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2017 (8) TMI 519 - AT - Service TaxConstruction of residential complex - demand for the period 16.6.2005 to 31.7.2007 - Held that - major part of the period for which demand is raised is prior to 1.6.2007 - the works contract service are not subject to levy to service tax prior to 1.6.2007 - the demand for the period prior to 1.6.2007 in respect of demand made for construction of residential complex service is not sustainable. With regard to the period after 1.6.2007 to 31.7.2007, the services were not covered by section 65(105)(zzzh) during the period prior to 1.7.2010. The appellant has produced sample copy of the agreement which shows that the possession of the constructed residential unit was handed over after completion of construction and completion of the payment. Therefore, the demand for the period 1.6.2007 to 31.7.2007 is also unsustainable. Maintenance and repair services on the corpus fund collected by the appellants - case of appellant is that this is only a deposit and not received as charges for any services rendered - Held that - the corpus fund, even according to the department is not collected for rendering any service of maintenance. It is in the form of a deposit. We, therefore, are of the opinion that the demand of service tax on such deposit under the category of Management, Maintenance and Repair Service is unsustainable. However, this fact needs verification as to how the corpus fund has been put into use - matter requires verification. Appeal allowed in part and part matter on remand.
Issues:
1. Service tax liability for construction of residential complex. 2. Taxability of corpus fund and maintenance charges. 3. Collection of maintenance charges for specific projects. Analysis: Issue 1: Service tax liability for construction of residential complex The appellant, engaged in construction, was issued a show cause notice for non-payment of service tax. The original authority confirmed a demand for service tax, interest, and penalties. The appellant contested the demand, arguing that the service rendered was not taxable as works contract service. Referring to legal precedents, the appellant claimed that the service was not taxable before a certain date. The Tribunal held that for the period before a specific date, the demand was not sustainable based on the Supreme Court judgment. For the subsequent period, the Tribunal applied a previous case decision and ruled that the demand was also not sustainable. The Tribunal noted that even though the appellant had collected service tax from some parties, it was paid to the Government with interest. Therefore, the demand for the specified period was set aside. Issue 2: Taxability of corpus fund and maintenance charges The appellant argued that the corpus fund collected was a deposit, not a service charge, and should not be subject to service tax. The Tribunal agreed, stating that the demand for service tax on the corpus fund under the category of Management, Maintenance, and Repair Service was unsustainable. However, the Tribunal highlighted the need for verification on how the corpus fund was utilized. Additionally, an amount related to maintenance charges for a specific project was contested by the appellant, and the Tribunal acknowledged this without contest. Issue 3: Collection of maintenance charges for specific projects An amount collected as maintenance charges for a particular project was admitted by the appellant and not contested. The Tribunal acknowledged this admission. In conclusion, the Tribunal partly allowed the appeal by setting aside the demand for service tax on the construction of residential complex. The issues related to the corpus fund and maintenance charges were deemed to require further verification and were remanded to the adjudicating authority for reconsideration. The appeal was partly allowed and partly remanded for detailed examination of specific issues.
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