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Sumeet C Tholle & Pratima S. Tholle Versus Commissioner of Central Excise & Customs Aurangabad

2016 (2) TMI 774 - CESTAT MUMBAI

Claim for refund of service tax alleged to have been collected from them contrary to law - Service tax was paid by the provider of "construction of residential complex service" - claim of refund by the joint owner / purchase of flat - The Assistant Commissioner rejected the refund claim on the ground that the joint application did not enclose proof that the tax paid by them had indeed been deposited to the credit of the government by the vendor of the property; that the plan of the house was suc .....

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of consideration from the appellants. Therefore, the transaction between appellants and vendor does not fall within the exception to the `declared service.' The appellants claim that theirs is a single residential unit. However, a perusal of the sale agreement reveals transfer of land and built-up facilities along with the constructed house; this would include a share in the common roads, community facilities and other land that is not assigned specifically to a house owner. That is part of the .....

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ed by the exclusion from service and, therefore, outside the ambit of tax. The tax collected from the appellants by the vendor and deposited in the government account is without authority of law and is liable to be refunded under section 11B of Central Excise Act, 1944 as made applicable to Finance Act, 1994. - The appellants have borne the incidence of the tax. Deposit of tax collected from the appellants by the vendor in the government account is established to the extent that it is human .....

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ad in rejecting the claim for refund of service tax alleged to have been collected from them contrary to law. 2. The appellants had jointly procured a house in the project of M/s AM Patel Infra (P) Ltd at Satara vide sale deed of 31st December 2013 and, along with the purchase price, were asked by the vendor to pay service tax of ₹ 2,59,700 for which receipt dated 27th March 2014 is in possession of the appellant. It would appear from the sale deed dated 31st December 2013 that the vendor .....

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377; 70,000 respectively. From the records, it appears that M/s AM Patel Infra Private Ltd has been registered as a provider of "construction of residential complex service" since 10th August, 2010. 3. The appellant sought refund of tax claiming that this transaction was not liable to tax. The Assistant Commissioner rejected the refund claim on the ground that the joint application did not enclose proof that the tax paid by them had indeed been deposited to the credit of the government .....

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llants that house was not liable to service tax. Relying on the presumption that the project must have been in execution since 2010, reference was made to section 65(105)(zzzh) of Finance Act, 1994 and definitions in section 65(91a) of Finance Act, 1994 to conclude that the house was part of complex containing more than twelve units; that building permissions were obtained for the whole and not separately for the house; and, there being no contract between the builder and appellant, it was not p .....

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[(2013) 41 STT 113 (SC)] i.e. "if contract with flat purchaser is entered only after construction is completed, goods used in the construction cannot be deemed to have been sold by the builder since at that time there is no purchaser and no VAT can be levied" is not admissible owing to the definition in section 65 that deems a service to have been rendered if payments had been made before issuance of completion certificate. 5. A ground for rejection of application for refund was the l .....

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thus, compelled to be taxed at a metaphorical "gunpoint" cannot be expected to insist upon being furnished with proof of subsequent deposit of the amount in government account. Tax authorities are also surely not oblivious that consolidated remitting of tax by service provider subsumes the tax collected from each recipient; that no marker can ever identify the contribution of the appellant to the tax kitty. Insistence upon on such evidence, especially in a scheme that bars the taxpayer .....

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tion in deposit. Recovery of tax collected but not deposited and sanction of refund of tax collected are independent actions the former does not lend itself as pre-condition for proceeding with the latter. Evidence of payment of tax is a necessary condition for refund but not evidence of deposit. The original authority should have limited its satisfaction to the tendering of tax amount by the appellants to the supplier which is the condition in section 11B of Central Excise Act, 1944. By the ima .....

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compass determination of size, the number of doors or the adaptability at a future date; a future transaction will be adjudged for taxability only when it occurs. These flaws in the order of the original authority have not been addressed by the first appellate authority. These findings are not tenable in resolution of the dispute before the Tribunal. 6. The finding in the impugned order that the taxability had been settled before the appellants were made to pay the tax along with purchase price .....

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operty. There is, therefore, no basis for the conclusion by the first appellate authority that taxability is a settled issue. The incidence of tax has been borne by the appellants and it is well within their rights to claim that the transaction is not taxable. Constitutional authority to collect tax is not vested in a service provider but in the proper officer who is not expected to alienate the responsibility to determine the taxability. It is also seen that the transaction pertains to the peri .....

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sputant is without authority of law. Presumptions of construction having occurred prior to the date of transaction is neither relevant nor acceptable in tax determination. 7. Casting aside the above issues that were relied upon to dispose the claim, denial of the refund by the two lower authorities appears to rest on two main planks: (a) that the house purchased by the applicant is part of a housing scheme and (b) that the purchase price was paid by the applicants before the competent authority .....

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Projects Ltd v. Commissioner of Service Tax [2008 (12) STR 603 (CESTAT Chennai)], AS Sikarwar v. Commissioner of Central Excise, Hyderabad [2012 (28) STR 479 - CESTAT Delhi ], Sai Teja Construction v. Commissioner of Central Excise, Hyderabad [2013 (31) STR 291 - CESTAT Bangalore] and Arihant Construction v Commissioner of Central Excise, Jaipur II [2013 (30) STR 64 (Tri Delhi)] were cited in support. Attention was also drawn to circular no. 201/01/2014-CX.6 dated 20th dune 2014 that was allege .....

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uld not detract from the description of the purchased property as a single residential unit. Relying on the decision in Larsen & Toubro v State of Karnataka referred to supra, it was claimed that their transaction with the builder was sale of immoveable property and not for receiving of a service. 9. Learned Authorized Representative reiterated the findings of the lower authorities and contended that the exemption at sl no. 14 in notification no. 25/2012-ST dated 20th June 2012 was intended .....

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scope of any of the services in section 65 of Finance Act, 1994. With the introduction of negative list' regime, service providers, being uncertain about coverage under the definition of taxable service in section 65B (44) of Finance Act, 1994, prefer to avoid the risk of being burdened with recovery proceedings on a later date. Such collection is never to their detriment and the person who bears the incidence of tax is entitled to claim a refund. More so, when the tax liability, such as in .....

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mercial purposes. Ease of taxation was a spinoff' from this emergence. The levy of tax under Finance Act, 1994 has seen many repairs' to the statutory provisions to plug the various leakage points that were found while administering the tax. Crafting of the tax provisions posited a dilemma arising from the peculiar characteristics of the industry and the need to fence out some beneficiaries of the service from the tax net. The findings of the two lower authorities appear to have stemmed .....

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that are sought to be taxed. Implicit in such tax is the availability of the option of self performance of the activity. Construction is an enterprise that cannot, except in very rare circumstances, lend itself to exercise of such an option. The scale, complexity and professional expertise required put it beyond the scope of that option. Especially, for individuals who seek fulfillment of their housing dreams. Tax provisions are devised to provide escapement to those who have such aspirations wi .....

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n section 66E of the Finance Act, 1994. 66E. Declared Services. The following shall constitute declared services, namely:- (a) xxxxxxxxx (b) construction of a complex, building, civil structure or a part thereof, including a complex or building intended for sale to a buyer, wholly or partly, except where the entire consideration is received after issuance. of completion-certificate by the competent authority. Explanation. - xxxxxxxx (II) the expression "construction" includes additions .....

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ed by the developer. The issuance of completion certificate is thus considered to be the legal deadline for service having been rendered. Even where consideration has been paid before the issuance of completion certificate, exemption is provided by notification no. 25/2012-ST dated 20th June 2012 to 14. Services by way of construction, erection, commissioning, or installation of original works pertaining to, - (b) a single residential unit otherwise than as apart of a residential complex; Single .....

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from tax even though it is covered for tax liability as a declared service,' This exemption does not extend to residence constructed as part of a complex. The specific role of developer is to procure services in common for those who intend to occupy the complex and a residential complex will contain within it more than one residential unit. As the particular service rendered by developer in a complex, other than bundling the various input services, is the aggregation of residential owners on .....

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ndor was not in possession of the completion certificate at the time of receipt of consideration from the appellants. Therefore, the transaction between appellants and vendor does not fall within the exception to the declared service.' The appellants claim that theirs is a single residential unit. However, a perusal of the sale agreement reveals transfer of land and built-up facilities along with the constructed house; this would include a share in the common roads, community facilities and .....

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