2013 (11) TMI 1071 - AT - Service Tax

Stay application - Construction of residential flats - Payment of fees - Held that - Appellant was obliged to discharge property tax, water and electricity tariff etc. on behalf of the flat owners and the appellant has undertaken these activities in the capacity of an executor. Therefore, the appellant has not rendered any management, maintenance or repair services - In view of provisions of Section 5 of the Maharashtra Ownership Flats (Regulation) Act, 1963, prima facie case is in favour of assessee - Stay granted.

Summary

Issues: Service tax demand on construction of residential flats under Maharashtra Ownership Flat (Regulation) Act, 1963.

Analysis:
1. Issue of Service Tax Demand: The appellant, engaged in constructing residential flats, collected development and maintenance fees from flat buyers. The department contended that these activities fall under "Management, Maintenance, and repair services," leading to a service tax demand of Rs.25,49,213, including GTA service charges. The appellant argued that the collection was under Section 5 of the Maharashtra Ownership Flat (Regulation) Act, 1963, to discharge property tax, water, and electricity expenses on behalf of flat owners, not as management services. The appellant sought a stay, citing a similar case where the Tribunal granted a stay.

2. Arguments by the Appellant: The appellant maintained that they acted as an executor under the Act, not providing management, maintenance, or repair services. They highlighted that individual service providers had already paid service tax for specific services like cleaning and lift maintenance. Relying on a previous Tribunal decision in the case of Lake View Developers, the appellant sought a waiver from the service tax demand.

3. Revenue's Position: The Deputy Commissioner for the Revenue upheld the adjudicating authority's findings, supporting the service tax demand on the appellant for the activities related to the construction and sale of residential flats.

4. Tribunal's Decision: After reviewing the submissions and examining Section 5 of the Maharashtra Ownership Flat (Regulation) Act, 1963, the Tribunal found merit in the appellant's arguments. The Tribunal granted an unconditional waiver from pre-deposit of the dues imposed on the appellant and stayed the recovery during the appeal process. This decision was based on the appellant's demonstration that they were obligated to handle certain expenses on behalf of flat owners under the Act, not providing specific management, maintenance, or repair services as contended by the Revenue.

In conclusion, the Tribunal ruled in favor of the appellant, granting a waiver from the service tax demand and staying the recovery process, emphasizing the distinction between the appellant's obligations under the Maharashtra Ownership Flat (Regulation) Act, 1963, and the provision of management, maintenance, or repair services subject to service tax.