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TMI Blog2025 (5) TMI 72X X X X Extracts X X X X X X X X Extracts X X X X ..... n the flat. The assessee was discharging service tax liability on the basic price of flat along with PLC at the rate applicable after availing abatement of 75% or 70% as applicable, in terms of notification no. 26/20122-ST dated 20.06.2012 as amended. 3. The assessee was found to have short paid service tax amounting to Rs. 17,51,046/- (Rs. Seventeen Lacs Fifty One Thousand and Forty Six only including all cesses as detailed in Annexure-A) on the amount of Rs. 1,88,89,395/- received in the name of "PLC" from the buyers of the flats during the period from July, 2012 to Sep 2015 which was opined to be the part of consideration received towards service provided to a buyer, by the builder of a residential complex, or a commercial complex, or any other person authorized by such builder, for providing preferential location or development of such complex in terms of section 65 (105) (zzzzu) of Finance Act, 1994. The appellant was found to have paid service tax amounting to Rs. 5,83,682/- after claiming abatement of 70% / 75% in terms of Notification No. 26/2012-St dated 20.06.2012, as amended, whereas the assessee was liable to pay service tax amounting to Rs. 23,34,728/- on the entire a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... charges for construction services which is separately taxable under Section 65 (105) (zzzzu) of the Finance Act, 1994. Based on this presumption Service Tax is wrongly alleged payable at full rate on the said charges without abatement under Notification No. 26/2012-ST. 8. It is submitted that the service, if any, of providing specific floor is towards a singular activity of construction of units, and the amounts received towards that one single activity cannot be taxed separately. Also the dominant nature of the transaction is construction of flats, PLC are incidental to the construction activities and therefore, the essential character of the transaction remains as 'construction', on which service tax is payable at the abated value. Hence, PLC are part and parcel of consideration towards construction of units for sale and will also attract levy and treatment of service tax in the same manner as is attracted for construction services. Hence, the benefit of Notification No. 26/2012 dated 20.06.2012, being available to the construction services, is available on the amount of PLC as well. 9. Reliance is placed on the following decisions wherein under similar transaction it has been ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Commissioner of CGST, CE & Customs-Jabalpur 2023 (1) TMI 934- CESTAT New Delhi Commissioner of Service Tax, Chennai Vs. Repco Home Finance Ltd. 2020 (7) TMI 472- CESTAT CHENNAI Madhya Pradesh Power Transmission Company Ltd. Vs. Principal Commissioner, CGST & CE, Bhopal 2023 (385) ELT 152 (Tri.- Del) With these submissions, the order under challenge is prayed to be set aside and the appeal is prayed to be allowed. 12. While rebutting the submissions made on behalf of the appellant, learned Departmental Representative appearing for the department, at the outset, has reiterated the discussions and findings given in the Order-in-Original. While submitting on merits, it is mentioned that Preferential Location Charges (PLC) means any location having an extra advantage which attracts extra payment over and above the basic sale price. These are given by the homebuyers towards an option to choose certain benefit in terms of surroundings and locations. This helps developers maximise their profits also. Accordingly, these charges are in the nature of service provided by the builder to the buyer of the property over and above the construction service. Usually all the houses/floors i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... into Section 66F(3)(a), according to which in a situation where two services are naturally bundled, the transactions would be treated as provision of such service which gives the transaction its essential character. In this regard, we draw our support from the decision in the case of Torrent Power Ltd. Vs. UOI 2020 (34) GSTL 385 (Guj.) and Jodhpur Vidyut Vitran Nigam Ltd. Vs. UOI 2022 (56) GSTL 273 (Raj.) wherein it has been held: "24. It has been contended on behalf of the respondents that subsection (3) of Section 66F of the Finance Act would not apply where the single service which gives the bundle of services its essential character is exempt from the levy of service tax. In the opinion of this Court, there is nothing in the language employed in sub-section (3) to Section 66F to read into it a requirement that such service should not be exempt from tax. All that the subsection provides is that taxability of bundled services shall be determined in the manner provided therein. The term taxability means liability to taxation. Thus the term taxability would take within its sweep not being taxable also inasmuch as liability to taxation would also mean not being liable to any tax. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... day. Such service is an ancillary service to the provision of hotel accommodation and the resultant package would be treated as services naturally bundled in the ordinary courses of business. Other illustrative Indicators, not determinative but indicative of bundling of services in ordinary course of business are: - There is a single price or the customer pays the same amount, no matter how much of the package they actually receive or use. The elements are normally advertised as a package. The different elements are not available separately. The different elements are Integral to one overall supply - if one or more is removed, the nature of the supply would be affected. 17. Reverting to the facts of the present case, we observe that the PLC, are inextricably linked to the construction of complex service provided to the customer as a preferential location/unit is asked for from the service provider among several other locations/units which are constructed by him while providing Construction of Complex Service. Thus PLC is an additional amount received by the service provider with respect to few among all locations/units constructed but it cannot be an amount for another ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... also has already been held eligible for abatement under said notification no. 26/2012-S.T. Accordingly, we hold that order under challenge has wrongly held PLC as the consideration received for activity different than 'Construction Service'. The amount being part of the bundle, as discussed above, is wrongly denied the abatement benefit of Notification No. 26/2012. 21. The another issue which requires adjudication is: "Whether the amount retained/forfeited out of advance amount on account of breach of forms of the Flat Buyers Agreement by the buyer is taxable under Section 66E(e) of the Finance Act, 1994?" 22. We observe that the disputed amounts are retained with the intention to make good for the losses and to also act as a deterrent to ensure that buyer do not violate the terms of contract. We do not find any other separate activity being rendered by the appellant to the buyers while retaining the said amount for being classified as a service under Section 66E(e) of the Act. There has to be a flow of consideration from one person to another when one person agrees to the obligation to refrain from an act, or to tolerate an act, or a situation, or to do an act. 23. It is tri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion in lieu of any service. Instead, these are in the nature of a deterrent imposed so that such a breach or non-performance is not repeated, and hence the amounts are not taxable. 27. Further we rely on Circular No. 178/10/2022-GST dated 3.8.2022 and Circular No. 214/1/2023 - ST dated 28.02.2023, wherein it was clarified that the damages collected on account of breach of terms of the contract are not susceptible to tax. It is the settled law that circulars are binding on the Department. 28. Coming to the issue about invocation of the extended period of limitation, we observe that appellant was maintaining all the records, and the demand was proposed basis the records of appellant only. Also, no element of fraud or suppression has been established in the Impunged Order. Further, it is submitted that the Appellant was under the bonafide belief that it was not liable to pay Service Tax in the alleged manner. The Appellant followed a reasonable and correct interpretation of law. Further, demand was proposed pursuant to audit. Also, returns were periodically filed before the Department by Appellant on the basis of self-assessment and it was the responsibility of the Department to scr ..... X X X X Extracts X X X X X X X X Extracts X X X X
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