2018 (12) TMI 1040 – CESTAT CHENNAI – TMI – Construction service – period involved is 2006-2009 – Site formation and clearance service – real estate projects at Silver County, Platinum County and other projects – non-payment of service tax – non-filing of periodical ST-3 returns.
–
Construction service – period involved is 2006-2009 – Held that:- Hon’ble Supreme Court in the case of Larsen & Toubro Ltd. [2015 (8) TMI 749 – SUPREME COURT] and the decision of this very Bench in the case Real Value Promoters [2018 (9) TMI 1149 – CESTAT CHENNAI], the said activity will be exigible to service tax only under “Works Contracts Service” and not under Residential Complex Service as has been demanded in the impugned order. In view thereof, there is no hesitation in setting aside the demand of Rs. ? 83,77,188/- with interest thereon under the category of construction of residential complex service. The portion of the impugned order to the contrary demanding the aforesaid amount with interest
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
investigation caused by the department, it emerged that appellants were rendering construction of residential complex in respect of Golden Country Project at Maraimalai Nagar, Kanchipuram District concerning 240 flats in Phase-I. It also appeared that they were engaged in providing site formation and clearance service with respect to their real estate projects at Silver County, Platinum County and other projects. Department took the view that appellants had not paid appropriate service tax; not filed periodical ST-3 returns in respect of the said services provided by them. Hence a show cause notice dt. 29.07.2010 was issued inter alia, demanding service tax liability of ₹ 1,36,61,900/- in respect of construction residential complex service for the period 2006-07 to 2008-09 and ₹ 31,16,246/- in respect of site formation and clearance service during the period 2006-07 to 2007-08 with interest thereon and also proposing imposition of penalties under various provisions of law.
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
er of property in goods could be covered under Residential Complex Service (hereinafter referred to as RCS ) from the date of introduction of service tax on such services was being litigated upon and which was finally settled by the Hon ble Supreme Court in the case of CCE Vs Larsen and Toubro Ltd – 2015 (39) STR 913 (SC). The Apex Court observed that in as much as Section 67 of the Finance Act (hereinafter referred to as the Act ), dealing with valuation of taxable services, refers to the gross amount charged for service, the service of RCS would cover only pure service activity as any contrary view would imply that the union government can levy service tax on the gross amount, including the value of transfer of property in goods also, which is constitutionally impermissible. The Hon ble Apex Court also held that it was only with the introduction of Works Contract Service (WCS) as a separate taxable service with effect from 01.06.2007, the statutory mechanism to exclude the value of t
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
d proposed under Residential Complex Service cannot sustain. (iii) With regard to the demand made under site formation and clearance service , the amount of ₹ 2,38,89,740/- (FY 2006-07) has been subjected to service tax erroneously. This amount consists of two figures, namely, a sum of ₹ 1,91,89,740/- received from one of the promoters of the Appellant Company, namely, Mr. Anand and ₹ 47,00,000/- income received from sale of land. (iv) Appellant submits only effected outright sale of land during the financial year 2006-07 and the aforesaid figures i.e. ₹ 1,9,89,740/- and ₹ 47,00,000/- are nothing but income from sale of UDS. (v) The sum of ₹ 2,38,89,740/- (total) received by the Appellant has been spent on the expenses incurred on the land prior to sale. These expenses include expenses such as site filling and other site preparatory expenses. The amount of ₹ 2,90,76,680/- has been spent towards land development expense towards land development
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
and Loss Account for the year ending 31st March 2008. (viii) It is a settled law that any expense incurred before the transfer of goods forms part of the sale price and cannot form part of any service tax liability. (ix) The aforesaid amount of ₹ 2,38,89,740/- is a reimbursement for the expenses (i.e. ₹ 2,90,73,680/-) incurred by them without any provision of service. 3. On the other hand, Ld.A.R Ms. T. Usha Devi supports the impugned order. With respect to the demand under site formation and clearance service, appellants had collected consideration from the buyers of flat under two separate categories as sale of land and land development charges, namely, consideration towards land cost which is reflected in the sale deed and the balance amount towards land development charges. It is therefore clear that site formation and clearance service has been provided by the assessee to the buyers of flats and consideration towards the said activity has also been collected from the b
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
mount with interest thereon is set aside. 6.2 The second demand relates to site formation and clearance service allegedly provided by the appellant. During the adjudication proceedings appellants have contended that the said activities were undertaken before sale of land took place, hence the service was a self-service and there is no service provider and service recipient relationship and therefore they are not liable for service tax demand. The adjudicating authority has however held that though site formation and clearance activity took place before sale of land, as the assessee collected consideration from the buyers of flats as land development charges; that even if appellant had entered into an agreement for sale of flats, it is a composite agreement wherein element of sale and service are clearly discernible and therefore value of service portion is chargeable to service tax. We are unable to appreciate such a line of argument. It is not disputed that the land in question belong
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =