TaxTMI 
TaxTMI 
2026 (9) TMI 825
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....ssailed by M/s. Sunnit Enterprises Private Ltd [The appellant] in this appeal. The Joint Commissioner had decided the proposals in the Show Cause Notice dated 17.7.2018 [SCN] issued to the appellant and confirmed demand of service tax of Rs. 1,06,66,772/- under section 73 of the Finance Act, 1994 [Act] on the 'Transfer of Land Development Rights' treating such transfer as a service and imposed an equal amount as penalty under section 78 and penalty of Rs. 10,000/- under section 77(2) of the Act. She also denied and ordered recovery of CENVAT credit of Rs. 30,40,929/- under Rule 14 of the CENVAT Credit Rules, 2002 [CCR] and imposed an equal amount as penalty under Rule 15 of the CCR read with section 78 of the Act. 2. We have heard Shri A....
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.... should have paid service tax on the transfer of development rights which, by itself, was the service not in the negative list and the abatement would not be available to the appellant. It was also felt that the CENVAT credit was wrongly availed by the appellant as the administrative charges and construction services of the developer were not input services for the Transfer of Development Rights by the appellant. 6. Accordingly, the SCN was issued the proposals in which were decided by the Joint Commissioner and upheld by the Commissioner (Appeals) in the impugned order. 7. The first issue to be decided is what is the nature of a transaction in which the development rights in land are transferred and if such transfer is a service. Hon....
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....thin the meaning of Section 3 of the Indian Registration Act, 1877. A lease, therefore, of such right for a period of more than one year must be made by registered instrument. A Division Bench of the Oudh High Court in Ram Jiawan and Anr. v. Hanuman Prasad and Ors. AIR 1940 Oudh 409 also held, that bazar dues, constitute a benefit arising out of the land and therefore a lease of bazar dues is a lease of immovable property. A similar view has been taken by another Division Bench of the Allahabad High Court in Smt. Dropadi Devi v. Ram Das and Ors. on a consideration of Section 3(26) of General Clauses Act. From these judgments what appears is that a benefit arising from the land is immovable property. FSI/TDR being a benefit arising from the ....
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....the appellant is not entitled to CENVAT credit of these amounts. The denial and recovery of CENVAT credit therefore, needs to be upheld. However, extended period of limitation under section 73 of the Act as made applicable to Rule 14 of the CCR cannot be invoked in this case because the appellant was of the view that it was liable to pay service tax on the transfer of development rights as construction services and for that reason availed the CENVAT credit. For the same reason, the penalty imposed under Rule 15 of the CCR also needs to be set aside. 11. It may also be pointed out that the appellant had wrongly treated the transfer of development rights as 'construction service' and paid service tax. Since we have held that it was not a s....