TaxTMI 
TaxTMI 
2026 (8) TMI 1599
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....nance Act, 1994 read with Sections 66, 67 and 68 of the said Act; ii. Interest at appropriate rate is also ordered to be recovered from the Noticee under Section 75 of the Finance Act, 1994, on the demand of service tax confirmed above at sl. no. (i) above. iii. I impose a penalty of Rs. 19,27,38,667/- upon the Noticee under Section 78 of the said Act for suppressing the relevant details and the taxable value of the said services with intent to evade payment of service tax; iv. I do not impose penalty under Section 76 of the Finance Act, 1994; v. I impose penalty of Rs. 10,000/- on Noticee under Section 77 of the Finance Act, 1994 vi. I hold the Noticee liable to pay the amount under Rule 7C of Service Tax Rules, 1994 which should be recovered from them for their failure to file the prescribed returns on or before the prescribed date on actual computation. Thereby confirming the proposal of Show Cause Notice No. 15-40/2015 dated 24.04.2015. Being aggrieved, the appellant is before this Tribunal. 2. We have heard Shri A.K. Batra and Ms. Shakshi Khanna, learned Chartered Accountants for the appellant and Shri Rajpal Sharma, learned S....
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....rights constitutes a benefit arising out of land, falling within the definition of immovable property as per Clause 3(26) of the General Clauses Act, 1897. Accordingly, the tansaction lies outside the ambit of 'service' as defined under Section 65B(44) of the Finance Act, 1994. Reliance in this regard is placed on the previous decision and on the following judgments: (i) Hon'ble Bombay High Court in the case of Chheda Housing Development Corporation Vs. Bibijan Shaikh Farid reported as 2007 (3) MhLJ 402, wherein it was held that development right are immovable property and constitute benefits arising from land. (ii) Hon'ble CESTAT, Chandigarh in DLF Commercial Projects Corporation Vs. Commissioner of Service Tax, Gurugram reported as 2019 (27) GSTl 712 (Tri.-Chan.), wherein the Tribunal held that transfer of development rights is not a taxable service under the Finance Act, 1994. 3.4 With respect to demand in respect of Kamal Vihar Yojana, it is submitted that the allotment of land on a freehold basis is construed as a sale of immovable property, which falls outside the scope of 'services' as defined under the Act. Accordingly, service tax is not leviable on su....
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....ting". The transfer of land was granted by the appellant only after receiving of the transfer fee. Hence, the amount was received for an activity which was directly in relation to renting. Hence, the same has rightly been held taxable, it being not covered even in the negative list. The plea of inclusion of land value in the lease premium has rightly been denied for want of any evidence to support the said claim. 4.4 With respect to the cost of providing Commercial and Residential Complex Services, the plea of appellant that their liability is on 40% of the service value in terms of Rule 2A of the Service Tax Valuation Rules is denied to have any legitimate basis as apparent of the findings in the order under challenge in Para 36.44 thereof. The interest received by the appellants from the buyers of the residential unit is also to be treated as consideration for Commercial and Residential Complex Services as the appellant itself has booked the said amount as 'other interest' in their books of accounts. With these submissions, appeal is prayed to be dismissed. 5. Having heard the rival contentions and perusing the entire records, we observe and hold as follows: 5.1 The appe....
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....d dispose of the property and to enter into contracts w.e.f. the date of said notification i.e 03.09.2004. 7. We now peruse the definition of the government authority. Notification No. 25/12 dated 20.06.2012 defined government authority as follows: EXEMPTION NOTIFICATION 2(s) "governmental authority'' means a board, or an authority or any other body established with 90% or more participation by way of equity or control by Government and set up by an Act of the Parliament or a State Legislature to carry out any function entrusted to a municipality under article 243W of the Constitution; CLARIFICATION NOTIFICATION 2(s) "governmental authority" means an authority or a board or any other body; (i) Set up by an Act of Parliament or a State Legislature; or (ii) established by Government, with 90% or more participation by way of equity or control, to carry out any function entrusted to a municipality under article 243W of the Constitution; Hon'ble Supreme Court in CIVIL APPEAL NO. 3991/2023 COMMISSIONER, CUSTOMS CENTRAL EXCISE AND SERVICE TAX, PATNA VS. M/S SHAPOORJI PALLONJI AND COMPANY PVT. LTD. & ORS...APPELLANT .......
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....has been examined. The Board is of the view that the activities performed by the sovereign/public authorities under the provision of law are in the nature of statutory obligations which are to be fulfilled in accordance with law. The fee collected by them for performing such activities is in the nature of compulsory levy as per the provisions of the relevant statute, and it is deposited into the Government treasury. Such activity is purely in public interest and it is undertaken as mandatory and statutory function. These are not in the nature of service to any particular individual for any consideration. Therefore, such an activity performed by a sovereign/public authority under the provisions of law does not constitute provision of taxable service to a person and, therefore, no service tax is leviable on such activities." 9. The perusal reveals that if the government authority is receiving any statutory fee the same cannot be called as consideration for rendering taxable service. Further perusal reveals that the circular also clarifies as follows: "3. However, if such authority performs a service, which is not in the nature of statutory activity and the same is u....
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....e to be interpreted in light of the words employed in them and there cannot be any addition or subtraction from the statutory provisions." 11. From the above discussion, it becomes clear that it shall be the nature of service which shall be relevant for deciding the tax liability of a government authority. We accordingly proceed as per the demand on five counts as already enumerated above. 12. Issue No. 1 12.1 The demand of this issued is based upon a agreement dated 11.11.2005 as was entered between the appellant and M/s. GIPL for development of City Centre Mall on the land which was otherwise owned by the appellant. However, on the basis of own ownership and transfer (BOOT Policy). The said project was sanctioned by Chhattisgarh Government vide letter dated No. 1950/1452/32/2005 dated 13.07.2005. Undisputedly the appellant was appointed as the body responsible for urban planning including town planning, one of the sovereign function but department has alleged that the act of the appellant vide the said agreement is meant to have a personal commercial motive of RDA and that the activity is taxable. Krishi Upaj Mandi Samiti (supra) has already held that p....
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..... Once the possession of property is transferred to the developer against the payment of share of sale consideration for the development/construction on the said immovable property, the transaction is also that of the transfer to immovable property. The Hon'ble Court has clarified that it is as good as transferring of developmental rights being a benefit arising from the land which amounts to sale of immovable property. Similar view has been taken in the decision of this Tribunal in the case of DLF Commercial Projects Corporations Vs. Commissioner of Service Tax, Gurugram reported as 2019 (27) G.S.T.L. 712 (Tri.-Chan.) It has been appreciated as follows: "(xv) Section 65B (44) (a) (i) says that transfer of title in goods or immovable property, by way of sale, gift or in any other manner. In other words, the transaction of transfer of title either in goods or in "immovable property" are excluded from the purview of "Service". A question then arises, what is the meaning of the word "immovable property". Immovable property has not been defined in Finance Act, 1994 but has been defined in Section 3(26) of General Clauses Act, 1987 in following words:- (26) "immovable ....
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....oresaid definition. It was an act of leasing out the land permanently for a longer period as that of 90 years against the one time payment. Irrespective that an annual ground rent was received but the lessee was allowed to retain the possession with all control on the immovable property. The transaction is one similar to sale as defined under Article 366 (29A)(d) of the Constitution of India incorporated vide 46th amendment. The activity therefore cannot fall under the definition of renting of immovable property even for the prior period. Hence, the demand of Issue No. 1 is liable to be set aside. 13. Issue No. 2 13.1 The appellant had constructed the residential complex. This issue stands settled vide the decision of this Tribunal in the case titled as M/s.Rajasthan State industrial Development and Investment Corporation Ltd. Vs. Commissioner of Central Excise, Jaipur I reported as 2017 TIOL 1725 CESTAT Delhi, wherein it has been held that the consideration received for allowing the allottee have direct nexus to the service of renting of immovable property. Appellant however had contended that the abatement of Notification No. 29/2010 dated 22.06.2012 has not bee....
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....se of AP Trade Promotion Corporation Vs. Commissioner of Central Excise, Hyderabad reported as 2010 (17) STR 107. 15. Issue No. 4 15.1 The service tax has been demanded on the amount received by the appellant against once year water supply. It is submitted that the said amount was booked under the account head "water tax". It is submitted that the appellant was providing water supply to the occupants of the residential complexes at such rates as equivalent to the rate on which water has been supplied by Chhattisgarh Jal Board. From the meaning of government authority as discussed above, supply of water by a government authority is a sovereign function. Also from the definition of service as discussed above, it is clear that discharging a sovereign function cannot be called as the provision of services. Otherwise also, as pointed out on behalf of the appellant that Chhattisgarh State Act, 2003 in its Schedule I while talking about tax free goods has specifically covered water in its ambit. Once water is as good as a good supply thereof is an act of transfer of goods which is subject to VAT and not to service tax. 16. Issue No. 5 16.1 There is no d....