2017 (5) TMI 1029 - AT - Service Tax

Valuation - Management, maintenance and repair service - the appellants did maintain the residential complex in which there were various occupants - non-payment of service tax during the period 16.06.2005 to 30.09.2009 - The Revenue entertained a view that the appellants have rendered service of management maintenance and repair of the said dwelling units/ complex and are liable to pay service tax - Held that - the appellant did provide taxable service to various occupants of the complex under tax entry of management, maintenance and repair service which specifically talks about management and maintenance of immovable properties. Regarding the valuation of such taxable service, A portion of the building is still under the control/maintenance of the appellants themselves. We find that while tax liability of the appellant has to be upheld, the method of arriving at the tax value has to be in terms of Rule 3 (b). For applying the provision of Rule 3 (b), the stipulation is that the value shall not be less than the cost of provision of such taxable service. The equal money value has to be arrived at based on the documents and supporting evidence to be submitted by the appellant. For applying the provision of Rule 3 (b), the stipulation is that the value shall not be less than the cost of provision of such taxable service. The equal money value has to be arrived at based on the documents and supporting evidence to be submitted by the appellant. In case, no separate supporting evidences are available, a value, not below minimum benchmark value of cost of provision of such taxable service should be arrived at - we remand the matter to the Original Authority, who will examine the evidences to be submitted by the appellant to arrive at a proper value - appeal allowed by way of remand.

Summary

Issues: Dispute regarding non-payment of service tax by the appellant under the category of management, maintenance, and repair service in relation to a residential complex project.

Analysis:
1. Issue of Taxable Service and Valuation: The appellant, engaged in constructing a residential complex, undertook maintenance work for the project premises, including already sold dwelling units. The Revenue contended that this constituted a taxable service under management, maintenance, and repair. The dispute centered on the valuation of this service, as no direct consideration was received from the occupants. The Revenue relied on valuation rules to determine an equivalent consideration. The Tribunal acknowledged the taxable service but found the notional interest adopted by the Revenue as an improper basis for valuation. The matter was remanded to the Original Authority to determine the value based on the cost of provision of the service, directing the appellant to provide supporting evidence.

2. Contention on Time Bar and Penalties: The appellant argued that due to not receiving consideration from the occupants, they believed there was no taxable service during the ongoing project, pleading for setting aside the demand on grounds of time bar and penalties imposed. The Revenue maintained that the appellant provided taxable service and did not fulfill tax obligations, supporting the penalties. The Tribunal, while upholding the tax liability, remanded the case to reevaluate the quantum of tax liability. The plea on time bar and liability to penalties was directed to be reviewed by the Original Authority afresh.

3. Conclusion: The Tribunal recognized the taxable service provided by the appellant in maintaining the residential complex but found the method of valuation inadequate. By remanding the matter for proper valuation determination, the Tribunal addressed the issues of time bar and penalties, ensuring a comprehensive review by the Original Authority. The appeal was disposed of with instructions for a reassessment of tax liability and related penalties, emphasizing the need for a correct valuation methodology based on the cost of provision of the taxable service.