2011 (3) TMI 1048 - AT - Service Tax

Waiver of pre-deposit - construction of residential complexes - assessee s submission that the services are self services and the Adjudicating Authority has held that having taken the advances, the service would not fall under the category of sale of residential complexes - Held that - As it is very clear from the records that the appellants were the owners of the land and developed the properties and sold the flats to the prospective buyers by entering into different agreements. It is unconceivable that just because the appellant received advances from the prospective buyers, the sale could not be considered as sale and would fall under services. As find that the appellant has made out a prima facie case for the waiver of the pre-deposit of the amounts involved. Applications for the waiver of pre-deposit of the amounts involved are allowed and recovery thereof stayed till the disposal of the appeals.

Summary

Issues:
1. Waiver of pre-deposit of Service Tax and penalties.
2. Classification of services as "construction of residential complexes."
3. Interpretation of ownership and sale in the context of advance payments.

Issue 1: Waiver of pre-deposit of Service Tax and penalties
The appellant filed a stay petition seeking waiver of pre-deposit of Service Tax amounts along with penalties imposed by the Adjudicating Authority. The appellant argued that the services provided were self services and not falling under the category of sale of residential complexes. The appellant cited relevant circulars and orders to support their claim for waiver.

Issue 2: Classification of services as "construction of residential complexes"
The Adjudicating Authority confirmed the demand based on the appellant's provision of services related to "construction of residential complexes." The appellant contended that they were the owners of the land and developed properties, selling flats to buyers through various agreements. The Authority's view that advance payments indicated a service rather than a sale was disputed by the appellant, who argued for a prima facie case for waiver of pre-deposit.

Issue 3: Interpretation of ownership and sale in the context of advance payments
The dispute centered on whether receiving advances from buyers before completion of the purchase affected the classification of the transaction as a sale or a service. The Tribunal disagreed with the Authority's interpretation, emphasizing that the appellant's ownership of the land and development activities supported the sale of flats rather than the provision of services. The Tribunal found a prima facie case for waiver of pre-deposit, allowing the appellant's application and staying the recovery of amounts pending appeal disposal.

This judgment highlights the importance of establishing ownership and the nature of transactions to determine the applicability of tax liabilities and penalties in cases involving the construction and sale of residential complexes. The Tribunal's decision to grant the waiver of pre-deposit underscores the need for a clear prima facie case in challenging tax demands and penalties imposed by authorities.