2015 (7) TMI 349 - AT - Service Tax

Construction of residential complex - Penalty u/s 76, 77 & 78 - Held that - During the relevant period, if the builder and developer constructed a residential complex himself and sell the flats to individuals, such activity is not liable for tax. However appellant has paid the tax. In my opinion, this itself is sufficient to take a view that the original authority s decision not to impose penalty is appropriate. However in the case of CST, Bangalore Vs. Motor World 2012 (6) TMI 69 - KARNATAKA HIGH COURT , Hon ble High Court has taken a view that the revision/review power under Section 84 of Finance Act, 1994 cannot be exercised to review the discretion used by the original authority for waiving the penalty. This decision is applicable to the facts of this case also - Decided in favour of assessee.

Summary

Issues involved:
Imposition of penalty under Sections 76, 77 & 78 of Finance Act, 1994 on a builder and developer for non-payment of service tax during the year 2006.

Analysis:
The Appellate Tribunal CESTAT BANGALORE addressed the issue of penalty imposition on a builder and developer for non-payment of service tax during 2006. The original adjudicating authority dropped the penalty invoking Section 80 of the Finance Act, 1994. However, the Commissioner, utilizing powers under Section 84 of the same Act, reviewed and imposed penalties under Sections 76, 77 & 78. The appeal challenged this decision.

During the relevant period, the Tribunal noted that if a builder and developer constructs a residential complex and sells flats to individuals, such activity is not taxable. Despite this, the appellant had paid the tax. The Tribunal opined that this act alone justified the original authority's decision to not impose a penalty. Citing the case of CST, Bangalore Vs. Motor World, the Tribunal highlighted that the revision power under Section 84 cannot be used to review the original authority's discretion in waiving the penalty. Consequently, the appeal was allowed, granting any consequential relief to the appellant.

In conclusion, the Tribunal's judgment focused on the applicability of penalty imposition under the Finance Act, 1994 on a builder and developer for service tax non-payment in 2006. By analyzing relevant legal provisions and precedents, the Tribunal ruled in favor of the appellant, emphasizing the original authority's discretion in penalty waiver and the limitations on the Commissioner's review powers under Section 84.