TMI Blog2013 (6) TMI 588X X X X Extracts X X X X X X X X Extracts X X X X ..... be that no element of service relating to the construction is involved after completion of the Construction. Regarding valuation - Held that:- The measure of tax is also not notional as contended; it is the gross value of construction charged by the service provider. Hence, the judgment of the Supreme Court in Rajasthan Chemist Association (2006 (7) TMI 17 - SUPREME COURT OF INDIA) is of no assistance to the petitioners. Any standard having a nexus with the essential character of the levy can be regarded as a valid basis for assessing the measure of the levy. Character of the levy being service tax on Construction, the gross value of construction clearly will have nexus with the element of service involved in the construction. It is stated that presently 75% of the gross value of Construction is exempted from service tax vide Notification dated 22.06.2010, issued by the Central Government in exercise of the power under Section 93(1) of the Finance Act, 1994. Be that as it may. As all the contentions fail, the writ petitions are liable to be dismissed - Decided against the assessee. - W.P. NOS. 24050-24051 OF 2010 (T-RES) - - - Dated:- 12-12-2012 - H.G. RAMESH, J. For th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lder to the buyer; .. (zzzzu) - to a buyer, by a builder of a residential complex, or a commercial complex, or any other person authorised by such builder, for providing preferential location or development of such complex but does not include services covered under sub-clauses (zzg), (zzq), (zzzh) and in relation to parking place. Explanation : For the purposes of this sub-clause, preferential location means any location having extra advantage which attracts extra payment over and above the basic sale price. 4. Before referring to the contentions urged, a brief survey of the relevant provisions of the Service Tax Legislation is necessary. The nature of the impugned provisions also requires to be stated. 4.1 Scheme of the Act : Chapter V of the Finance Act, 1994 relates to Service tax. Sub-Section (95) of Section 65 defines 'Service Tax' as tax leviable under the provisions of Chapter V. Section 66 provides for levy of service tax on the value of Taxable services. Taxable Services are listed in sub-Section 105 of Section 65. Section 67 provides for valuation of Taxable Services for charging service tax. Section 68(1) obli ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the sense the service component is not taken as the measure, the impugned provisions are unconstitutional. In support of this submission, he relied on a judgment of the Supreme Court in State of Rajasthan v. Rajasthan Chemist Association 6. Counsel appearing for the respondents submitted that the impugned provisions are held to be constitutionally valid by a Division Bench of the Bombay High Court in Maharashtra Chamber of Housing Industry v. Union of India [2012] 34 STT 384She also referred to a Division Bench judgment of the Punjab and Haryana High Court in G.S. Promoters v. Union of India [2011] 30 STT 268 7. I will now examine the contentions urged by the learned Counsel for the petitioners in the order in which they were urged: Re. Legislative Competence of Parliament to enact the impugned provisions : To examine the contention that the tax on the services referred to in the impugned provisions is really a tax on 'lands and buildings' specified in Entry 49 of List II (State list), the scope and ambit of Entry 49 requires to be examined. On this aspect, it is useful to refer to the following observations made by a Seven Judge Bench of the Supreme Court in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cil v. Province of Madras in the context of concepts of Duties of Excise and Tax on Sale of Goods said: ... The two taxes, the one levied on a manufacturer in respect of his goods, the other on a vendor in respect of his sales, may, as is there pointed out, in one sense overlap. But in law there is no overlapping. The taxes are separate and distinct imposts. If in fact they overlap, that may be because the taxing authority, imposing a duty of excise, finds it convenient to impose that duty at the moment when the excisable article leaves the factory or workshop for the first time on the occasion of its sale.... (Emphasis Supplied) In my opinion, as stated above, the subject matter relating to the impugned provisions will not fall within the ambit of Entry 49 of List II of the Seventh Schedule of the Constitution. Nature of the levy is determined on the basis of the taxable event. By the two impugned explanations, certain services are made exigible to service tax. It is a tax with respect to the services rendered and not with respect to lands and buildings. In my opinion, an element of service is certainly involved in construction of flats and buildings. Similarly, in the con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ething. While applying the doctrine of classification, the Legislature is allowed more freedom of choice in the matter of taxation vis-a-vis other types of laws. In this context, it is useful to refer to a Five judge Bench decision of the Supreme Court in East India Tobacco Co. v. State of Andhra Pradesh AIR 1962 SC 1733 wherein a tax imposed on sales of Virginia tobbaco but not on Country tobacco was held to be not violative of Article 14 on the ground that the former has certain features which distinguish it from the latter. The following observations made therein are relevant: (4) It is not in dispute that taxation laws must also pass the test of Art. 14. That has been laid down recently by this Court in Kunnathat Thathunni Moopil Nair v. State of Kerala AIR 1961 SC 552. But in deciding whether a taxation law is discriminatory or not it is necessary to bear in mind that the State has a wide discretion in selecting the persons or objects it will tax, and that a statute is not open to attack on the ground that it taxes some persons or objects and not others. It is only when within the range of its selection, the law operates unequally, and that cannot be justified on the basis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gned legislation must be held to be not obnoxious to Art. 14 of the Constitution. (Emphasis supplied) Coming to the contention urged, it cannot be said that sale or intended sale of a completed building after grant of completion certificate by the Competent Authority stands on the same footing as that of a building, before, during or after construction but before grant of completion certificate. Hence, it cannot be said that equals are being treated unequally or that the classification does not rest on a valid basis. The 'Completion Certificate' is the differentia which keeps apart the constructions to which the Act does not apply. I find nothing discriminatory or arbitrary in excluding completed constructions, from the purview of service tax, for which no sum is received from the prospective buyer before grant of completion certificate. The reason for exclusion appears to be that no element of service relating to the construction is involved after completion of the Construction. 9. Re. Measure of tax The contention of the learned counsel for the petitioners that the measure of tax could be only the service component and not the gross amount charged for the construct ..... X X X X Extracts X X X X X X X X Extracts X X X X
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