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Kirthi Constructions Versus Commissioner of C. Ex. & S.T., Mangalore

2015 (12) TMI 1573 - CESTAT BANGALORE

Refund claim - Circular No. 108/02/2009, dated 29-1-2009 - non-leviability of service tax for the transactions made with the buyers of the flats - service tax paid by mistake of law and appellant had not collected the same from the customer/buyers - Held that:- this special kind of agreement, where the builder has not sold the flat directly but made the buyers as owners of the land and those owners in turn entered into an agreement with the said builder for construction of flats for their own pe .....

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or payment of service tax and the appellant’s claim for refund would deserve examination and consideration as per the provisions of law as applicable during the relevant period. It is made clear that service is definitely under the exclusion category and not liabile for payment of service tax. This appeal is allowed by way of remand to the original adjudicating authority for examination and consideration of refund claim under the provisions of refund claims wherein the adjudicating authority wil .....

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hority for examination and consideration of refund claim under the provisions of refund claims wherein the adjudicating authority will also examine the claim under both the criteria i.e. time bar as well as ‘unjust enrichment’.the service in question is not liable for payment of service tax and the appellant’s claim for refund would deserve examination and consideration as per the provisions of law as applicable during the relevant period. It is made clear that service is definitely under the ex .....

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inayaka, Advocate, Vishnu Daya & Co., for the Appellant. Shri Ajay Saxena, AR, for the Respondent. ORDER Both parties have been heard in detail. The matter concerns with the admissibility of the refund claim filed by the appellant namely Kirthi Constructions, Bangalore before the Revenue. The appellant claims that this refund claim had arisen on account of non-leviability of service tax for the transactions made with the buyers of the flats. The appellant here is basing their argument on Cir .....

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by mistake of law and deserves to be laid claim of refund of the said tax paid earlier mistakenly. 2. The appellant states that they have two agreements with the class of buyers of these flats; one is for transferring undivided share in the land for each buyer (agreement to sell land) and another is for construction of flats (construction agreement) wherein the appellant would be constructing flats for each buyer, who signed the agreement with the appellant. In support of their stand that s .....

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by mistake of law and they had not collected the same from the customer/buyers. The appellant cites the decision of Hon ble High Court in the case of Geojit BNP Paribas Financial Services Ltd. v. CCE, Cus. & S.T., Kochi [2015 (39) S.T.R. 706 (Ker.)] in support saying that the period of limitation will not arise as the service tax was paid by mistake. 2.2 The appellant also argues that there has been amendment in Section 65(105)(zzzh) in the definition of taxable service of construction .....

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e certificate(s) also from their buyers to this effect. 3. The learned AR Mr. Ajay Saxena appearing for the Revenue vehemently argues that the services i.e. the activities and transactions in question are liable to service tax under the construction of residential complex service as the activities and transactions are not self-service and are not covered by exclusion clause of Section 65(91a) of the Finance Act, 1994. He also argues that the impugned services would not be covered by Circula .....

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of claim of the refund saying that as the tax has already been collected by the appellant, they have to follow the provisions wherein refund claim is to be examined mainly under Section 11B of Central Excise Act which has been made applicable to service tax by virtue of Section 83 of the Finance Act, 1994; further saying that limitation period of one year from the relevant date is certainly applicable for the refund claim filed by the appellant. He has also cited the following case laws in supp .....

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rged is as follows : Whether the impugned transactions and activities (i.e. services in question) are liable for payment of service tax and whether these services would come under the exclusion clause of Section 65(91a) of the Finance Act, 1994 and whether the clarification issued by Circular No. 108/2/2009-S.T., dated 29-1-2009 by the Ministry of Finance in its Para 3 covers these for declaring them as not liable to payment of service tax. 4.1 The issue of refund will arise only, if liabil .....

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ring undivided share in the land to the buyers and another for doing construction on behalf of flat buyers (construction agreement). Before we go further, let us refer to the definition of residential complex as given in Section 65(91a) of the Finance Act, 1994, which says as follows :- Residential complex means any complex comprising of - (i) A building or buildings, having more than twelve residential units; (ii) A common area; and (iii) Any one or more of facilities or services such as park, .....

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reby declared that for the purposes of this clause, - (a) personal use includes permitting the complex for use as residence by another person on rent or without consideration; (b) residential unit means a single house or a single apartment intended for use as a place of residence; This definition of residential complex says that it does not include a complex constructed by a person directly engaging another person for designing, planning and lay out and when the construction of such complex is i .....

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, 1994. Here they have given undivided share in the land to the flat buyers which means that those flat buyers are to be treated as owners of the land and when the same buyers signed an agreement with the said builder appellant for construction of flats; it may be called that those flat buyers are engaging this builder for designing or planning of the layout and construction of such complex which is intended for personal use as residence by such persons. 5.1.1 This special kind of agreement .....

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under the service of construction of complex service as per the provisions of Section 65(105)(zzzh) which defines the taxable service of construction of complex. Of course the situation may be different after 1-7-2010, the date with effect from which an Explanation has been added to Section 65(105)(zzzh) of the Finance Act, 2010 (14 of 2010) dated 8-5-2010 and made effective from 1-7-2010 vide Notification No. 24/2010-S.T., dated 22-6-2010. 6. The appellant has claimed that as they paid ser .....

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ehemently argued that provisions of law concerning the sanction of refund under Service Tax law would be applicable and he has cited in support various decisions of Hon ble Supreme Court as well as CESTAT, Bangalore. It is made clear that when the refund claim is to be examined, it would be necessary for the claim to pass all the tests including the time limitation of one year as well as satisfying the criterion that the liability of service tax was not passed on to the buyers i.e. passing the t .....

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