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TMI Blog2024 (6) TMI 1414X X X X Extracts X X X X X X X X Extracts X X X X ..... been selling residential flats during construction. They are also availing the CENVAT Credit as admissible in terms of CENVAT Credit Rules 2004. 2.2 During the course of the audit of the records of the Appellant, it was observed that; ♦ they had paid service tax on abated value while no abatement was admissible to them. ♦ they had not paid service tax on charges collected towards maintenance and repair service. ♦ they have wrongly availed Cenvat credit on input services on the basis of inadmissible invoices. ♦ they have not paid service tax on the amounts received towards supply of electricity through DG Set under the category of maintenance or repair services. 2.3 A Show Cause Notice [SCN] dated 17.03.2015 was issued for the period from October, 2011 to September, 2013 by invoking extended period of limitation. 2.4 Show Cause Notice dated 05.01.2016 was issued for the period from October, 2013 to March, 2015. 2.5 Lower authorities have confirmed the demand in both the cases as proposed in the SCNs. The breakup of demands in the two orders are as under: - Amount in Rs Appeal No S. No Description ST/70795/2016 ST/71101/2018 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ession of fact. An incorrect statement cannot be equated with a willful misstatement. The latter implies making of an incorrect statement with the knowledge that the statement was not correct. 12. As far as fraud and collusion are concerned, it is evident that the intent to evade duty is built into these very words. So far as mis-statement or suppression of facts are concerned , they are clearly qualified by the words "willful", preceding the words "mis-statement or suppression of facts" which means with intend to evade duty. The next set of words "contravention of any of the provisions of this Act or Rules" are again qualified by the immediately following words "with intend to evade payment of duty". Therefore, there cannot be suppression or misstatement of fact, which is not willful and yet constitute a permissible ground for the purpose of the proviso to section 11 A. Mis-statement of fact must be willful." 4.4 In case of M/s Shervani Industries, Syndicate Ltd. reported in 2009 (14) S.T.R. 486 (Tri-Delhi), this Tribunal has held that extended period of limitation is not invokable when there is scope of difference in interpretation. Para 14 of the order reads as under :- " ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt of Rs. 3,67,778/- is towards input services exclusively related to repair services, the remaining amount comes to Rs. 44,36,106/- which was not debited by the Appellants. He also observed that another condition of Notification No. 01/2006 dated 01- 03-2006 was that the cost of land should be included in the gross amount charged. He examined one of the `Flat Buyer Agreement' and observed that land of the building has not been sold to the flat buy After making above observations, the learned Commissioner disallowed the abatement under Notification No. 01/2006 (supra) and confirmed the demand of Rs. 3,18,92,285/-. 4.7 The learned Counsel for the Appellants submitted that as per SCNs, Appellants had reversed the entire Cenvat credit of Rs. 44,22,221/- on input services. He referred to various case laws in support of its contention that once the credit had been reversed, the benefit of exemption under Notification No. 01/2006 dated 01-03-2006 cannot be denied. He also submitted that the observation of the Commissioner that Appellants had availed credit on inputs (instead of input service); that entire credit had not been reversed and that as per 'F ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... period has been reversed alongwith interest and penalty. We find that there is no dispute that the Appellants had reversed the entire Cenvat credit relating to Construction of Residential Complex Service even before issuance of SCN. The Hon'ble Supreme Court in the case of Chandrapur Magnet Wires (Pvt.) Ltd. Vs. Collector of Central Excise reported in 1996 (81) E.L.T. 3 (S.C.) has held that debit entry in Modvat account indicates as if credit was not taken on such inputs. Para 6 & 7 of the judgement reads as under :- "6. It is true that the assessee has not maintained separate accounts or segregated the inputs utilised for manufacture of dutiable goods and duty free goods, as should have been done. The contention of the Department that in this situation, the assessee is not entitled to reverse the entries and get the benefit of the tax exemption is a question which merits serious consideration. There is no doubt that the assessee should have maintained separate accounts for duty free goods and the goods on which duty has to be paid. But our attention was drawn to a departmental circular letter on this problem in which it has been clarified by the Ministry of Finance as under :- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The question as to whether manufacturer can be treated as not having taken credit on the inputs used in the manufacture of final product, even though it was originally taken but subsequently reversed, has been decided by a five Member Bench of the Tribunal in the case of Franco Italian Company Pvt. v. CCE, 2000 (120) E.L.T. 792. The aforesaid five members Bench of the Tribunal after taking into account the ratio laid down by the Supreme Court in the case of Chandrapur Magnet Wire (P) Ltd. v. CC, Nagpur, 1996 (81) E.L.T. 3 has held as under :- "6. Drawing similar analogy we consider that subject to the reversal of Modvat credit taken with regard to the inputs which were utilised in the manufacture of duty free goods, the manufacturer could avail of the Modvat credit as well as full duty exemption under applicable small scale exemption notification with regard to some specified goods. Reference is answered accordingly. 7. As a result the impugned order-in-appeal dated 28-1-1999 passed by the Central Excise is set aside and the appeal of Franco Italian Company (supra) is allowed subject to the conditions that Modvat credit taken of the duty paid on the inputs which were utilised ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t would collect maintenance and repair charges. He therefore held that charges collected in the name of sinking fund are in fact charges for maintenance and repair of building. 4.15 The learned Chartered Accountant during the course of hearing submitted that Appellants collect an amount (approx. 1.2% of the cost of flat) towards sinking fund. The said amount is ultimately transferred to RWA/society and is in the nature of interest free maintenance security. He drew our attention to the Balance Sheet (page 265 of appeal paper book) where in the amount collected as sinking fund had been shown as liability. He also drew our attention to the ST-3 returns to contend that wherever they have collected amount towards maintenance and repair service, they had regularly been paying service tax. He also placed reliance on following decisions: - - Kumar Beheray Rathi Vs. CCE reported in 2014 (34) S.T.R. 139 (T). - P.V.S. Construction (Pvt.) Ltd Vs. CCE reported in 2018 (19) G.S.T.L. 277 (T). - KDP Infrastructure (Pvt.) Ltd. Vs. CCE reported in 2019 (22) G.S.T.L. 450 (T). 4.16. The learned Departmental Representative supports the view taken by Lower Authorities. 4.17. We find that the i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rmination of the ownership agreement and if no such termination has taken place till date, the amount would not be refunded. As long as the provisions for refund of the said amount in the agreement itself is there, it has to be considered that the said amount is refundable and was towards security deposits and was not for the purpose of providing any services, so as to levy tax on the same". "4. In any case, we also note that the issue stands decided by precedent decisions of the Tribunal. Reference can be made to the Tribunal decision in the case of CCE & ST, Jaipur v. Sand Dunes Construction Pvt. Ltd. - 2018 (7) TMI-1383-CESTAT-New Delhi, whereby while taking note of the precedent decision of the Tribunal in the case of Kumar Beheray Rathi v. CCE, Pune - 2013 (12) TMI-269-CESTAT Mumbai = 2014 (34) S.T.R. 139 (Tri.-Mum.). It was held that the security deposits collected by the Builder for providing maintenance to immovable property services would not be taxable under the category of "Management Maintenance or Repairs Services". In fact, we note that Commissioner (Appeals) for the subsequent period in the appellant's own case has dropped the demand vide its Order-in-Appeal N ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... als sold by service provider to the recipient of service, subject to the condition that there is documentary proof specifically indicating the value of said goods. He relied the decision of this Tribunal in case of ICC Reality (India) Pvt. Ltd. Vs. CCE reported in 2013 (32) S.T.R. 427 and submitted that supply of electricity being goods, service tax cannot be demanded on the same. On a specific query from the Bench, the learned counsel clarifies that they have installed pre paid meters and the amount for supply of electricity is charged on the basis of units consumed by the individual resident. As regards electricity consumed in common areas or for operating the lift during shutdown, the corresponding expenses are charged by way of maintenance or repair charges. We find that the issue regarding liability for payment of service tax on supply of electricity generated through DG set in case of power failure is no more res integra. This Tribunal in the case of ICC reality India (P.) Ltd. Vs. CCE, Pune reported in 2013 (32) S.T.R. 427 has held that service tax cannot be charged on electricity charges collected from the tenants. Para 9 and para 10 of the said order reads as under: - "9 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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