TMI Blog2019 (9) TMI 889X X X X Extracts X X X X X X X X Extracts X X X X ..... f GS. PROMOTERS VERSUS UOI [ 2010 (12) TMI 34 - PUNJAB AND HARYANA HIGH COURT] where it was held that the levy of tax is on service and not on service provider and construction services are certainly provided even when a constructed flat is sold. Taxing of such transaction is not outside the purview of the Union Legislature as the same does not fall in any of the taxing entries of State list - service tax cannot be levied. Demand of service tax - reverse charge mechanism on the services availed by them from two sub-contractors - HELD THAT:- Karnataka High Court in the case of COMMISSIONER OF CENTRAL EXCISE SERVICE TAX CUSTOMS, BANGALORE-II VERSUS NITHESH ESTATES LTD., [ 2018 (7) TMI 1135 - KARNATAKA HIGH COURT] where it was held that the appellants are not liable to pay any service tax as the building constructed by them is not for the use of Commerce or Industry - no service tax is liable to be paid by the appellants in this regard. CENVAT Credit - the service provider has not furnished Cenvat credit documents to the Department for verification and thus failed to comply with the provisions of Rule 6 of the Cenvat Credit Rules - HELD THAT:- In terms of N/N. 21/2014-CE (NT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2.1. In relation to the activity Construction and sale of flats in the projects- Janardhana Heights and Janardhana Enclave, for a demand of ₹ 19,56,918 (from 2010-11 to 2012-13 (Up to 30.06.2012)) and ₹ 86,54,580 (from 2012-13 (from 01.07.2012) to 2014-15), for the Period, he submits that the amount collected from the prospective buyers included consideration towards undivided share of land; in a composite contract involving construction of flats and sale of undivided share of land, service tax cannot be levied, as there is no statutory mechanism to ascertain the value of services. The issue is covered by the judgments in Suresh Kumar Bansal Vs Union of India Others - 2016(43) STR 3 (Del) L T Ltd Vs State of Karnataka- 2013(65) VST 1(SC) 2.2. On the issue of alleged service tax of ₹ 39,45,596, demanded by the appellants on Reverse Charge Mechanism, on the services availed from 2 sub-contractors, for the Period; 2012-13 (from 01.07.2012) to 2014-15, he submitted that the Service Tax on the entire amount paid to the sub-contractors has already been discharged by the sub-contractors and the Appellant have not availed credit of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g time limit was inserted vide Notification No.21/2014 CE (NT), dated 11.07.2014 w.e.f 01.09.2014; majority of demand in the present matter was prior to such amendment and accordingly the Appellant is eligible to avail CENVAT credit without restriction for such period. The amendment, if applicable, will only apply to a restricted period of the dispute. Without prejudice, the Appellant places reliance on the following judgments. Formica India Division v. CCE 1995 (77) E.L.T. 511 (S.C.) CCE, Salem Vs Chemplast Sanmar Ltd 2009(239) E.L.T 398 (Mad.) 4. Learned Authorized Representative for the department reiterated the findings of the OIO and submitted that the amount of eligible credit is required to be redetermined in the light of decisions in the case of Formica India Division vs Collector of Central Excise reported at 1995(77) ELT 511 (S.C) and CCE, Salem vs Chemplast Sanmar Ltd reported at 2009(239) ELT 398(Mad). The same is not acceptable to the department on the following grounds: (i). The law pertaining to availment of CENVAT Credit has undergone drastic change w.e.f 1.9.2014. Cenvat Credit Rules,2004 was amended to prescribe time limit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see whether the appellants are liable to pay service tax on the amount received from the prospective buyers where such amount includes consideration towards undivided share of land within the period 2010-11 to 2014-15; on the services availed from two sub-contractors in undertaking construction activity when these sub-contractors have discharged the service tax liability; on the construction activity undertaken for educational institutions and on the deposits collected from all the buyers of residential apartment towards resident/owner welfare association to be used for future payments. 5.1. Coming to the first issue, we find that learned Commissioner held that the appellant has collected sums from the buyers before the receipt of the occupancy certificate/completion certificate and therefore provided taxable service as per Section 65(105) (zzzh) of the Finance Act 1994. He also relied upon the Board Circular 151/2/2012-ST dated 10.02.2012. He has also relied upon judgment of Punjab Haryana High Court in the case of M/s. GS Motors 2011 (21) S.T.R 100 (P H) and judgment of Bombay High Court in the case of Maharashtra Chamber of Housing Industry 2012 (25) S.T.R. 305 (B ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion, specially a flat rate of deduction cannot be applied to calculate the taxable turnover in works contract. So those circulars cannot hold the field. As stated in the judgments referred to above, in the absence of any statutory basis for calculation of taxable turnover, the Act remains unworkable. Such gap in the statute cannot be filled up by the circulars which are purely ad hoc and administrative in nature and specially so when it relates to taxing law. It is a well-settled principle that in matters of taxation either the statute or the Rules framed under the statute must cover the entire field. Taxation by way of administrative instructions which are not backed by any authority of law is unreasonable and is contrary to Article 265 of the Constitution of India. Therefore, the impugned circulars are set aside as also the impugned orders of assessment. The assessee‟s liability to pay tax remains but in order to assess that the State has to act in accordance with the statutory prescription by framing Rules under its rule-making power under Section 29 of the Act and the assessing authority can pass fresh orders of assessment on the basis of such statutory Rules. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... por Vs.CST- 2019 (25) GSTL 534 (Del.-HC). In view of the above judgments, we find that service tax cannot be levied on the appellants on this count. 5.2. Coming to demand of service tax from the appellants on reverse charge mechanism on the services availed by them from two sub-contractors, we find that the appellants have submitted that the sub-contractors have already discharged service tax and the appellants have not availed Cenvat credit of the same. They have also submitted a copy of a declaration submitted by the said contractors. In this respect, we find that Karnataka High Court in the case of Nitesh Exports (supra) has held as follows: 18 . The Residential Complex‟ in question was undertaken to be constructed by the respondent assessee M/s. Nithesh Estates Limited for ITC Limited under the Contract dated 1-4-2006. It is equally undisputed before us that the construction activity in question was in its entirety sub-contracted by M/s. Nithesh Estates Limited to M/s. Larsen and Toubro Limited. There is no material on record or evidence to indicate that any part of construction activity in question was undertaken by the respondent assessee M/s. Nith ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the sub-contractor M/s. Larsen and Toubro Limited has duly discharged the obligations to pay the Service Tax in the present Contract, we are at a loss to understand how the Revenue could again demand the Service Tax from the respondent assessee M/s. Nithesh Estates Limited, the Principal Contractor or the Developer, who did not undertake any construction activity in the present case. We also find that Tribunal in the case of BCC Developers and Promoters Pvt. Ltd. (supra) have held that 6.1. We agree with the submission of the ld. Counsel that no double taxation is permissible under the law. The Constitution (Article 265) provides to take the exact amount of tax i.e. neither more nor less. In the instant case, if the principal has already paid the Service Tax, then the same cannot be demanded from the appellant. As per the clarification of the Board‟s Circular dated 23.08.2007 as well as dated 07.10.1998, if the principal had not paid the Service Tax then the same can be charged. If the Service Tax has already been paid by the principal, then the same cannot be demanded again. In view of the above, we find that the impugned order does n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a separate account and would be used for discharging statutory obligations such as property tax, water connection charges etc. We find that the appellants have collected these amounts. However, the same are to be used in future. The amount so collected by the appellants are not towards any service rendered to the buyers. The appellants are holding the money as a Trust to be handed over to the Welfare Associations which are to be formed on completion of the construction and occupation thereof. We find that Tribunal in the case of Kumar Beharay Rathi (supra) have held that 6.4 We also note that the appellants are not in the business of maintenance or repair service or management of immovable property. The appellants cannot be held as provider of maintenance or repair service as they are only paying on behalf of various buyers of flats to various authorities (Municipal Corporation, Revenue authorities etc.) and various service providers (such as security agency, cleaning service providers etc.) and they are not charging anything on their own. The payments are made cost on cost basis and the same is debited from the deposit account. They act only as trustee or as pure ag ..... X X X X Extracts X X X X X X X X Extracts X X X X
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