Executive Engineer Division V,M.P. Housing and Infrastructure Development Board Versus CGST C.E & C. C-Bhopal
Service Tax
2018 (11) TMI 1219 – CESTAT NEW DELHI – TMI
CESTAT NEW DELHI – AT
Dated:- 31-8-2018
Appeal No ST/53124/2015- (DB) – Final Order No. 53282/2018
Service Tax
Mr. C.L. Mahar, Member (Technical) And Mrs. Rachna Gupta, Member (Judicial)
Shri Sandeep Mukherji, CA for the appellant
Shri Vivek Pandey, (DR) for the respondent
ORDER
Per: Rachna Gupta
1. The impugned appeal has been directed against the Order No. 308 dated 21st May, 2015 passed by the Commissioner Central Excise.
2. The appellants were herein are engaged in construction of service and are registered under the category of commercial and industrial construction service and also under construction of residential complex service. During the scrutiny of their records, the Department observed that they are paying service tax on the service amount received at the time of giving possessio
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he impugned order has adjudicated two show cause notices for total period with effect from 1/4/2007 to 31/3/2013. It is impressed upon that till 30th June, 2010 there was no liability upon the builder to pay any service tax upon the amount received prior giving possession of the constructed property to their clients, it is only after explanation under Section 65(105)(zzzh) Finance Act, 1994 was incorporated which into effect from 1/7/2010 that the builders are liable to pay the same. It is impressed upon that the demand as confirmed for the period prior 31st June, 2010 is apparently wrong and is liable to be set aside. With respect to the remaining demand it is submitted that the appellant were entitled for abatement at the rate of 75 per cent but the Adjudicating Authority below has given the said abatement only to the extent of 67 per cent. While impressing upon the Notification No. 1/2006 dated 1/07/2010 and Notification No. 36/2010 the demand for the said subsequent period is praye
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e to discharge the tax liability at the time of receiving the first phase of the said demand. Denying any alleged infirmity even with respect to the effect of abatement, as alleged, Ld. DR has prayed for dismissal of the impugned appeal.
6. After hearing both the parties and perusing the record we observe and hold as follows;
7. The fact of the present case is that the appellant is a builder engaged in construction activity that under heavy financing scheme where the appellant are receiving payments in phases over years. It is also an admitted fact that the appellants were paying the service tax at the stage of final allotment of the constructed residential/Commercial unit after the payment received from the buyers along with taxes at the said final stage. In view of these admitted facts the core issue to be adjudicated is as to whether the appellants were required to pay the service tax on the amount received by them from the prospective buyers, In advance.
8. No doubt as per secti
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r;”
9. Hon'ble High Court of Mumbai in the case of Indian National Ship Honours Association vs. Union of India 2009(40) STR 289 has held that the introduction of new entry and inclusion served services in that entry would pre-supposed that there was no earlier entry covering the said services. This Principal Bench of Delhi in the case of U.B Construction Pvt. Ltd vs. CCE 2013 (32) S.T.R. 738(Tri. Del) has held that Explanation added to Section 65(105)(zzzh) with effect from 1/07/2010 is prospective in nature as it expands scope of taxable service provided by the builder to buyer pursuant to intended sale of property to be during or after the construction. It was classified in this decision that in such case there is no liability on the assessee to remit service tax under the then existing legislative reason that is either under Section 65(38) read with Section 65(91) (a) of the Finance Act taxable under Section 65(105) (zzq). In another recent adjudication by Tribunal Bangaloor in th
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ed demand for the period since 1/04/2007 till 30th June 2010 is not sustainable the same has wrongly been confirmed, accordingly is hereby set aside.
11. Now, coming to the demand for the remaining period, the computation thereof so far as abatement whether of 67 per cent of 75 per cent is concerned, we observe that in view of Notification No. 1/2006 ST dated 1/3/2006 the abatement on construction services till 30th June 2010 was 67 per cent however the said Notification of amended vide Notification No. 29/2010 ST dated 22/06/2010 with a further amended vide Notification No. 26/2012 ST dated 20th June, 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.
12. Finally coming to the issue of invoking the exte
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ble Apex Court in Gopal Zarda Udyog vs. CCE Delhi 2005 (188) E.L.T 251 SC has held that when asseessee has a reasonable belief that he is not required to give a particular information only normal period of limitation that is 1 year is applicable. In the present case also 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 ordinarily to be imposed unless the party either acted deliberately in defiance of law and was guilty of dishonest conduct the Hon'ble Apex Court in the case of Hindustan Steel Pvt. Ltd. vs. State of Odissa 1978 E.L.T 134 SC has held that where the breach flows from the bona fide belief that the offender is not liable to act in the manner prescribed by the statue such an offender/assessee is not liable any penal action. In view of these observations the penalty is held being not sustainable the show cause notices is rather
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