2018 (2) TMI 1024 - AT - Service Tax

Business of selling residential houses and apartments - levy of service tax - case of appellant is that they are contesting the issue only on the confirmation of the demands against them of ₹ 8.26 lakhs approximately on the ground that the said demand has been confirmed for the period post December 2012 for which no show-cause notices has been issued. Held that - it is found that demand of approximately ₹ 7.48 lakhs has not raised in the show-cause notice issued to the appellant - the demand of approximately ₹ 7.48 lakhs which arises in respect of these two agreements entered post December 2012, are unsustainable as there is no demands which have been raised in the show-cause notice. To that extent the assessee/appellants appeal is allowed. Demand of ₹ 1.08 lakhs for the period in question up to December 2012 - interest - penalty - Held that - the said demand is liable to be upheld as there is dispute that the tax liability needs to be discharged on the said amounts - Since the issue involved in these cases is regarding the interpretation of the provisions of Section 65(105). Hence no penalty is required to be discharged but the interest liability on the said amount of ₹ 1.08 lakhs needs to be discharged by the main appellant - interest upheld - penalty set aside. Appeal allowed in part.

Summary

Issues:
Appeal against order-in-original dated 13/01/2016 challenging service tax liability for selling residential properties; Confirmation of demands for service tax, interest, and penalty; Interpretation of provisions regarding taxable services and liability for service tax on construction services.

Analysis:
1. The appeals were filed against the order-in-original dated 13/01/2016, challenging the service tax liability for selling residential properties. The appellant, engaged in selling houses and apartments, entered into development agreements-cum-general power of attorney with landowners for six projects from 2010 to 2013. The respondent believed builders were not liable for service tax and did not collect it from customers. However, demands were raised for short-paid tax liability, leading to a show-cause notice for service tax of approximately &8377; 23.55 lakhs for the period 2010-11 to 2012-13. The adjudicating authority confirmed demands of approximately &8377; 8.26 lakhs and dropped demands of &8377; 13.29 lakhs.

2. The appellant contested the confirmation of demands post-December 2012, arguing no show-cause notice was issued for that period. The Revenue defended the demands, citing legislative intent and applicability of service tax provisions. The appellant contended that agreements entered pre-July 2010 were not taxable, relying on CBEC circulars and judicial precedents. The appellant's appeal was allowed in part, setting aside demands not covered in the show-cause notice.

3. The Revenue's appeal was based on the interpretation of taxable services and liability for service tax on construction services. The adjudicating authority's findings were supported by Tribunal decisions and CBEC circulars. The appellant argued for non-taxability of agreements pre-July 2010, citing legal precedents and prospective application of amendments. The Tribunal upheld the adjudicating authority's decision, rejecting the Revenue's appeal.

4. In conclusion, the appellant's appeal was partly allowed, setting aside demands not covered in the show-cause notice. The Revenue's appeal was rejected, upholding the adjudicating authority's decision on taxable services and liability for service tax on construction services.

Judgment:
The Tribunal allowed the appellant's appeal in part, rejecting the Revenue's appeal, and upheld the adjudicating authority's decision on taxable services and liability for service tax on construction services.