2012 (12) TMI 996 - AT - Central Excise

Waiver and stay of penalty - consideration received in the form of land by the assessee from the service recipients (land owners) - whether twin houses and villas are also to be considered as a residential complex in view of the expression building or buildings used in the definition of residential complex? Held that - the appellant indeed paid service tax in respect of 62 houses (22 villas and 40 twin houses) constructed in the same premises. Those villas and twin houses were also constructed and given to individual buyers. However the aforesaid issue is relevant to the said houses also. As the appellant paid service tax in respect of those constructions we shudder to think how they can resist the present demand on merits - we are inclined to ask for a reasonable amount of predeposit from the appellants - there shall be waiver and stay in respect of the penalty imposed on the appellants on compliance - appeal disposed off - decided partly in favor of appellants.

Summary

Issues:
- Waiver and stay sought for service tax amount and penalty
- Interpretation of the definition of "residential complex"
- Valuation dispute regarding consideration received
- Whether villas and twin houses fall under the definition of "building or buildings"
- Requirement of predeposit
- Payment of service tax for other constructions in the same premises

Analysis:
The judgment deals with an application seeking waiver and stay concerning a service tax amount and penalty related to the construction of a residential complex. The primary issue revolves around the interpretation of the term "residential complex" under Section 65(91a) of the Finance Act, 1994. The appellants argue that the buildings constructed for landowners, including twin houses and villas, do not fall within this definition. They rely on a Tribunal's decision and a Supreme Court dismissal related to a similar case. Conversely, the department contends that villas and twin houses should be considered part of a residential complex based on the term "building or buildings" in the definition. A valuation dispute arises as the appellants claim no monetary consideration from landowners, while the department argues that the land's value constitutes consideration.

The Tribunal acknowledges the contentious nature of the issue, emphasizing the conflicting interpretations of whether villas and twin houses qualify as "buildings" within the residential complex definition. The lack of clarity in previous decisions prompts the need for a detailed examination during the final hearing. Additionally, the department highlights that the appellants previously paid service tax for other constructions in the same premises, raising questions about their resistance to the current demand based on merits. Considering the circumstances, the Tribunal orders a predeposit of Rs. Five lakhs within four weeks, with compliance verification scheduled for a specific date. Upon compliance, a waiver and stay are granted for the penalty and remaining tax amounts.

In conclusion, the judgment delves into intricate legal arguments surrounding the definition of a residential complex, valuation disputes, and the requirement for predeposit. The decision underscores the need for a thorough analysis of the term "building or buildings" in the context of villas and twin houses to resolve the ongoing debate.