2015 (1) TMI 419 - AT - Service Tax

Imposition of penalty - Construction of residential complex service - Held that - Appellants have deposited the entire amount of tax payable but the Commissioner in the impugned order has rejected the appeal on the ground that the appellants did not deposit the 50% penalty which was required to be deposited by them. The appellants were also required to deposit service tax also but the same has been deposited subsequent to the order passed by the Commissioner. Since the service tax itself was not payable where flats were sold to individual buyers in a residential complex under an agreement during the relevant period, we consider that the amount deposited by the appellants prima facie is sufficient for hearing the appeal. Therefore the impugned order is set aside and the matter is remanded to the learned Commissioner (A) with a request to decide the appeal without insisting on any further deposit to be made and treating the deposit of service tax made by the appellants as sufficient - Decided in favour of assessee.

Summary

Issues:
1. Liability of service tax on construction of residential complex.
2. Rejection of appeal due to non-deposit of penalty.
3. Requirement of depositing service tax for appeal.

Analysis:
- Issue 1: Liability of service tax on construction of residential complex
The appellant, engaged in the construction of a residential complex, was held liable for service tax amounting to &8377;49,78,083 for the period from 1.6.2007 to 31.3.2008. The Commissioner confirmed the demand of service tax along with interest. However, the appellant contended that they had already deposited the entire tax amount due. The Tribunal considered the fact that service tax was not payable when flats were sold to individual buyers in a residential complex under an agreement during the relevant period. Therefore, the Tribunal set aside the impugned order and remanded the matter to the Commissioner to decide the appeal without insisting on any further deposit, treating the service tax already deposited by the appellant as sufficient. The appellant was granted a reasonable opportunity to present their case before a final order was passed.

- Issue 2: Rejection of appeal due to non-deposit of penalty
The appeal was rejected by the Commissioner on the grounds that the appellant did not deposit the 50% penalty required, in addition to the service tax. It was noted that the appellants had deposited the entire tax amount but not the penalty. The Tribunal, however, considered the circumstances and ruled that the amount deposited by the appellants prima facie was sufficient for hearing the appeal. Consequently, the impugned order was set aside, and the matter was remanded for further proceedings without the insistence on the additional penalty deposit.

- Issue 3: Requirement of depositing service tax for appeal
The Tribunal emphasized that the service tax itself was not payable in the scenario where flats were sold to individual buyers in a residential complex under an agreement during the relevant period. Despite the subsequent deposit of service tax by the appellants, the Tribunal deemed the initial deposit as adequate for the appeal process. Therefore, the Commissioner was instructed to proceed with the appeal without requiring any further deposit, allowing the appellants a fair opportunity to present their case before a final decision was made.