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TMI Blog2025 (5) TMI 1530X X X X Extracts X X X X X X X X Extracts X X X X ..... 19.03.2013 and statement of Shri Sujeet Banerjee, Project Manager and Shri Abhishek Mishra, Assistant Manager (Sales & Marketing) were also recorded. Statement of Shri Vidup Agrahari was recorded on 26.03.2013. Subsequently show cause notice [SCN] dated 26.02.2015 was issued proposing as under:- "19. Now, therefore M/s Shyam Construction, 1281, Bairi Akbarpur, Indira Nagar, Kanpur (a unit of M/s New Mount Trading and Investment Company Limited, 26, Jawahar Lal Nehru Road, 2nd Floor, Suite No.22, Kolkata) are hereby called upon to Show Cause to the Commissioner of Central Excise and Service Tax, 117/7, Sarvodaya Nagar, Kanpur within thirty (30) days of the receipt of this notice, as to why:- (i) Service Tax amounting to Rs.1,11,03,818, Education Cess amounting to Rs.2,22,075 & Secondary and Higher Education Cess amounting to Rs.1,11,039 (Total Rs.1,14,36,933 Rupees one crore fourteen lakhs thirty six thousand nine hundred and thirty three only) not paid by them should not be demanded and recovered from them by invoking extended period under proviso to Section 73(1) of the Finance Act, 1994; and the amount of Rs.10,00,000 already deposited by them on 28.03.2013 towards service t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was not refunded. 6. Now, we take up the first issue of demand of service tax of Rs.52,43,416/- under the head 'Preferential Location or External or Internal Development of Complex Service' on the amount of advances received from the prospective buyers. 7. The impugned Order has confirmed the demand on the allegation that the Appellants were charging additional cost from customers for providing preferential locations while buying flats and as such the same would be taxable under the head of 'Preferential Location or External or Internal Development of Complex Service' under Section 65(105)(zzzzu) of Finance Act, 1994. 8. The Adjudicating Authority has relied upon the statement of Shri Vidup Agrahari, Director of Appellant's company to allege that three types of Preferential Location Charges [PLC] were collected from the customers. It is alleged that such PLC were separate and additional charges for providing an extra benefit of a preferential location. The Adjudicating Authority alleges that the separate mentioning of PLC in the payment plan denotes that such charges were separate and additional to the construction cost received from buyers and there was no need to bifurcate cos ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tricacies of the matter, we would like to refer to the provisions as under: - Section 65 (105) (zzzzu) of the Finance Act, 1994 - "Taxable service" means any service provided or to be provided to a buyer, by a 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 but does not include services covered under sub-clauses (zzg), (zzq), (zzzh) and in relation to parking place. Explanation.- For the purposes of this sub-clause, "preferential location" means any location having extra advantage which attracts extra payment over and above the basic sale price. [Section 65(105)(zzzzu)]." Department's Circular vide D.O.F. No.334/1/2010-TRU, dated 26-2-2010 - "Construction of '8.1 commercial or industrial structures was brought under service tax net in 2004 while construction of residential complexes became a taxable service in 2005. The scope of the existing services includes construction, completion and finishing, repairs, alterations, renovation or restoration of complexes. It has been reported that in addition to these activities, the builders of residential ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that for an activity to be taxable under the head 'Preferential Location or External or Internal Development of Complex Service', following conditions must be satisfied: - * There should be provision of a specific location. * Such location must be more advantageous than a general location. * A consideration must be charged from buyer for the said location. * Such provision of preferential location must be over and above the original transaction of construction service. * Such consideration must be separate and additional to the consideration received for construction service. 14. In the present case, on perusal of the agreements with buyers provided by the Appellant, we observe that the entire services provided by the Appellant form a single transaction. A single Agreement was done for the sale of flats/units, and preferential location charges (if any) were a part of the cost of such unit. No separate charges were collected for the preferential location distinct from the original agreement. Similarly, the preferential location was a part of the transaction of construction service, and no separate service was provided over and above the Agreement. 15. We also find that w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... evail over any clarification etc. given by the CBEC/ TRU, prior to 01.07.2012. 15. From the facts on record and on perusal of the RUDs, we find that although the Appellant may have prepared a price list showing preferential location charges, car parking charges etc. separately, but it is evident from the buyer-agreements (sample buyer agreement produced at the time of hearing), that the Appellant have charged the negotiated sales price per sq. ft. and in addition have charged IFMS and EDC/IDC per sq. ft. basis. In addition, there is power back up charges in some of the cases. Evidently, we find that Revenue have calculated preferential location charges, IFMS charges, EDC/IDC, power back up charges based on the price list. We find that there is no such mention in the buyer agreement, nor there is any amount collected towards such heads in the books of accounts maintained by the Appellant, as is evident from their balance sheet/ P&L account/ trial balance. Thus, we hold that service tax is not payable on such hypothetical calculation, there being no actual consideration towards these, which is an admitted fact. We hold that service tax levied in this manner based on the price list ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is contended that such amount would not be subject to service tax under the head 'Club or Association Service'. It is further contended that such amount received for construction cost is a part of construction and hence the Appellant will be eligible to benefit of abatement under Notification No.01/2006 dated 01.03.2006 and Notification No.26/2012 dated 20.06.2012. 23. We have perused through the contentions raised on both sides, the evidences brought on record as well as the arguments made by the Authorized Representatives. It is an established fact that the Appellant has paid service tax on such amount received for construction cost of concerned facilities after taking the benefit of abatement, by considering the same to be a part of construction service. Thus, the issue to be decided is whether such activity is a separate service taxable under the head of 'Club or Association Service' and as such whether the benefit of abatement will be available to the Appellant. Before going into the intricacies of the matter, we would like to refer to the provision being referred by the parties :- Section 65 (105) (zzze) of the Finance Act, 1994 - "Taxable services means any service pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s SJP Infracon Limited Vs. Commissioner of Central Excise & Service Tax, Noida [Appeal No. ST/70343/2018-CU{DB} dated 19.11.2018] in this respect, wherein it was held that amounts like club building charges included in the total construction cost are to be considered as a bundled service of construction and cannot be held to be taxable under separate heads for the sake of disallowing benefit of abatement to taxpayers. We find that the ratio laid down in the above judgement is squarely applicable herein. 28. Thus, we set aside the demand of Rs.11,27,850/- confirmed in the impugned Order under the head of 'Club or Association Service'. 29. Next, we consider the issue of demand of service tax of Rs.25,65,993/- based on the POT Rules, 2011. The Appellant in the present case has calculated and paid service tax on receipt basis. The Adjudicating Authority contends that as per Rule 3 of the Point of Taxation Rules, 2011; service tax is payable on due basis, irrespective of when the amount is received by the Appellant. Consequently, the Adjudicating Authority has confirmed the demand on differential amount not considered by party for payment of service tax. 30. The Appellant has admitte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as determined under the POT Rules, 2011. 35. The above Order squarely applies to the present case and we find no reasons to deviate from the same. Accordingly, the demand of Rs.25,65,993/- is set aside. 36. Further, we move onto the demand of service tax of Rs.24,40,589/- on cash receipts alleged to have been received by the Appellant form its buyers over and above the Agreement cost. During the course of the search of the Appellant's premises, certain loose paper records were resumed which have been provided as RUD-22 and RUD-43 in the SCN. It is observed that such records mention certain entries with certain amounts under the head 'INTT'. 37. It is the contention of the Adjudicating Authority that said amounts denote cash received by the Appellant from various buyers over and above the terms of the Agreement. It has been alleged that such entries were not entered by the Appellant in its books of account in pursuance of a clandestine removal of goods/services. On the topic of whether such amount denotes a notional calculation of interest as highlighted by the term 'INTT", the Adjudicating Authority contends that no explanation, calculation methodology or evidence has been broug ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd positive corroborative evidence of clandestine manufacture and clearance and not merely on the basis of inferences and assumptions. 22. As per our discussion above, we find that the standard of proof in taxation cases is different from criminal offences. It is now settled principle that cases of this nature need not be proved with mathematical precision. At the same time, a single piece of evidence cannot be accepted to encompass the whole gamut of transactions. A word of caution must be added here that while the principle of preponderance probability demands us to believe that under the given facts and circumstances, the alleged tax evasion must have occurred. However, the principle ends here. Issues like quantification of duty evaded, requires concrete reliable dependable data. Reliance on principle of preponderance of probability, no way confers a License to demand duty on the basis of assumptions/presumptions/ vague imputations. 25. We are of the considered opinion that in the absence of any corroborative evidence, it would be difficult to uphold the charges levelled on assumption and presumption. Hon'ble Supreme Court held in Oudh Sugar Mills vs. Union of India -1978 ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed that if the department had impression that the data on the loose sheets was related to the clearances of the goods manufactured by them then they should have tallied the data with duty paid goods and goods manufactured by them which were not attracting duty and even after that verification if the data did not tally then there was reason for the department to make allegation that the data relates to clearances of goods without payment of duty in a clandestine manner. This exercise has not been done and it was only presumed that the data available on loose sheets was indicating the value of the goods cleared clandestinely. The show cause notice issued on the basis of presumption is not sustainable in law and therefore, the appeals may be allowed. XXXXXXX XXXXXXXX XXXXXXX 6. We have carefully taken into consideration the rival contentions. We have also gone through the statements and the various Annexures enclosed to the show cause notice. We find that in none of the statements there was any admission that the data recorded on the loose sheets, was related to the value of the goods cleared clandestinely. There is force in the argument of the learned Counsel for the appellants ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Appellant. Further, even it is assumed such entries existed, but that does not prove that the Appellant in fact made any such higher amount of payment in absence of any corroborative evidence." 42. The judgement of this Bench in the case of Commissioner of Central Goods & Service Tax, Meerut Vs. M/s B. N. Viz. And Others [Service Tax Appeal No.70285 of 2019], wherein it was held that :- "4.4 We find that the Commissioner (Appeals) has decided the matter before him by holding that there are no corroborative evidences available on record to establish the case made out against the Respondent on the basis of second set of data retrieved. In absence of any such averment, we do not find any merits in this appeal. It is incorrect to say that the judgment relied upon by Commissioner (Appeals) while deciding the appeal, were in respect of the goods and not in respect of services. It is the ratio decidendi, which Commissioner (Appeals) has followed, which is reproduced below: "Though the confessionals statement may be the starting point of investigations but in view of the other evidence available on record and in the absence of the other evidence indicating. clandestine removal, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that no explanation or reasoning has been provided with respect to this issue in the appeal memo. We observe that Appellant in its Additional Submission has accepted such demand and has stated that such amount along with applicable interest has already been paid. A copy of Challan has been brought on record before us in this regard. 46. Accordingly, we hold that such payment made be adjusted towards the same. Thus, the demand confirmed is set aside. 47. We observe that the Adjudicating Authority has placed repeated emphasis in the impugned Order on the alleged lack of evidence on part of the Appellant to prove the non-taxability of concerned activities/transactions. We find it necessary to state that burden of proof with respect to allegation of taxability of a transaction lies upon the Revenue. 48. The Finance Act, 1994 does not provide for any provision wherein the burden of proof with respect to alleged taxability of a transaction is on the taxpayer. Unless and until the taxpayer claims the benefit of an exemption notification (in which case the burden of proving the applicability of such notification is on the taxpayer), the burden of proving that a particular transaction fa ..... X X X X Extracts X X X X X X X X Extracts X X X X
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