2024 (5) TMI 760 - AT - Service Tax

Demand of Interest - appellant has paid the service tax from July 2010 onwards though belatedly - construction of residential complex and sale thereon - period from April 2009 to June 2010 - HELD THAT - The Board vide circular No.108/02/2009 dt. 29.1.2009 has clarified that a builder/promoter/developer is not liable to pay service tax prior to 1.7.2010. The said issue has been decided by the Tribunal in the case of Krishna Homes 2014 (3) TMI 694 - CESTAT AHMEDABAD . In the said case the Tribunal has applied Board s circular and discussed the very same issue after taking note of the Explanation introduced in Section 65 (105) (zzzh) of the Finance Act 1994. The Board has specifically stated that developer/builder/promoter would be liable to pay service tax only after 1.7.2010. The demand of service tax for the period prior to July 2010 cannot sustain and requires to be set aside - For the period after July 2010 to March 2011 the appellant has paid the service tax though belatedly the impugned order has confirmed the demand of interest for the said period. The appellant is liable to pay the same. The impugned order is set aside to the extent of demand of service tax interest thereon and penalties for the period upto 1.7.2010 - the interest demand confirmed for the period after 1.7.2010 not disturbed - appeal allowed in part.

Summary

Issues involved:
The issues involved in the judgment are the non-payment of service tax for the period April 2009 to June 2010 by a construction company engaged in building residential complexes, the imposition of penalties under Sections 76, 77, and 78 of the Finance Act, 1994, and the non-filing of periodical returns for the period April 2009 to March 2010.

Non-payment of Service Tax for April 2009 to June 2010:
The appellant, engaged in construction of residential complexes, did not pay service tax for the period April 2009 to June 2010. The appellant justified this non-payment based on Board circulars stating that builders were not liable to pay service tax prior to July 2010. The Tribunal referred to previous cases supporting this view and ruled that the demand of service tax for the period before July 2010 could not be sustained and should be set aside.

Imposition of Penalties:
Penalties under Sections 76, 77, and 78 of the Finance Act, 1994 were imposed on the appellant by the original authority. The appellant contested these penalties, arguing that they were not liable to pay service tax before July 2010. The Tribunal set aside the demand of service tax for the period up to July 2010 and partially allowed the appeal, providing consequential reliefs.

Non-filing of Periodical Returns:
The appellant had not filed periodical returns for the period April 2009 to March 2010 and filed returns belatedly from April 2010 to March 2011. The show cause notice issued to the appellant proposed to demand service tax, interest, and penalties for the non-filing of returns. The Tribunal's decision primarily focused on the non-payment of service tax for the period before July 2010 and the subsequent imposition of penalties and interest.