2014 (10) TMI 770 - AT - Service Tax

Waiver of pre deposit - Construction of Residential Complex Service - Held that - Applicants are engaged in the construction of a project under the name of Golden Enclave of multistoried residential complex comprising of 36 flats and 30 individual villas having common area and common amenities. Prima facie, we are unable to accept the contention of the Ld. Counsel that it is individual villas or single houses or single apartment. We find from the impugned order that the ownership of the property continued to be with the applicant till the construction is completed. It is seen from the impugned order that the applicant had not provided documents viz., copy of the plan and other details to the department and prima facie we are unable to accept the demand is barred by limitation - Partial stay granted.

Summary

Issues:
1. Whether the construction of individual houses in a project qualifies as a residential complex for tax purposes.
2. Whether the demand for tax on the construction of individual houses is justified.
3. Whether there was suppression of facts by the applicant with the intent to evade tax.

Analysis:
1. The dispute revolved around whether the construction of 30 individual houses in a project should be considered part of a residential complex. The applicants argued that the houses should not fall under the purview of a residential complex, citing a Construction Agreement with buyers. However, the Revenue contended that the houses were part of a common area within a gated community. The Tribunal found that the project, named 'Golden Enclave,' consisted of both multi-storied flats and individual villas with shared amenities, leading them to conclude that the houses did not qualify as individual units but were part of a larger residential complex.

2. The Revenue had demanded tax of &8377; 15,85,865 under 'Works Contract Services' for the construction of the individual houses. The Commissioner (Appeals) upheld this demand. The applicants argued that the demand was time-barred as show cause notices were issued earlier for the flats in the same project, indicating the department's awareness of the construction. The Tribunal, however, found that the demand was not barred by limitation, as the applicants failed to provide necessary documents to the department, and there was no evidence of suppression of facts to evade tax.

3. The Revenue alleged that the applicants suppressed facts to evade tax by not providing documents related to the construction of individual houses. The Tribunal noted that the applicants did not furnish essential documents like the construction plan to the department, leading them to conclude that there was a lack of cooperation in providing necessary information. Despite this, the Tribunal directed the applicants to deposit &8377; 4,50,000 within eight weeks, with the balance of tax, interest, and penalty being waived upon compliance. The recovery of the remaining amount was stayed pending the appeal's disposal, with a reporting deadline set for September 1, 2014.