2013 (10) TMI 810 - AT - Service Tax

Stay application - Demand of service tax - Construction of residential complex - Held that - applicant disclosed that the applicant engaged the contractor for construction of the flats. The facts of the case as narrated in the impugned order seem to have not been placed before the authority will be examined at the time of appeal hearing. The applicability of the Board circular would depend on the facts of the case after examining in detail with agreement. Prima facie, we find that it is not a case for waiver of entire amount of tax along with interest and penalty - Prima facie case not in favour of assessee - Stay granted partly.

Summary

Issues involved: Tax demand on construction of residential complex; Tax demand on management, maintenance, and repair services.

Analysis:

1. Tax demand on construction of residential complex:
The applicant, engaged in constructing a residential complex, faced a tax demand of Rs.93,75,351 for the period 16.6.2005 to 31.3.2009. The demand was categorized into construction of residential complex and management, maintenance, and repair services. The applicant argued that the demand on construction services was not sustainable due to limitation and merit issues. It was highlighted that a refund claim had been allowed by the Commissioner (Appeals) for a previous period, indicating the Department's awareness of the applicant's activities. The applicant relied on a Board Circular to support their position, emphasizing that the activities were covered by the circular, and the refund claim had not been challenged by the Revenue.

2. Tax demand on management, maintenance, and repair services:
Regarding the tax demand on management, maintenance, and repair services, the applicant contended that after completing construction, maintenance charges were collected from flat owners, and maintenance activities were later handed over to the flat owners' association. Citing a Tribunal decision, the applicant argued that the demand was not sustainable as the amounts collected were reimbursement of expenditure, not consideration for services. The Revenue, however, argued that the applicant was the de facto contractor, engaging in construction activities with individual customers before entering into agreements for construction and sale. The Revenue asserted that the Board's circular applied when a landowner engaged a contractor, which was not the case here. The Revenue also claimed that the reimbursable expenses were not claimed by the applicant, distinguishing this case from the Tribunal decision.

3. Judgment and Order:
After hearing both parties and reviewing the records, the Tribunal found merit in the Revenue's submissions regarding the applicant's activities as a de facto contractor. However, discrepancies in the facts presented to the authority were noted, and a detailed examination was deemed necessary during the appeal hearing. The Tribunal directed the applicant to deposit Rs.18,00,000 within eight weeks, with the balance dues predeposit waived and recovery stayed during the appeal. The decision was based on the overall facts and circumstances of the case, indicating a partial acceptance of the Revenue's arguments while allowing further examination of the case details during the appeal process.