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M/s. Vijay Shanthi Builders Ltd. Versus Commissioner of Service Tax, Chennai

2017 (8) TMI 519 - CESTAT CHENNAI

Construction of residential complex - demand for the period 16.6.2005 to 31.7.2007 - Held that: - major part of the period for which demand is raised is prior to 1.6.2007 - the works contract service are not subject to levy to service tax prior to 1.6.2007 - the demand for the period prior to 1.6.2007 in respect of demand made for construction of residential complex service is not sustainable. - With regard to the period after 1.6.2007 to 31.7.2007, the services were not covered by section 6 .....

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for any services rendered - Held that: - the corpus fund, even according to the department is not collected for rendering any service of maintenance. It is in the form of a deposit. We, therefore, are of the opinion that the demand of service tax on such deposit under the category of Management, Maintenance and Repair Service is unsustainable. However, this fact needs verification as to how the corpus fund has been put into use - matter requires verification. - Appeal allowed in part and par .....

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was not discharging the service tax liability and therefore show cause notice was issued demanding service tax along with interest and also for imposing penalty. After due process of law, the original authority confirmed the demand of ₹ 1,24,28,623/- for the period 16.6.2005 to 31.3.2007 under the category of Construction of Residential Complex Service as well as Management, Maintenance and Repair Service along with interest and also for imposing penalty under section 76 of the Finance Ac .....

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act service. It is covered by the judgment of the Hon ble Supreme Court in the case of CCE Vs. Larsen & Toubro reported in (2015) SCC Online 738. For the remaining period i.e. from 1.6.2007 to 31.7.2007, the activity undertaken by the appellant does not fall under the said category as per the decision of the Tribunal in the case of Krishna Homes Vs. CCE 2014-TIOL-402-CESTAT-DEL. That the Tribunal in the said case held that the construction of residential units against payments when made in i .....

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s. The appellant had collected ₹ 73 lakhs towards corpus fund and the same is not taxable as it is only a deposit and not a service charge. He submitted that it is a deposit made by the allottee so that in the event of failure to pay the maintenance charges, the unpaid amount would be set off against the said deposit and the allottee will have to recoup it. That if this amount is taxed, it will amount to double taxation for the same activity. 3. Again, he submitted that an amount of ₹ .....

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ards the project Courtyard and the same is liable to service tax and is not contested by the appellant. He submitted that an amount of ₹ 7,97,808/- inadvertently collected as service tax has already been deposited by the appellant along with interest on 30.8.2007. The appellant had inadvertently collected such amount from a few allottes. The appellant does not contest this amount. He therefore pleaded that the demand in respect of the construction of residential complex service as well as .....

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or the period prior to 1.6.2007 in respect of demand made for construction of residential complex service is not sustainable. 8. With regard to the period after 1.6.2007 to 31.7.2007, the appellant has submitted that the judgment in the case of Krishna Homes (supra), analysed the issue as to the applicability of levy of service tax on construction of residential complex when the agreements were entered for construction of residential units and possession was handed over on completion of the cons .....

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lments during construction and in terms of which the possession of the residential unit, is to be handed over to the customers on completion of the residential complex and full payment having been made, are to be treated as works contracts, it has to be held that during the period of dispute, there was no intention of the Government to tax the activity in terms of such contracts a builder/developer with prospective customers for construction of residential units in a residential complex. Such wo .....

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hich shows that the possession of the constructed residential unit was handed over after completion of construction and completion of the payment. Therefore, the decision laid down in Krishna Homes (supra) is squarely applicable and the demand for the period 1.6.2007 to 31.7.2007 is also unsustainable and requires to be set aside, which we hereby do. Though the appellant has collected service tax from a few allottes, it is submitted that they paid the same to the Government account on 30.8.2007 .....

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deposit and not received as charges for any services rendered. According to appellant, it is a deposit made by the allotee and in the event of their failure to pay the maintenance charges, the unpaid amount would be set off against the said deposit. In the impugned order, it is observed that, at any point of time, even if appellant pays service tax on this fund, and if the corpus fund is refunded / transferred, suitable adjustment in tax liability can be made. It is therefore clear that the cor .....

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