2013 (7) TMI 818 - AT - Service Tax

Construction of residential flats - collection and payment of outgoing expenses including any municipal local taxes, property tax, water charges, electric charges, revenue assessment or interest or any mandatory charges - Development and maintenance fees collected - Revenue held that activity undertaken is under category of Management, maintenance and repair services - Held that - According to Section 5 of Maharashtra Ownership of Flats (Regulation) Act, 1963, appellant was obliged to discharge property tax, water and electricity tariff etc. on behalf of the flat owners and the appellant has undertaken these activity in the capacity of an executor - Therefore, the appellant has not rendered any management, maintenance or repair services - unconditional waiver from pre-deposit of the dues adjudged against the appellant granted - Decided in favour of assessee.

Summary

Issues:
1. Service Tax liability on collection of development and maintenance fees by a construction company under Section 5 of Maharashtra Ownership flats (Regulation) Act, 1963.

Analysis:
The appeal and stay application arose from an Order-in-Original passed by the Commissioner of Central Excise, Thane-I, confirming a Service Tax demand on M/s Hiranandani Constructions Pvt. Ltd., Mumbai, for collecting development and maintenance fees from flat buyers. The department viewed this activity as falling under 'Management, maintenance and repair services' as per Section 5 of the mentioned Act, leading to a demand of Rs. 10,44,855/-, including GTA services amounting to Rs. 9,492/-. The appellant argued that they collected the amount to discharge property tax, water, and electricity charges on behalf of flat owners, acting as an executor and not providing management, maintenance, or repair services. The appellant cited a previous Tribunal decision where stay was granted in a similar matter. The Revenue, represented by the learned Commissioner (AR), supported the adjudicating authority's findings.

Upon reviewing the submissions and Section 5 of the Maharashtra Ownership Flat (Regulation) Act, 1963, the Tribunal found in favor of the appellant. The Tribunal concluded that the appellant had a strong case for waiver from pre-deposit. Consequently, the Tribunal granted unconditional waiver from pre-deposit of the dues adjudged against the appellant and stayed the recovery during the pendency of the appeal. The judgment was dictated and pronounced in court by the Tribunal.