2015 (12) TMI 1540 - AT - Service Tax

Valuation - works contract service - non-monetary consideration - services provided to landlords for construction services under joint development agreement - waiver of pre-deposit - Held that - appellant is not the owner of the land on which the construction of apartments was executed by them. The owner(s) of the land were assigned 30 apartments and remaining were disposed off to other individuals under two categories of agreements outright sale on the one hand and contract for construction of apartments on the other. Prima facie it would appear that development of the property had been effected by construction of the 42 apartments which were not handed over to the landowners as the consideration. It would therefore appear that the service had been rendered to the land owners for which consideration was not monetary but in the form of apartments for disposal - prima facie case is against the assessee. - stay granted partly.

Summary

Issues:
Challenging service tax liability for works contract and renting of immovable property services, application for stay of operation of the impugned order pending appeal, ownership of commercial premises leased to corporate clients, disputed levy for works contract service, consideration of rendering service to landowners in the form of apartments.

Analysis:
The case involves M/s Hema Abodes Pvt Ltd challenging an order holding them liable for service tax for works contract service and renting of immovable property service. The appellant had entered into joint development agreements for building residential apartments, where some apartments were handed over to landowners, while others were sold or transferred to individuals. The appellant had discharged service tax liability for construction of residential complex service during the relevant period. However, they were also held liable for leasing out commercial space to a corporate entity in one project.

The appellant contended that they were not the owners of the commercial premises leased to corporate clients, and the demand for service tax in this regard does not seem sustainable. Regarding the disputed levy for works contract service, various arguments were presented by the appellant. The tribunal did not delve into the merits of this issue at this stage. It was noted that the appellant was not the owner of the land where the apartments were constructed, and the landowners were assigned some apartments while others were disposed of under different agreements. It was observed that the service had been rendered to the landowners in the form of apartments for disposal, and the tax liability on this consideration had not been fully discharged.

As a resolution, the tribunal directed the appellant to deposit a specific amount with a waiver of the remaining demand and penalties until the appeal is disposed of on merit, subject to compliance within a specified timeframe. The judgment highlights the complexities of service tax liability in the context of works contract service and renting of immovable property service, emphasizing the need for proper consideration and discharge of tax liabilities in such transactions.