2018 (7) TMI 1289 - AT - Service Tax

Valuation - Construction of Residential Complex Services - inclusion of amount charged from customers in respect of parking space in assessable value - Held that - In the definition of Residential Complex Service , parking space specifically stands included in Serial No.(iii) of the definition. If that be so, it has to be held that parking space is a part and parcel of the services falling under the category of Residential Complex Services - the new definition of Preferential Location Services specifically excludes the parking place which means that parking services do not get covered by the new definition - the consideration received by the appellant from their buyer on account of sale of parking space is a part and parcel of the services falling under the category of Residential Complex Construction Services and its value has to be added in the value of above services Extended period of Limitation - Held that - The Service Tax law, during the relevant period, was still at the nascent stage and was not clear - Inasmuch as admittedly the parking area is a separate area from flats sold by the appellant, there can be bona fide belief on the part of the assessee that such parking charges are not includible in the value of the services falling under Residential Complex Construction Services . There is also no positive evidence indicating any mala fide on part of the appellant - extended period cannot be invoked. Appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Whether the parking charges are integral to the construction of a residential complex and should be included in the taxable value of services?
2. Whether the demand of duty in respect of parking space is justified under the category of "Residential Complex Service"?
3. Whether the demand is time-barred due to lack of evidence reflecting mala fide intentions by the appellant?

Analysis:
1. The appellant, engaged in providing "Construction of Residential Complex Services," did not include parking charges while discharging Service Tax liability. The Revenue contended that parking space is integral to the residential complex and should be included in the service value. The Lower Authorities confirmed a demand of ?7,86,972 along with interest and penalty. The appellant argued that parking charges are not part of construction activities and should not be included in the taxable value. The Tribunal found parking space specifically included in the definition of "Residential Complex Service," hence part of the taxable services.

2. The appellant claimed that a new category, "Preferential Location or External or Internal Development of Complex," introduced in 2010 excluded parking space from taxable services. However, the Tribunal held that parking space being part of the "Residential Complex Service" definition, its value must be added to the services. The Revenue's reasoning, based on the definition of services, was upheld, rejecting the appellant's argument regarding the new category.

3. The demand was challenged on grounds of time-bar, citing lack of evidence showing mala fide intentions by the appellant. The Tribunal noted the unclear Service Tax law during the relevant period and the absence of evidence indicating mala fide actions. Referring to a Board Circular and the separate nature of parking areas, the Tribunal set aside the order on limitation, allowing the appeal on this ground.

In conclusion, the Tribunal upheld the inclusion of parking charges in the taxable value of services under "Residential Complex Service" and set aside the order on limitation due to lack of evidence of mala fide intentions by the appellant.