vide Summons dated 03.11.2017 calling for information/ documents, but this time also, they neither responded to the summons issued to them nor submitted the requisite documents/ information. 2.6 Shri Anupam Sharma, Chartered Accounta....
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....new date in the matter may be fixed after 11.08.2018. Accordingly, fresh summons dated 08.08.2018 were issued to Shri Sunil Kumar, Shri Anil Kumar and Shri Lokesh Kumar directors for submission of the documents/ information as per schedule appended in the said summons as well as their personal appearance 2.12 As appellant and its directors were not co-operating in the enquiry initiated against them, the Registrar of Companies, Kanpur was reminded vide dated 26.07.2018 to provide copy of Balance Sheets for the financial year 2012-2013 to 2016-2017, filed by GAYATRI with them. The Assistant Registrar of Companies, Uttar Pradesh, Kanpur vide letter dated 17.07.2018 requested the Deputy Commissioner (AE), CGST Commissionerate, Meerut to depute an official along with Pen drive/CD to collect the requisite documents from them. Accordingly, an Officer of Anti-Evasion Branch of the Commissionerate was deputed who collected the balance sheets for the Financial Year 2012-2013 to 2016-2017 from the Assistant Registrar of Companies, Uttar Pradesh, Kanpur 2.13 In response to the summons issued. Shri Anil Kumar appeared on 13.08.2018 and tendered Balance sheet for the year 2016-17, 26AS for....
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....rom sale of fully constructed house/flats failed to substantiate their claim with the supporting documents. Thus it appeared that appellant was engaged in providing Construction of Residential Complex services which falls under the definition of taxable services as defined under Section 65(B) (51) of the Finance Act, 1994 and also categorically defined under Section 66(E) (b) of the Finance Act, 1994 as Declared Services. Being a provider of taxable services are required to pay service tax on the value of such services received from the prospective buyers. 2.15 As appellant even after repeated letters and summons did not provide the requisite information the information as available in the balance sheets was taken for calculating the Service Tax Liability. 2.16 To calculate the taxable value, the figures shown under the head "Revenue from Operations" in the balance sheet of the financial year 2012-13 to 2016-17 has been taken and the advances shown under head short term borrowing in the balance sheet for the year ended 31.03.2017 has been added in the figures of the "Revenue from the Operations considering that the advances shown in the balance sheet of the respective years i....
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....uring the said period ⮚ Section 72 of the Finance Act, 1994.read with Rule 4 of the Service Tax Rule 1994 as they failed to provide the documents as required by the Department ⮚ Section 69 of the Finance Act, 1994 read with Rule 4 of the Service Tax Rules, 1994 as they failed to take registration in time as prescribed under Section 69 of the Finance Act, 1994 read with Rule 4 of the Service Tax Rules, 1994. 2.18 Shri Anil Kumar, Shri Sunil Kumar both Directors of appellant were involved in day to day functioning of the company. Shri Anil Kumar was the key person who was responsible for all the key decisions and deposit of due Service Tax and also in knowledge of the provisions of the Service Tax laws / Finance Act, 1994. He have willfully suppressed the taxable value and intentionally did not disclose this fact to the department inspite of several letters/ summons issued. He failed to submit the documents required by the department even after his promise to do so in his statement dated 13.08.2018. He was in-charge and responsible for conduct of business and thus contravened the provisions of Section 68 of the Finance Act, 1994 read with Rule 6 of ....
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.... 2.22 The show cause notice was adjudicated as per the impugned order, referred in para 1 above. 2.23 Aggrieved by the order appellant has filed this appeal. 2.24 Revenue has also filed the appeal challenging the demand dropped by the impugned order, by treating the receipts towards the sale of plots. 3.1 Matter was listed for hearing on 30.09.2024, 22.11.2024, 08.01.2025, 28.02.2025 in past. On all the occasions it was adjourned on the request of appellant on various pretexts. We observe that Section 35 C (1A) of the Central Excise Act, 1944 as made applicable to Service Tax matters by Section 83 of Finance Act, 1994 provides the maximum number of times the matter could be adjourned on the pretext of the appellant, and limits the number of adjournments to three. 3.2 When the matter was called on 14.10.2025, appellant/ appellant counsel chose to abstain again. Thus in view of the provisions of Rule 20 of the CESTAT Procedure Rules, 1982 as interpreted by the Hon'ble Supreme Court in case of Balaji Steel Re-Rolling Mills [2014 (310) E.L.T. 209 (S.C.)] as follows matter has been taken up for consideration on the basis of records: 9. Section 35C(1) of the Act wh....
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....ection 33(4) of the Income Tax Act, 1922 "33(4). The Appellate Tribunal may, after giving both parties to the appeal an opportunity of being heard, pass such orders thereon as it thinks fit, and shall communicate any such orders to the assessee and to the Commissioner." Rule 24 of the Appellate Tribunal Rules, 1946 "24. Where on the day fixed for hearing or any other day to which the hearing may be adjourned, the appellant does not appear when the appeal is called on for hearing, the Tribunal may dismiss the appeal for default or may hear it ex parte." Considering the aforesaid provisions, this Court held as under :- "7. The scheme of the provisions of the Act relating to the Appellate Tribunal apparently is that it has to dispose of an appeal by making such orders as it thinks fit on the merits. It follows from the language of Section 33(4) and in particular the use of the word "thereon" that the Tribunal has to go into the correctness or otherwise of the points decided by the departmental authorities in the light of the submissions made by the appellant. This can only be done by giving a decision on the merits on questions of fact and ....
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.... "How can it be said that the Tribunal should seek for advice on a question which it was not called upon to consider and in respect of which it had no opportunity of deciding whether the decision of the Court should be sought." Thus looking at the substantive provisions of the Act there is no escape from the conclusion that under Section 33(4) the Appellate Tribunal has to dispose of the appeal on the merits and cannot short-circuit the same by dismissing it for default of appearance." 13. Applying the principles laid down in the aforesaid case to the facts of the present case, as the two provisions are similar, we are of the considered opinion that the Tribunal could not have dismissed the appeal filed by the appellant for want of prosecution and it ought to have decided the appeal on merits even if the appellant or its counsel was not present when the appeal was taken up for hearing. The High Court also erred in law in upholding the order of the Tribunal. 3.3 Have heard Ms Chitra Srivastava Authorized Representative for the revenue. She reiterated the findings recorded in the impugned order for confirming the demand. She re-iterated the grounds taken i....
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....hich no sum is received from or on behalf of the prospective buyer by the builder or a person authorised 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; SECTION 66E. Declared services.- The following shall constitute declared services namely (a) renting of immovable property (b) construction of a complex, building, civil structure or a part thereof, including a complex pr building intended for sale to a buyer, wholly or partly, except where the entire consideration is received after issuance of completion-certificate by the competent authority Explanation. - For the purposes of this clause, (I) the expression "competent authority" means the Government or any authority authorised to issue completion certificate under any law for the time being in force and in case of non-requirement of such certificate from such authority, from any of the following, namely :- (A) architect registered with the Council of Architecture constituted under the Architects Act, 1972 ....
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.... (c) willful mis-statement; or (d) suppression of facts; or (e) contravention of any of the provisions of this Chapter or of the rules made thereunder with intent to evade payment of service tax, by the person chargeable with the service tax or his agent, the provisions if this sub-section shall have effect, as if, for the words ["thirty months"], the words five years" had been substituted. Explanation.-Where the service of the notice is stayed by an order of a court, the period of such stay shall be excluded in computing the aforesaid period of thirty months or five years, as the case maybe. 10.5 I find that this case was investigated by CGST officers of Meerut after getting reference from the Commissioner, Central Excise & Service Tax, Audit-I, Meerut vide letter dated 05.05.2016. During audit of the records of M/s Gayatri, the audit team had also failed to get any cooperation from the party as they did not submit the required documents to them. They played the same trick when investigation was taken up by the HQ Anti evasion branch. The case records show that in spite of issuance of various letters summons during the last two y....
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....e from the Operations" in the balance sheet of the financial year 2012-13 to 2016-17 and the advances shown under head short term borrowing in the balance sheet for the year ended 31.03.2017. has been added in the figures of the "Revenue from the Operations": considering that the advances shown in the balance sheet of the respective years i.e. 2012-13 to 2016-17 were already adjusted in "Revenue from he Operations". On the above basis, service tax of Rs. 6,80,62,956/- has been demanded from M/s Gayatri as shown below- S. No Financial Year Taxable as per Balance Value Taxable Value as sheet per ST-3 returns Diff. Taxable value S. Tax S. Tax to be paid (in Rs.) 1 2 3 4 5 (3-4) 6 7 1 2012-13 256326580 1730000 254596580 12.36% 31468137 2 2013-14 133411356 13352427 120058929 12.36% 14839284 3 2014-15 58306535 19293750 39012785 12.36% 4821980 4 2015-16 88438274 5586620 82851654 14.50% 12013490 5 2016-17 35346184 2545750 32800434 15.00% 4920065 TOTAL 571828929 42508547 529320382 68062956 TOTAL 11.2 The party....
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....balance sheets, the remaining pertains to construction of Commercial & residential complex. I hold that the amount of income shown in the balance sheet(s) minus amount on account sale of plots during the period 2012-13, 2013-14, 2014-15, 2015-16 and 2016-17, is the taxable amount for construction of residential complex & commercial complex, on which M/s Gayatri is liable to pay service tax as calculated under - [Amount in Rs.] SI. No Year Sale deeds for Number of sale deeds of plots Amount involved in such sale deeds Taxable value as per para 5.1 Taxable value pertaining to construction of residential flats/shops* [Col 6-Col 5] 1 2 3 4 5 6 7 1 2012-13 Plots 66 387,68,000 2563,26,580 2175,58,580 2 2013-14 Plots 13 83,43,000 1334,11,356 1250,68,356 3 2014-15 Plots 36 271.38,375 583,06,535 311,68,160 4 2015-16 Plots 79 684,78,238 884,38,274 199,60,036 5 2016-17 Plots 5 48,11,000 353,46,184 305,35,184 Total 14,75,38,613 57,18,28,929 42,42,90,316 11.4 Now, I consider service tax liability on constru....
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....250,68,3 56 25 % 312,67,08 9 133,52,4 27 179,14,6 62 12.36 % 22,14,2 52 2014 -15 311,68,16 0 25 % 77,92,040 192,93,7 50 - 115,01,7 10 12.36 % - 14,21,6 11 2015 -16 199,60,03 6 25 % 49,90,009 55,86,62 0 - 5,96,611 14.50 % -86,509 2016 -17 281,87,18 4 25 % 70,46,796 25,45,75 0 45,01,04 6 15.00 % 6,75,15 7 23,48,000 30 % 7,04,400 7,04,400 15.00 % 1,05,66 0 TOTAL 4242,90,3 16 1061,89,9 79 425,08,5 47 636,81,4 32 79,95,6 81 12. Accordingly, I hold that service tax amounting to Rs. 79,95,681/- has been short paid by M/s Gayatri and the same is recoverable from them under proviso to Section 73(1) of the Finance Act, 1994 13. I find that the amount of service tax involved in this case, was not paid by the party at the prescribed intervals, in terms of provisions of Rule 6 of the Service Tax Rules 1994. As such, I hold that the party also is liable to pay interest on the amount of service tax not paid by them, in terms of the provisions of section 75 of the Finance Act, 1994. 14. I find that a proposal has been....
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....llfully suppressed the taxable value of services rendered by M/s Gayatri and deliberately and intentionally did not disclose this fact to the department. In his statements dated 13.08.2018 tendered before the Superintendent (AE), Central Goods and Services Tax, Commissionerate Meerut, Shri Anil Kumar promised to submit the desired documents within 15 days but he did not submit the documents as required by the department from time to time and tried to hinder the investigation proceedings He was in-charge and responsible for conduct of business and thus contravened the provisions of Section 68 of the Finance Act, 1994 read with Rule 6 of the Service Tax Rules, 1994.Accordingly, I hold him Liable to penalty under section 78A of the Finance Act, 1994 16. Shri Sunil Kumar, Director of M/s Gayatri was summoned during investigation for submission of documents as mentioned in the schedule and also to tender statements being Director of M/s Gayatri but he did not submit the documents as required by the department from time to time. He was also in-charge and responsible for conduct of business of M/s Gayatri and thus contravened the provisions of Section 68 of the Finance Act. 1994 ....
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....ion [2019 (27) GSTL 712 (T-Chand) ○ Viraj Estates Pvt. Ltd. [2017 (5) GSTL 386 (T-Mumbai)] ○ Pulin Kumar [2019 (26) GSTL 57 (T-Del)] ○ Aba Builders [2019 (21) GSTL 539 (T-All)] ⮚ Determination of the taxable value as 25% of the sale consideration excluding the value of sale of plots is unjustified. ⮚ They have filed their ST-3 returns timely and deposited the tax. These ST-3 returns were never questioned. Even impugned order do not question the returns filed by them. ⮚ There is no justification for demand of service tax on sale of flat after completion of the same. The completion certificate from the chartered engineer was produced and it was submitted at the time of adjudication that they had applied for the issuance of completion certificate to the Meerut Development Authority. Reliance is placed on the Service tax (Removal of Difficulty) Order, 2010 dated 22.06.2010. ⮚ Extended period of limitation cannot be invoked reliance is placed on the following decisions: ○ Sainik Security Services [2016 (41) STR 149 (T-ALL)] ○ Central Warehousing Corp....
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....rvice tax, leading to invocation of extended period of limitation as per proviso to Section 73 (1) of Finance Act, 1994 for making the demand. The penalties imposed under Section 78 ibid also are justified in view of the decision of the Hon'ble Supreme Court in case of Rajasthan Spinning and Weaving Mills Ltd. [2009 (238) ELT 3 (SC)]. 4.6 The submission made by the appellant that they have provided the sale deeds of the plot on sample basis is also not supported by any documents. The relevant record of personal hearing and submissions made by the appellant are reproduced below: 4.7 The Annexures provided by the appellant claiming the sale of plots and their value has been made part of the impugned order. The sale deeds have been examined by the adjudicating authority as recorded in the impugned order and the total value of the sale of plots determined as per the sale deed and the Annexures provided by the appellant. Appellant has in their submissions in appeal not even pointed that which of the sale deed as per Annexure has not been made part of the impugned order while determining the value of sale of plots. The claim made by the appellant has not been substantiated and need....
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.... in absence of the completion certificate, we do not find any merits in the argument advanced by the appellant. 4.10 Notification No. 26/2012-Service Tax dated 20.06.2012 exempts the taxable service of the description specified in column (2) of the table below from so much of the service tax leviable thereon under section 66B of the said Act, as is in excess of the service tax calculated on a value which is equivalent to a percentage specified in the corresponding entry in column (3) of the said table, of the amount charged by such service provider for providing the said taxable service, unless specified otherwise, subject to the relevant conditions specified in the corresponding entry in column(4) of the said Table. Further, the Notification No. 26/2012-ST dated 20.06.2012 was again amended vide Notification No. 2/2013-Service Tax dated 01.03.2013 to the extent of the taxable value on which service tax was required to be pad subject to the conditions mentioned against the entries- S. No Description of Taxable Service %Age Conditions (1) (2) (3) (4) 12 Construction of a complex, building civil structure or a part thereof, intended for a sale to a bu....
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....nd can only be allowed after the entitlement to such benefit is irrefutably proved. In absence of any documentary evidence to prove that the balance amount of earning was on account of services related to construction of commercial and residential complex. In para 10.2 of the Show Cause Notice it was specifically alleged that the party was not eligible for abatement since they failed to submit the requisite documents viz. customer ledger, completion certificate of Competent Authority, details of advances from customers under different heads and documents to prove that the cost of land was included. Nowhere from the Order-in-Original it can be inferred that the party had submitted all these documents at the time of adjudication proceedings. The Adjudicating Authority has also not discussed these factors in his findings. The Adjudicating Authority, by allowing abatement on the net receipts, has travelled beyond the statutes of the law and has passed an illegal order based on assumptions and presumptions, more so when he had concluded that the party had suppressed and misstated the facts to the department. Thus it, was imperative that before allowing the abatement to the extent of 75-....
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....et/ profit and loss account of the appellant that was collected from the office of registrar of company as appellant was not providing any documents to the investigating officers. We also observe that appellant has provided the information in respect of the value towards the sale of plot which has been taken into account while determining the taxable value. Further appellant has impugned order in para 11.4 specifically discusses the manner of determination of the taxable value in terms of Notification No 26/2012-ST dated 20.06.2012, by treating the entire amount that received by the appellant as per their balance sheet towards sale amount pertaining to construction of residential flats/ houses. The abatement of 25% and 30% as per the Notification No 26/2012-ST has been allowed. The basic determination is on the basis that these amounts were received prior to receipt of completion certificate. When the determination has been done under the said notification for the reason of non production of the completion certificate, revenue cannot be aggrieved to state that Commissioner has failed to take into account the completion certificate. 4.15 We also observe that impugned order do not....
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....aring today at 12.30 Hrs as it would not be possible to attend the hearing through any other means as the documents to be presented are above 2000 pages and it can only be produced in person. So I would be attending the above hearing on behalf of the assessee on the above specified date and time at your office. Power of attorney is annexed with this letter as Annexure-1. Yours Faithfully. (CA. Arapamı Sharma) Authorised Representative Contact No. 9719103027 Add. 02, Victoria Garden, Near Jail Chungi Crossing Victoria Park Road, Meerut For Gayatri Build Associates Pvt. Ltd. Apeur Directo RECORD OF PERSONAL HEARING TIME: 12.00 PM PLACE: MEERUT DATE : 22.06.2020 FILE. NO. : V(15)Of/Adj./S.Tax_MRT/31/2018 NAME OF THE PARTY: M/s Gyatri Build Associates (P) Ltd., Daurala Meerut. NAME OF THE PERSONS WHO REPRESENTED THE PARTY :- Signature Date 1. CA Name Anupam Sharma 2 Shri Anupam Sharma, CA appeared on behal of the noticee. He mentioned that - @ Dispute is that the debt is asking servic tax on plot sale value treating them as residential complex. This is factually inco ect as they have sold plats only. The map of Plot is also appro....