2019 (6) TMI 1711 - AT - Service Tax

Recovery of short-paid service tax under works contract service - inclusion of value shown in the sale-deed and also other reimbursable charges in the nature of registration fee etc. - HELD THAT - The matter requires to be reconsidered as to whether the amounts included in the sale-deed value of immovable property would be subject to levy of service tax under construction services. The computation in the order-in-original has to be looked into on the basis of the sale-deed executed by the appellant with customer which includes the semi-finished flat. Other charges like registration fee, VAT, etc. needless to say will not be subject to service tax as being reimbursable expenses. For the period prior to 01.07.2010, the learned consultant submitted that in the appellant s own case GRANDEUR HOMES PVT. LTD., ALPINE ESTATES, PARAMOUNT BUILDERS, MODI MODI CONSTRUCTIONS, GREENWOOD ESTATES, SRI KRISHNA VENTURES PVT. LTD., KRISHNA DEVELOPERS VERSUS CCE, C ST, HYDERABAD II, HYDERABAD SERVICE TAX 2019 (2) TMI 772 - CESTAT HYDERABAD for the earlier period, the Tribunal had held that The self same issue was considered by the Bench in detailed in the case of M/s Mehta Modi Homes and-as also in the case of M/s Kolla Developers Builders and held that prior to 01.07.2010 service tax liability will not arise on the builders. We do not find any reason to deviate from such a view already taken on the issue. Accordingly, we hold that all the impugned orders are unsustainable and liable to be set aside and we do so. The impugned order is modified to the extent of setting aside the demand prior to 01.07.2010 and remanding the matter after 01.07.2010 to the adjudicating authority for reconsideration. The adjudicating authority in such remand proceedings shall also reconsider the issue of penalty. Appeal is partly allowed and partly remanded.

Summary

Issues:
1. Demand of short-paid service tax under works contract service.
2. Taxability of amounts included in the sale-deed value of immovable property under construction services.
3. Applicability of service tax liability on builders for services provided before 01.07.2010.

Issue 1:
The appellants were issued a show-cause notice proposing to demand short-paid service tax under works contract service. The appellant's consultant argued that they had discharged the entire service tax liability as per the agreement of construction but objected to the inclusion of the value shown in the sale-deed and other reimbursable charges in the notice. The department contended that the amount in the sale-deed post 01.07.2010 should be taxable based on an amendment in the definition of residential complex service. The Commissioner's finding indicated that no service tax was demanded on the sale-deed value in light of a Board Circular. The Tribunal held that the matter needed reconsideration to determine if amounts in the sale-deed value of immovable property were subject to service tax under construction services, directing a review of the computation based on the sale-deed. The Tribunal partially allowed the appeal and remanded the matter for further consideration, including the issue of penalty.

Issue 2:
Regarding the period before 01.07.2010, the Tribunal referred to a previous case where it was held that service tax liability would not arise on builders for services provided before this date. Consequently, the Tribunal modified the impugned order to set aside the demand prior to 01.07.2010 and remanded the matter post that date for reconsideration by the adjudicating authority. The authority was instructed to also review the issue of penalty during the remand proceedings. The appeal was partly allowed and partly remanded with consequential relief, if any.

This detailed analysis of the judgment covers the issues of demand for short-paid service tax under works contract service, the taxability of amounts in the sale-deed value of immovable property under construction services, and the applicability of service tax liability on builders for services provided before and after 01.07.2010. The Tribunal's decision to remand the matter for further consideration and review of penalty issues provides clarity on the legal aspects involved in the case.