TMI Blog2014 (9) TMI 1044X X X X Extracts X X X X X X X X Extracts X X X X ..... ds and not earlier to that results in Service Tax demanded prior to 1-7-2010 under ‘Construction of Residential Complex Service’ is not payable. As the applicant has made full and true disclosure, accordingly after allowing the benefit in terms of Board’s clarifications in respect of services rendered prior to 1-7-2010 of ‘Construction of Residential Complex Services’ and considering value after 1-7-2010 as cum-tax value for computation of Service Tax as communicated by Revenue, Service Tax liability works out to ₹ 88,45,406/-. As such the Bench settles the Service Tax liability at ₹ 88,45,406/-. The applicant is eligible for refund of ₹ 1,40,912/- which should be dealt with in accordance with law. The Jurisdictional Commissioner would work out the interest liability and communicate to the applicant. Imposition of penalty - Non-payment of Service Tax on the various services rendered during the period April 2009 to December 2012 - Held that:- out of the demand, the major portion of the demand pertains to ‘Construction of residential complex service’ in respect of which the applicant admitted and paid Service Tax on the services rendered after 1-7-2010. The ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ceedings; (b) vide Summon dated 7-7-2011, the applicant was asked to produce documents. The applicant on 8-7-2011, admitted the tax liability and made part payment of ₹ 18,15,253/-; including their past liability; (c) in response to the summons dated 7-7-2011/4-10-2012, the applicant submitted copies of (i) General ledgers for the years 2008-09 to 2010-11, (ii) copies of Income Tax Returns for the years 2008-09 to 2010-11 and (iii) copies of agreement entered into with customers, etc.; (d) the Managing Director Shri S. Ashok Kumar gave statements on dates 23-11-2012, 27-12-2012 8-1-2013. In his statement, he inter alia stated that they are engaged in construction of residential complexes, undertaking irrigation projects for PWD and Highways of Tamil Nadu Govt., and Mining and Transportation Services. They undertook three construction projects namely : (i) Aiswariyam Grand Project , Coimbatore (ii) Aiswariyam Grand C Block , Coimbatore (iii) Aiswaryam Enclave Project , Erode in respect of Aiswaiyam Grand Project , Coimbatore paid Service Tax, as the Construction Service commenced after 1-7-2010; the Aiswariyam Grand C Blo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct of the Project AISWARIYAM ENCLAVE which was executed and completed prior to 1-7-2010; regarding AISWARYAM GRAND PROJECT blocks A and B, this Project was commenced during December, 2009 and the applicant registered themselves under Construction of residential complex service during August, 2010. The applicant maintained receipt of service charges on running account basis and no Service Tax was charged separately; the correct tax liability worked out by the applicant on the above Project works out to ₹ 69,77,359/-; besides, the applicant admitted tax liability of ₹ 58,247/- which is not included in the show cause notice and pertaining to the period from April, 2012 to June, 2012 on the construction works services; the applicant admitted tax liability for the services they had undertaken for the construction of Rain Water Harvesting Structures to M/s. Madras Cements Ltd., during May, 2010 and July 2010, by treating the value as cum-tax value; admitted the entire tax liability under Real Estate Agent s Service ; admitted tax liability on Renting of Tangible Goods by adopting cum-tax value wherever Service Tax was not collected in the bills. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and Annexure III 9467 Supply of Tangible Goods 13,89,546 Para 6.9 and Annexure III 13,89,255 Real Estate Agents Service 4,59,086 Paras 8.2 and 8.3 and Annexure VIII 4,59,086 Construction of Aiswariyam Enclave Project 1 24,55,070 Para 9.4.5 and Annexure VII Nil Construction of Aiswariyam Grand Project Blocks A B 71,27,898 Paras 9.4.3 and 9.4.4 and Annexure V VI 69,19,112 Total 1,14,43,418 87,76,920 as regards tax of ₹ 2,029/- demanded in the show cause notice under Mining Service , the applicant has neither admitted nor denied their liability; as regards, the tax liability of ₹ 9,467/- as against ₹ 9,789/- demanded in show cause notice, which can be permitted by treating the charges as cum-tax value, provided the tax is not collected subsequently; under Supply of Tangible Good ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... long with interest and have paid the same and extended full cooperation during the proceedings. According to him they have also made true and full disclosure of their liability, and therefore, pleaded for leniency in penalty and immunity from prosecution. 4.3 The representative of the department confirmed the payments made and submitted that they have no objection in allowing the benefit of cum-tax valuation in this case. As regards the issue raised in respect of levy of Service Tax for the period prior to 1-7-2010, he submitted that the Board s clarification is not applicable to the applicant s case as the UDS (Undivided Share) was sold before taking up the construction. He cited CESTAT s judgment in the case of LCS City Makers (P) Ltd. v. Commissioner of Service Tax, Chennai reported in 2012 (05) LCX 0086 = 2013 (30) S.T.R. 33 (Tri.). He also submitted that Hon ble Commission may not have jurisdiction to decide the question of levy and the rate of taxation for the period prior to 1-7-2010, in terms of judgment of Hon ble Madras High Court cited by the Commissioner in his report. At this stage, the advocate for the applicant submitted that he would like to make further written ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecisions of the Hon ble High Courts cited by the department are not relevant. 5.5 The applicant also drew the attention of the Hon ble Settlement Commission, New Delhi in the case of M/s. Alchem International Ltd. - 2009 (247) E.L.T. 864 (Sett. Comm.) wherein Hon ble Bench has observed that Further, the Bench is of the view that the objective of settlement is to determine the liability of the applicant in an equitable, just and fair manner, without giving undue importance to technicalities 5.6 The applicant prayed before the Hon ble Settlement Commission for complete waiver of penalties. Findings of the bench and decision 6.1 The Bench has examined the records of the case, and the submissions made by the applicant in the application as well as during the proceedings of the hearing. The Bench has also perused the reports and submissions of the Revenue. 6.2 The issue of filing of ST-3 returns was considered in the light of the amended proviso of Section 32E(l)(a) of Central Excise Act, 1944 made applicable to Service Tax matters under Section 83 of Finance Act, 1994, advented in the Finance Act, 2014. Accordingly, the facts of the case point to delay in filing of S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... In the LCS City makers case, the demand was for the period 16-6-2005 to 31-3-2007 and it was held that the Board s clarification dated 29-1-2009 dealt with the cases where flats were sold after construction and not where UDS is sold first and an agreement for construction is entered into later and went on to hold the activity as taxable for the period prior to 1-7-2010 where UDS was sold first. This view taken by the Hon ble CESTAT seems to be contrary to the view taken by Hon ble Gujarat High Court in the case of Commissioner of Service Tax v. Sujal Developers reported in 2013 (31) S.T.R. 523 (Guj.). 6.6 In the instant case, the applicant was issued with the show cause notice demanding Service Tax of ₹ 1,14,43,420/- for the period April 2009 to December 2012. It appears that C.B.E. C. after appreciating various practices of transaction prevalent in construction industry, had set at rest all the grey areas in taxing the service by issuing clarificatory Circulars from time-to-time. In addition, from 1-7-2010 vide Finance Act, 2010, the definition of taxable service was amended by insertion of following explanation : Explanation. - for the purpose of this sub-clause t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... taxable in case any part of the payment/development rights of the land was received by the builder/developer before the issuance of completion certificate and the Service Tax would be required to be paid by builder/developers even for the flats given to the land owner . This Circular dated 10-2-2012 makes it clear that even in the cases where builder/developer receives consideration for the construction service provided by him from land owner in the form of land/development rights, the service would not be taxable for the period prior to 1-7-2010. In the instant case, even if there is any agreement for sale of UDS of land prior to agreement for sale of flat, the activity for the period prior to 1-7-2010 would not be taxable in terms of Circular dated 10-2-2012 as discussed above. 6.7 The distinct facts brought out contrasted with the facts dealt with by the Hon ble CESTAT in LCST case supra, are that : UDS proportionate to each of the flat was not sold prior to the commencement of construction and the sale of flat was gradual i.e. one by one as and when the prospective buyer was found; any construction agreement by the possessor of the UDS of land cannot be made; ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntial or Complex Service is exempted from payment of Service Tax. (e) The Bench holds that the demand of ₹ 24,55,070/- on the Service rendered under Construction of Residential Complex Services before 1-7-2010 is squarely hit by the clarification given by C.B.E. C. Circular No. 151/2/2012-S.T., dated 10-2-2012. In the light of the above, the Bench holds that Service Tax demanded prior to 1-7-2010 under Construction of Residential (Complex Service is not payable. 6.9 The Commissioner in his report (sic) confirmed payment of ₹ 89,86,318/- towards- Service Tax and ₹ 9,62,384/- towards interest. The Bench notes that the applicant has made full and true disclosure. Accordingly after allowing the benefit in terms of Board s clarifications in respect of services rendered prior to 1-7-2010 of Construction of Residential Complex Services and considering value after 1-7-2010 as cum-tax value for computation of Service Tax as communicated by Revenue, Service Tax liability works out to ₹ 88,45,406/-. As such the Bench settles the Service Tax liability at ₹ 88,45,406/-. The applicant is eligible for refund of ₹ 1,40,912/- which should be dealt w ..... X X X X Extracts X X X X X X X X Extracts X X X X
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