TMI Blog2013 (8) TMI 295X X X X Extracts X X X X X X X X Extracts X X X X ..... 65(105)(zzzh) – Waiver of pre-deposit - Held that:- Construction of residential complex was taxable u/s 65(105) (zzzh) prior to 01-06-2007 – following the judgement of LCS City Makers Vs. CST Chennai [2012 (6) TMI 363 - CESTAT, CHENNAI ] – considering the financial hardship of the assesse 4.50Crore were ordered to be submitted as pre-deposit – upon such submission rest of the duty to be waived till the disposal – Decided partly in favor of assesse. - ST/448-450/12 - Misc. Order Nos. 41959-41961/2013 - Dated:- 29-7-2013 - Shri. P.K. Das and Shri. Mathew John, JJ. For the Appellant: Smt. Radhika Chandrashekar, Advocate For the Respondent: Shri K.S.V.V. Prasad, JC (AR) ORDER Per Mathew John; The applicant is engaged in the business of Construction of Residential Complexes and the applicant registered for payment of service tax. On investigations conducted by Revenue, it appeared to the Revenue officers that the applicant had not paid appropriate service tax on different projects executed by them during the period Apr 06 to June 10. Three Show Cause Notices issued in this regard have been adjudicated by a common order confirming a tax demand of Rs.11,21,54,460/- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... had the right to take back possession of land and sell it to any other prospective buyer. So for all practical purpose the land continued to belong to the applicant and hence there was no service being provided to anybody else and there could be no levy of service tax, according to the Counsel. 5. Further the Ld. Counsel submits that out of 4252 flats constructed only 843 flats have been sold. She argues that at least for the unsold flats it is very clear that there was no service receiver. Further because of the fact that the flats constructed could not be sold because of the slump in the market, the applicant is facing acute financial constraints in making any pre-deposit. 6. She points out that an explanation has been added on 01-07-2010 in section 65 (105) (zzzh) defining the relevant taxable service to the effect that even in a situation where the land is in the possession of the developer and money is taken for construction of flats to be sold there is a service involved. She argues that this explanation could have only prospective effect. She relied on the decision of CCE Vs. Skynet Builders, Developers, Colonizers (2012) 27 STR 388. She argues that this would imply that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... registration with local authorities is done for sale of flat and not for sale of UDS. The facts that there is proof of sale of land and registration thereof with local authorities and there is no registration done for sale of flat are clinching proof that there was a relationship of service provider and service recipient between applicant and the persons to whom UDS was sold. He submits that the question whether there service tax liability would arise in situations of the type under consideration was examined by the Tribunal in the case of LCS City Makers Vs. CST Chennai - 2013 (30) STR 33 (Tri.-Chen.) and the issue is decided in favour of revenue. 14. The Ld. A. R. further points out that the issue before the Hon Madras High Court in the case of Sanhvi and Doshi Enterprises (Supra) was whether a developer of land was eligible for deduction from income earned under 80IB of income Tax Act, 1961. In that case, three parties were involved. A land owner (Hotel Mullai Pvt Ltd), a property Developer (Sanghvi and Doshi Enterprises, the appellant therein) and prospective buyers of land (all taken together as one party for discussion). In this case only two parties are involved. The appl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... information relevant for issue of show cause notice. So he argues that the extended period is correctly invoked. 20. He further points out that Construction of Residential complex became taxable from 16-06-2005. Article 366 (29A) of Constitution of India permitted bifurcation of material and service in a composite contract. The scheme of levy provided relief under notification 15/2004-St and subsequent notification 01/2006-ST to avoid taxation of material value. In the present demand also abatement for value of materials is given and tax is demanded on the value of services only. The new entry for works contract provided only for a new method for determining the quantum of levy and this new entry cannot make the earlier entry ultra virus the Constitution. In fact both entries at 65(105) (zzzh) and section 65 (105) (zzzza) make use of the same expressions as defined in section 65 (30a) and section 65(91a). So the argument that the activity can be taxed from 01-06-2007 only is not correct. 21. He submits that this bench has been consistently calling for 50% of the tax demanded as pre-deposit in such cases and the same type of order may be passed in this case also. 22. We have c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hardly any new aspect to be considered. 24. The other issues raised by the Ld. Counsel are already decided against the applicant in the case of LCS city Makers. That is the Tribunal held the view that construction of residential complex was taxable under section 65(105) (zzzh) prior to 01-06-2007. 25. The decision in the case of Srinandha Nagar-IV Co-operative society was when a co-operative society does construction activity for its members whether there is any service involved. This is not the issue involved in this case. In the case of Mohitasam Complexes (P) Ltd the flats were constructed and sold. The model followed was not one of selling UDS and then constructing the flats. So these decisions prima facie are not applicable to the facts of the case. 26. At this stage we do not see much merit in the argument regarding time bar because there was no adequate disclosure from the applicant to the department. 27. Considering the discussions above and also the financial hardship pleaded by applicant and also the Revenue interest, we order the applicant to make a pre-deposit of Rs.4,50,00,000/- (Rs. Four crore Fifty lakhs only) within 8 weeks and report compliance on 10/10/201 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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