2018 (11) TMI 1219 – CESTAT NEW DELHI – TMI – Levy of service tax – Construction Services – Amount received in advance – abatement under N/N. 1/2006/ST dated 1/3/2006 – whether the appellants were required to pay the service tax on the amount received by them from the prospective buyers, In advance? – extended period of limitation – penalty.
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Held that:- No doubt as per section 67 of the Act a person in the case where the provisions of service is for consideration in money, is liable to pay the service tax on gross amount charged by the service provider for the service provided or to be provided by him. But simultaneously there is no denial of fact that the levy in question was imposed for the first time by the amendment to Finance Act 1994 with effect from 1/07/2010 to Section 65(105) (zzzh).
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The Notification No. 136/2010 as impressed upon by the appellant is perused. It becomes clear that vide the said Notification the advance receipt by a builder till 30th June 2010 for
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e, 2012. Vide which the taxable service to the extent of 25 per cent only is made taxable. Hence the appellant is held to be entitled for the abatement at the rate of 75 per cent. The computation at the rate below is an error apparent, as such the same is liable to be re-computed the matter needs to be remanded for this limited purpose.
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Extended period of limitation – Held that:- The appellant was not liable to pay the service tax prior to 1st July 2010 there remains no reason for alleged suppression. Otherwise also to invoke the extended period of limitation heavy burden rests upon the Department to proof some positive Act on account on the assessee other than the mere inaction or failure to discharge the liability – extended period cannot be invoked.
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Penalty – Held that:- The apparent allegation is delay in discharging the liability the allegation as grave as of misinterpretation and suppression are not at all attributable. For the similar reason penalty also will not ord
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records, the Department observed that they are paying service tax on the service amount received at the time of giving possession of the constructed shop/house towards providing services to their clients. The said amount of service tax is calculated on 33 per cent of the sales amount of the property by availing abatement as provided under Notification No. 1/2006/ST dated 1/3/2006. The Department also observed that the appellants were not paying service tax on the amount received by them at the time of the receipt of the amounts resultantently the service tax was not paid on the total amount received toward taxable services provided by the appellant the Department, accordingly served the appellant with Show Cause Notice No. 6900 dated 6/3/2014 proposing the demand of alleged short payment along with the interest at appropriate rate of proportionate penalties the said entire demand was confirmed vide the order under challenge hence the present appeal. 3. We have heard Mr. Sandeep Mukharj
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on the Notification No. 1/2006 dated 1/07/2010 and Notification No. 36/2010 the demand for the said subsequent period is prayed to be quantified at the rate of 75 per cent abatement. Order is accordingly prayed to be set aside. It is also submitted that the extended period of limitation has wrongly been invoked by the department while issuing show cause notices and suppression of fact has also been wrongly alleged, while imposing the penalty as there was no intent to evade the tax initially for the reason that the amount received was not taxable subsequently for the reason that the appellants were entitled for abatement. The order to that extent is also prayed to be set aside. Appeal is prayed to be allowed. 5. Ld. DR while justifying the order has submitted that the Commissioner has duly appreciated Section 67 and Section 68 of the Finance Act while adjudicated the impugned controversy holding that the service tax becomes payable at the time of receipt of consideration even in respect
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ed to pay the service tax on the amount received by them from the prospective buyers, In advance. 8. No doubt as per section 67 of the Act a person in the case where the provisions of service is for consideration in money, is liable to pay the service tax on gross amount charged by the service provider for the service provided or to be provided by him. But simultaneously there is no denial of fact that the levy in question was imposed for the first time by the amendment to Finance Act 1994 with effect from 1/07/2010 to Section 65(105) (zzzh) Act as follows; Explanation.- For the purpose of this sub-clause, construction of a complex which is intended for sale, wholly or partly, by a builder or any person authorised by the builder before, during or after construction(except in cases for which no sum is receive from or on behalf of the prospective buyer by the builder or a person authorised by the builder before the grant for completion certificate by the authority competent to issue such
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a) of the Finance Act taxable under Section 65(105) (zzq). In another recent adjudication by Tribunal Bangaloor in the case of Vinayaka Homes 2016 (43) STR 251 it was held that activity squarely falling under construction of residential complex service is not liable to service tax prior to 1/07/2010 in case of phased payments. 10. The Notification No. 136/2010 as impressed upon by the appellant is perused. It becomes clear that vide the said Notification the advance receipt by a builder till 30th June 2010 for which service was provided by him after 30th June 2010 was not to be taxed thereby qualifying that services of appellant were not taxable prior 1/07/2010. When the explanation as inserted in Section 65(105)(zzzh) is read along with clarification given by CBEC vide letter No. 334/3 TRU dated 1/07/2010, it again becomes amply clear that if agreement is entered into or any payment is received for sale of complex or apartment in residential complex service tax will be leviable on suc
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ted the matter needs to be remanded for this limited purpose. 12. Finally coming to the issue of invoking the extended period of limitation and imposition of penalty on ground of alleged suppression we observe that the department has alleged appellant to have deliberately mis-represented the fact with intent to evade payment of service tax but it is simultaneously apparent fact that the present is not the case of non payment of service tax the allegation is that the service tax is not paid at the time of receipt of the first instalment from the property buyer but at the time of final payment and allotment. The gross value of the taxable service has been self-assessed by the appellant only after receiving the last instalment. We have already opined that he appellant was not liable to pay the service tax prior to 1st July 2010 there remains no reason for alleged suppression. Otherwise also to invoke the extended period of limitation heavy burden rests upon the Department to proof some po
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