TaxTMI 
TaxTMI 
2026 (3) TMI 1633
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....enance or Repair service during the period October 2006 to March 2011, and on completion of investigation show cause Notice was issued on 23.2.2012 for recovery of Service tax of Rs.2,61,423/- on 'Membership of Club or Association Services' and Rs.3,82,74,489/- on 'Management, Maintenance or Repair Services' rendered during the period from 01.10.2006 to 31.03.2011 with interest and penalty. On adjudication, the demands were confirmed with interest and penalty. Hence, the present appeal. 3. At the outset, the learned advocate Shri B. N. Gururaj submitted that the appellant is a property developer and the present property relates to 'Diamond District Complex' which comprises both residential as well as commercial premises. He has submitted that the demands confirmed in the impugned order can be bifurcated as follows: Club or Association Service Rs.2,61,423/- Management, Maintenance and Repair: 1. Power Generation & water charges Rs.1,60,75,396/- 2. Parking and other services Rs.18,26,590/- 3. Interest on FD Rs.42,34,000/- 4. Maintenance Deposits Rs.1,61,38,501/- 4. He has submitted that the appellant does not render Club or....
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.... 6. With regard to the demand of Rs.18,26,590/- which is mainly on the facility charges i.e., parking facilities, visitor's parking charges, notice board charges, vehicle stickers, reconnection charges, etc., he has submitted that these charges are nothing to do with the 'Management, Maintenance or Repair Services'. All these receipts are incidental to owning a large apartment and commercial complex for which operating facilities are provided as part of residential complex; hence, these charges are not liable to service tax. 7. With regard to the service tax demand of Rs.42,34,000/- confirmed towards interest received on fixed deposits, he has submitted that these deposits were received from the purchasers of the property towards maintenance of the facilities provided to the property owners. He has submitted that these deposits were collected based on carpet area of the apartment. Interest income was utilised for providing maintenance services of the common area, the campus, repair and upkeep. He has submitted that the demand has been raised directly on the Fixed Deposit interest receipt. He has submitted that the only consideration towards the taxable service can be charged to ....
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....d both sides and perused the records. In the impugned order, the learned Commissioner has confirmed demand of Rs.2,61,423/- observing that the appellant had rendered services under the taxable category of 'Membership of Club or Association Services' to the residents/occupants. Undisputedly, the appellant is a builder/developer constructed Diamond District Complex and provided certain facilities to the purchasers/shareholders, which includes a club house facility as a part of sale of the units/flats to the residents. As rightly pointed out by the learned advocate for the appellant that the services provided by the builder i.e., playing area, swimming pool, club house facility cannot be considered to fall under Club or an Association and it is a facility extended to the residents for purchasing a flat/unit in the said complex, hence, confirmation of demand on the amount for the said facilities provided to the occupants under the taxable category of 'Membership of Club or Association Services' cannot be sustained. 11. On the issue of levy of service tax on the amount towards collection of electricity charges, we find that in the said complex, the appellant has provided electricity ....
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....to and forming part and parcel of this Agreement. Time for payment of the above Deposit is and shall be the essence of this Agreement. However, the Company at its absolute discretion may extend time for effecting payment of Deposit. The Company has appointed M/s. Diamond District, Sheriff Centre-5th Floor, No.73/1, St. Mark's Road, Bangalore 560 001 (hereinafter referred to as Diamond District) to manage the finances and construction of the project and has authorised the said Diamond District to represent the Company in all matters of allotment, collection of Deposits and the like and as such the Member shall pay the Deposit directly to the said Diamond District and any receipt issued by Diamond District on behalf of the Company shall be a valid discharge for the monies paid by the Member. 2(b) ..... 3. ..... 12. ..... C. EXPENSES TO BE BORNE BY THE MEMBER: The Member shall exclusively bear and pay all the expenses and liabilities in respect of the Schedule-B Unit including:- (a) Corporation Tax and any other taxes levied and payable in respect of Schedule-B Unit. (b) Repair and maintenance of Schedule-B Unit includ....
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....ch, in our opinion, is chargeable to service tax under the category of 'Management, Maintenance or Repair Services'. The learned advocate resisted the said demand and argued that the by a resolution of the General Body meeting on 28.10.2006 wherein initial agreement/contract has been cancelled and the maintenance charges have been revised without any formal agreement/contract between the service provider i.e., the appellant and the occupants, no service tax can be charged in the absence of a valid contract. We do not find merit in the said contention of the learned advocate inasmuch as the resolution dt. 28.9.2006 referred by the appellants enclosed with the Appeal paper-book, does not support the said claim. The relevant minutes of the Meeting reads as follows: 1. ADOPTION OF ACCOUNTS "Resolved that the balance sheet as at 31-3-2006, the profit and loss account for the year ended that date along with the schedules, noted accounting policies and the reports of the directors and auditors thereon be and are hereby adopted." 2. RE-APPOINTMENT OF DIRECTOR "Resolved that Mr. Khalid A. K. Buhari be and is hereby re-appointed as director." 3. R....
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....e deposits appropriated being the consideration received by the appellant is chargeable to service tax. 14. Further, it is claimed by the learned advocate for the appellant that while confirming the service tax demand on the total amount of deposit of Rs.14,08,54,999/- it is assumed that the entire deposit has been received by the appellant from the occupants, however, the adjudicating authority has not appreciated their submission that out of the said amount of Rs.14,08,54,999/-, only an amount of Rs.8,71,09,477/- has been received and the balance amount of Rs.5,37,45,022/- being not be adjusted against the said deposit being not received by them, service tax cannot be demanded on it. However, we do not find any evidence in this regard has been produced by the appellant either before the adjudicating authority or during the proceedings before this Tribunal justifying their claim that the amount of Rs.5,37,45,022/- has not been received from the occupants and remains outstanding till date. Therefore, the said claim being devoid of evidence, accordingly, does not merit to be considered. Therefore, the entire amount is chargeable to service tax as held by the adjudicating authorit....