Vasantha Green Projects Versus CCT, Rangareddy GST
Service Tax
2018 (5) TMI 889 – CESTAT HYDERABAD – 2019 (20) G. S. T. L. 568 (Tri. – Hyd.)
CESTAT HYDERABAD – AT
Dated:- 11-5-2018
Appeal No. ST\/31095\/2017 – Final Order No. A\/30559\/2018
Service Tax
Hon'ble Mr. M. V. Ravindran, Member (Judicial) And Hon'ble Mr. Madhu Mohan Damodhar, Member (Technical)
\nShri Alok Barthwal & Sh. Ch. Nageswara Rao,Advocate and Consultant for the Appellant
\nShri J Sreenivas, Superintendent \/AR for the Respondent
\nORDER
\n[ Order Per : M. V. Ravindran ]
\n1. This appeal is directed against Order-in-Original NO. HYD- EXCUS-004-COM-006-17-18, dated 31.05.2017.
\n2. The relevant facts that arise for consideration are that appellant is registered with the Department under the category of construction of residential complex services and works contract services; entered into joint development agreement for construction of houses and residential premises with different land owners, in respect of o<\/p>\n
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Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n ued on the basis of nearest sale value of the villas to the new prospective customers of the property which lies with the appellant. The appellant contested the show cause notice on limitation as well as on merits, taking the stand that the value of Rs. 5,495\/- per sq. Ft in respect of the land owner share is incorrect as the entire value of the land was considered by them while discharging the service tax liability in terms of Section 67 (1)(iii) of Finance Act, 1994 read with Rule 3(a) of Service Tax (Determination of value) Rules, 2006 and claim the benefit of abatement as per various notifications. The adjudicating authority, after due process of law, confirmed the demands raised alongwith interest and imposed penalties. = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n he Finance Act, 1994 shall be gross amount charged by service provider (builder in this case) for such services provided or to be provided and these instructions are applicable on Revenue and has not been withdrawn. = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n s provided construction services to the land owner and as a consideration, received legal rights on his share of land, constructed Villas on that land and sold them, which would mean that appellant is investing the consideration received from first transaction of land owners right to construct in second transaction. In our view, merely because the consideration received from land owners is invested in construction of villas to other buyers on which service tax is paid, it cannot be concluded that service tax paid on consideration received from land owners has to be evaluated differently. = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n understand that the value which has been arrived at for sale of villas to prospective customers, would include the consideration paid or payable for acquisition of land. It is not a case that appellant has not discharged the service tax liability on the value received for the villas from prospective customers. In our view, if the consideration towards the acquisition of the land has been included in the value of the villas sold to prospective customers and appropriate service tax liability has been discharged the same value, it cannot be again made liable to service tax under the premise that sale value of the villas given to land owners is a consideration on which service tax liability was not discharged. It would be imperative to reproduce the provisions of Section 67 of the Finance Act, 1994 which would apply in the case in hand, as also rule 3 of the Service Tax (Determination of the Value) Rules, 2006. = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n ll be such amount as, with the addition of tax payable, is equal to the gross amount charged. = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n ideration received by them and in such a case there is no reason to again demand service tax on the villas constructed and handed over to the land owners. = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n c) contractors and (d) buyers exist. These practices influence the 'taxable value' under the construction of complex services. In all such situations, the taxable value under section 67 shall be the gross amount charged by the service provider (builder in this case) for such services provided or to be provided by him. This read with notification No. 18\/2005-ST, dated 07.06.2005 entitles a builder\/contractor an abetment of 67% on the gross amount charged, which shall include the value of goods and material supplied. Further, there is no deductions\/exemptions provided for computation of such taxable value in the composite contract.” = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n e tax on the same amount again would amount to double taxation. = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n","protected":false},"excerpt":{"rendered":" Vasantha Green Projects Versus CCT, Rangareddy GSTService Tax2018 (5) TMI 889 – CESTAT HYDERABAD – 2019 (20) G. S. T. L. 568 (Tri. – Hyd.)CESTAT HYDERABAD – ATDated:- 11-5-2018Appeal No. ST\/31095\/2017 – Final Order No. A\/30559\/2018Service TaxHon'ble Mr. M. V. Ravindran, Member (Judicial) And Hon'ble Mr. Madhu Mohan Damodhar, Member (Technical) Shri Alok Barthwal & … Continue reading “Vasantha Green Projects Versus CCT, Rangareddy GST”<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[],"tags":[],"class_list":["post-11802","post","type-post","status-publish","format-standard","hentry"],"_links":{"self":[{"href":"https:\/\/goodsandservicetax.in\/GST\/index.php?rest_route=\/wp\/v2\/posts\/11802","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/goodsandservicetax.in\/GST\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/goodsandservicetax.in\/GST\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/goodsandservicetax.in\/GST\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/goodsandservicetax.in\/GST\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=11802"}],"version-history":[{"count":0,"href":"https:\/\/goodsandservicetax.in\/GST\/index.php?rest_route=\/wp\/v2\/posts\/11802\/revisions"}],"wp:attachment":[{"href":"https:\/\/goodsandservicetax.in\/GST\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=11802"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/goodsandservicetax.in\/GST\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=11802"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/goodsandservicetax.in\/GST\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=11802"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}
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\n3. Ld. Counsel Shri Alok Barthwal appeared alongwith Shri Ch. Nageswara Rao, Consultant for the appellant. It is his submission that demand has been wrongly confirmed; that at the time of sale of Villas to prospective customers, appellant had included the cost of <\/p>\n
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\n4. Ld. DR after reiterating the findings of the lower authorities, submits that to arrive at gross value for discharge of service tax, the value of construction of villas which are given free of cost to the landlords also needs to be considered as recorded by the adjudicating authority in para Nos. 21 to 23. It is his submission that they have adopted the value for inclusion of discharge of service tax on the portion of the land developed and given to the land owners @ Rs. 1,779\/- per sq.ft. is totally wrong going by the provisions of Section 67 (1) of Finance Act, 1994 read with rule 3(a) of the Service Tax (Determination of value) Rules, 2006 and as clarified by the Board vide circular dated 10.02.2012 and the value that should be adopted for discharging the service tax <\/p>\n
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\n6. There is no dispute as to the following facts:
\n a) Appellant and land owners entered into joint development agreement under which appellant has to construct villas on the land owned by land owner and sale the same to prospective customers on which service tax liability is discharged.
\n b) In consideration of such land, appellant has constructed villas for the land owner and the value of villas sol<\/p>\n
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\n “24. For the purpose of analyzing the valuation aspect of the impugned transa<\/p>\n
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\n (3) The gross amount charged for the taxable service shall include any amount received towards the taxable service before, during or after provision of such service.
\n (4) Subject to the provisions of sub-sections (1), (2) and (3), the value shall be determined in such manner as may be prescribed under Rule 3 of Service Tax (Determination of value) Rules, 2006 (hereinafter “valuation Rules.”
\n “Rule 3. Manner of determination of value- subject to the provisions of section 67, the value of taxable service where such value is not ascertainable, shall be determined by the service provider in the following manner:-
\n (a) The value of such taxable service shall be equivalent to the gross amount charged by the service provider to provide similar service to any other person in the ordinary course of trade and the gross amount charged is the sole consideration;
\n (b) Where the value cannot be d<\/p>\n
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\n9. The Chartered Accountant certificate has clearly stated that to arrive at the value of construction, areas of villas to be shared to land owners, the Developer (the appellant herein) had undertaken an exercise to determine the value of construction per sq.ft for the villas and the said construction value of the villas built up area which was shared free of cost to the land owner, was considered while arriving at the service tax liability. We find that the annexure to the said certificate talks about the financial arrangements which we have explained herein above. The said Chartered Accountant certificate and the annexure thereto are reproduced:
\n10. The adjudicating authority, in the impugned order, had relied upon Board Circular No. 151\/2\/2012-ST, dt. 10.02.2012 to arrive at the value in the case of flats given to land owners to<\/p>\n
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\n (emphasis supplied)
\n12. It can be seen from the above said instructions, the gross amount charged by the builder is liable to tax. The said instructions are in force till today and has not been withdrawn by the Board. As already detailed herein above, the appellant has discharged the service tax liability on the gross amount charged i.e. consideration re<\/p>\n
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\n13. The reliance placed by Ld. DR on the case of LCS City Makers Pvt. Ltd. will also not carry the case of Revenue any further, as in that Bench upheld the contention of the Revenue that recording that “the facts and circumstances of the case do not warrant assessment of a different value for services in respect of flats sold to individual buyers as compared to flat handedover to the land owners”; and recorded that the flats which were allotted to land owners were sold by land owners. In the case in hand, the facts are different.
\n14. In respect of the arguments put forth on limitation, we do find that in the situation wherein the interpretation of the provisions of Section 67 and the rules were involved and there could be different interpretation. It is undisputed that appellant had declared the value received from prospective customers in their returns and discharged the service tax liability thereon, which include the <\/p>\n
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