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TMI Blog2019 (9) TMI 123X X X X Extracts X X X X X X X X Extracts X X X X ..... dy deposited by them should not be appropriated to the Government account. b) Interest should not be demanded and recovered from them under the provision of section 75 of the Act. c) Penalty under section 76 of the Act should not be imposed upon them for their failure to pay the service tax, in accordance with the provision of Section 68 of the Act ibid. d) Penalty under Section 77 of the Act for not declaring the correct taxable value in their ST-3 returns. e) Penalty under section 78 of the Act should not be imposed upon them for suppressing value of taxable services with intent to evade service tax. 3. The aforesaid amount of Rs. 1,06,73,865/- as stated in the show cause notice was for the following three services provided by the appellant: i) The appellant had not paid service tax amounting to Rs. 88,24,333/- during the period 01.04.2007 to 31.08.2012 in respect of Corpus Fund, Escrow Fund and Maintenance Security Deposit obtained from buyers of immovable property, under the category of 'Management, Maintenance or Repair' service under section 65 (105) (zzg) read with section 65(64) of the Act; ii) The appellant had not paid service tax of Rs. 4,03,022/- during the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) I confirm the liability of interest on the amount of Service Tax demand confirmed as (i) above against M/s. Mahima Real Estate (P) Limited, under section 75 of the Finance Act, 1994. iii) I impose a penalty of Rs. 1,06,73,865/- upon M/s. Mahima Real Estate (P) Ltd. under section 78 of the Finance Act, 1994. However, benefit of reduced penalty of 25% as per proviso Section 78 ibid, is available to the noticee on service tax demanded and payable upto 7.4.2011 subject to the condition that the subject Service Tax demanded and payable upto 7.4.2011 and the interest payable thereon under Section 75, is paid within thirty days from the date of communication of this order and further subject to the condition that the benefit of reduced penalty (25% of service tax demanded and payable upto 7.4.2011) shall be available if the amount of penalty so determined has also been paid within the period of thirty days from the date of communication of this order. iv) I impose a penalty of Rs. 200/- per day during which such failure continues or at the rate of 2% of the amount of service tax due, per month, whichever is higher, till 9.5.2008, subject to maximum of amount outstanding till 9.5.200 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... maintenance security, Corpus Fund and Escrow Fund under Management, Maintenance or Repair services falling under Section 65(105)(zzg) of the Finance Act, 1994 for the period from 1.04.2007 to 31.08.2012." (emphasis supplied) 9. In regard to the second issue regarding payment of an additional amount for the delay in depositing the installment, the Commissioner observed as follows: "I find that the noticee has charged certain amount from their customers in case they make any kind of default or delay in paying the pre-decides amount on completion of particular stage of construction and has given it the name of interest to avoid the incidence of tax but from the very nature of amount charged, it is clear that it is a penalty for late payment of any installment of the value of property. Since the value of the property is taxable under construction of complex classifiable under Section 65(105)(zzg) of the Finance Act, 1994 and Commercial or Industrial construction service classifiable under Section 65(105)(zzg) of the Finance Act, 1994, the amount of penalty received by the noticee in relation to said taxable is also taxable under amount of penalty received by the noticee in relation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d not be providing any service. 14. In Vijay Shanthi Builders Ltd. Vs. CCE Chennai 2018 (9) GSTL 257 (Tri-Chennai), the Tribunal examined the demand made under Management, Maintenance or repair service on the Corpus Fund collected by the appellant therein and observed that the demand of service tax on such deposit under the category of management, maintenance or repair service is unsustainable. It was, only to ascertain whether these funds had been used, that the matter was remanded. The observations are as follows: "10. The second issue is with regard to the demand made under maintenance and repair services on the corpus fund collected by the appellants. It is submitted by the learned counsel that this is only a 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 there ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty, it cannot be said that the maintenance security deposit is towards any service. The maintenance security deposit is to cover an exigency when the owner of the house does not pay the maintenance charges after the society is formed. It has, therefore, to be ascertained whether this amount before it is transferred to the society has been utilized. This aspect of the matter, therefore, also needs to be examined on remand. 17. Shri Sanjay Jain, learned Authorized Representative of the Department, however, placed reliance upon the decision of the Tribunal in Satya Prakash Builders Pvt. Ltd. Vs. CCE Jaipur 2017 (4) GSTL 393 (Tri-Del). This decision would be of no help to the respondent for the simple reason that there is no finding in the said decision that the maintenance of the residential complex by the appellant therein was out of the two funds namely Corpus Fund or Escrow Fund. 18. The second aspect is regarding the confirmation of service tax by the Commissioner on late payment charges. 19. Learned Counsel for the appellant submitted that late payment charges are not towards any service provided and, therefore, cannot be subjected to levy of service tax. In this connection le ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es received by the stock brokers are not includible in taxable value as the same are not the charges for providing taxable services. Such charges are on account of delay in making payments by the service recipient to the service provider and are in the nature of a penal charge for not making the payment within stipulated time. Such amounts are not includible in the taxable value for charging Service Tax. This principle will also apply to other service providers. 3. However, Section 67 of the Finance Act, 1994 provides that Service Tax is chargeable on taxable value which shall be the 'gross amount charged' by the service provider. Therefore, if in the account statement/invoice/bill, etc. issued by the service provider, only the gross amount is shown without indicating the delayed payment charges separately, the Service Tax would be payable on the entire amount. Delayed payment charges would not be includible in 'gross value charged', only if these charges are shown separately in the account statement/invoice/bill, etc." (emphasis supplied) 22. The Commissioner was therefore, not justified in confirming the demand. 23. The appellant in regard to third allegation relating to sho ..... X X X X Extracts X X X X X X X X Extracts X X X X
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