TMI Blog2019 (9) TMI 123X X X X Extracts X X X X X X X X Extracts X X X X ..... hether 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. Demand of service tax - late payment charges - HELD THAT:- Any additional amount collected towards delay in making the payment of the installments cannot be subjected to levy of service tax. This position stands clarified by the Circular dated 3 August 2011 issued by the Central Board of Excise and Customs New Delhi - Demand set aside. Short payment of service tax - period 1 July 2011 to 30 September 2012 - payment made on receipt basis instead of accrual basis - HELD THAT:- The payment is made on receipt basis instead of accrual basis had actually deposited the amount prior to the issuance of the show cause notice and that is why the amount has also been appropriated in the impugned order - only aspect that needs to be examined in regard to this issue is about the penalty that has been imposed by the Commissioner. Appeal allowed by way of remand. - Service Tax Appeal No. 53348 of 2014 - Final Order No.: 51153/2019 - Dated:- 19-8-2019 - HON BLE MR.JUSTICE DILIP GUPTA, PRESIDENT AND HON BLE MR. BIJAY KUMAR, MEMBER ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd, iii) The appellants had short paid service tax to the tune of ₹ 14,46,510/- during the period 01.07.2011 to 30.09.2012 as the appellant had paid service tax on receipt basis instead of accrual basis. 4. The appellant filed a to meet the capital expenses for a future date for replacement of items like lift, DG Sets, transformers, security devices, etc. and these funds are to be subsequently transferred to the co-operative society later formed by the members occupying the apartments / flats / properties. It was also stated that the refundable Maintenance Security Deposit was also collected from the flat owners at the time of handing over possession and this amount was also to be transferred to the resident association as and when formed. The appellant therefore, contended that these amount were not towards any specified service and hence were not liable to levy of service tax. 5. In respect of the second issue relating to receipt of the additional amount towards late payment of the monthly installments, it was contended that it was also not liable to levy of service tax as no service was provided. 6. In regard to t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... utstanding till 9.5.2008 upon M/s. Mahima Real Estate (P) Ltd. under section 76 of the Finance Act, 1994. v) I impose a penalty of ₹ 10,000/- upon M/s. M/s. Mahima Real Estate (P) Ltd. under section 77 / Section 77(2) of the Finance Act, 1994. 8. In regard to the first issue relating to payment of service tax on the amount received from the customers for Corpus Fund / Escrow Fund and Maintenance Security Deposit under the head management, maintenance or repair services falling under section 65 (105) (zzg) of the Act, the Commissioner observed as follows: From the above contention of the noticee, I find that the amount so collected from the customers is for provision of service to the buyers of the property and maintenance of common area of the building by the co-operative societies formed later on, hence I have no doubt that the said amounts received by the noticee in the name of Maintenance security, Corpus Fund and Escrow Fund are value of the taxable service namely Management, Maintenance or Repair Services. The noticee has not submitted any documentary evidence to prove that they have actually transferred the amount ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eived by the noticee in relation to said taxable is also taxable under amount of penalty received by the noticee in relation to said taxable under the said services. 10. The Commissioner, in regard to the third issue relating to payment of service tax on accrual basis directed that it was liable to appropriated since the appellant had deposited the amount. 11. The contention of the appellant that the extended period of limitation could not have been invoked for issuing the show cause notice was not accepted. The Commissioner also imposed penalty under Section 76 and 78 of the Act. 12. Shri A.K. Prasad, learned counsel for the appellant submitted that the Corpus / Escrow Funds is collected from the buyers / occupants of the property to meet the capital expenses on a future date for replacement of items like D-G Sets, transformers, Security device and these funds are subsequently transferred to the co-operative societies. Likewise, the refundable maintenance security from the flat owners collected at the time of handing over of the possession is also required to be transferred to the resident association. Learned counsel submitted that th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 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. It is also the case of the appellant that an amount of ₹ 13,04,280/- shown in Annexure A5 has not been collected by the appellant, during the relevant time as the project was not completed. That the department has levied the service tax basing upon the amount stated in the agreement. From the records, it is not clear as to whether the department has raised the demand merely basing on agreement and even though appellant has not collected it. This aspect also requires verification. 11. An amount of ₹ 9,87,216/- collected as maintenance charge ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... crow 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 learned counsel place reliance upon a Circular dated 3 August 2011 issued by the Central Board of Excise and Customs, New Delhi. Learned Counsel also submitted that late payment charges cannot be included in gross value charged as was held by the Supreme Court in Union of India Vs. Intercontinental Consultants and Technocrats Pvt. Ltd. 2018 (10) GSTL 401 (SC) 20. Learned Authorized Representative for the Department submitted that there is no error in the finding recorded by the learned Commissioner and that late payment are in the nature of a penalty and so, have necessarily to be included in the gross value. 21. We find considerable force in the submission advanced by the learned counsel for the appellant. Any additional amount collected towards delay in making the payment of the installments cannot be subjected ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 short payment of service tax during the period 1 July 2011 to 30 September 2012 on account of payment made on receipt basis instead of accrual basis had actually deposited the amount prior to the issuance of the show cause notice and that is why the amount has also been appropriated in the impugned order. 24. The only aspect that needs to be examined in regard to this issue is about the penalty that has been imposed by the Commissioner. 25. The learned Counsel for the appellant submitted that there was no deliberate attempt on part of the appellant not to make payments of service tax since the appellant had been making the payments on receipt basis in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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