2018 (12) TMI 1243 - AT - Service Tax

Construction of complex services - Demand of ₹ 10,91,396/- on the amounts received over and above the sale deed value for rendering construction of complex services prior to 01.07.2010 - demand alongwith interest and penalties - Held that - An identical issue has been decided by the Principal Bench in Delhi in the case of UB Constructions Pvt Ltd 2014 (1) TMI 402 - CESTAT NEW DELHI held that amount received prior to 01.07.2010 over and above the sale deed cannot be taxed under construction of commercial complex services - demand set aside. Demand of ₹ 26,73,714/- for the period after 01.07.2010 on the amounts received over and above the sale deed - Held that - The explanation clause included in the definition of construction of complex services will cover the said amount and appellant is liable to pay service tax. It is brought to notice that they had paid the entire service tax liability along with interest - since, the issue involved in this case was being litigated and appellant would have entertained a bonafide belief that tax liability need not be discharged, the provisions of Sec.73(3) could be made applicable to the situation in hand and penalties need to be set aside - demand set aside. Demand of ₹ 1,73,17,823/- - Held that - The issue involved in this case is regarding the amounts notionally attributed as consideration to the area shared to the land owner for the construction undertaken on development basis - identical issue has been decided by this Bench in the case of Vasantha Green Projects and Om Sree Builders & Developers and others 2018 (5) TMI 889 - CESTAT HYDERABAD , where it was held that the amount attributable to the consideration received by appellant in the form of land rights from the land owner stands included in the value of villas sold to prospective customer which would mean that whatever consideration was received by the appellant in form of developmental right was considered in assessable value - demand set aside. Appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Tax liability for construction of complex services for the period 2008-09 to 2012-13.
2. Demand raised on amounts received over and above the sale deed value.
3. Valuation of services rendered and taxability of the amount notionally considered as received from landowners.

Analysis:

I. Tax liability for construction of complex services for the period 2008-09 to 2012-13:
The appellant was issued a show cause notice for demand on amounts notionally arrived at for consideration for area shared with the landowner in a tripartite agreement. The demands were confirmed along with interest and penalties in the Order-in-Original. The Tribunal held that for the period prior to 07.07.2010, the demand of &8377; 10,91,396/- cannot be taxed under construction of commercial complex services. Citing precedent, the Tribunal set aside this demand, leading to the dismissal of interest and penalties.

II. Demand raised on amounts received over and above the sale deed value:
Regarding the demand of &8377; 26,73,714/- for the period after 01.07.2010, the Tribunal found the appellant liable to pay service tax as per the explanation clause in the definition of construction of complex services. However, since the appellant had already paid the entire service tax liability along with interest before the show cause notice, the penalties were set aside under Sec.73(3) due to a bonafide belief that tax liability need not be discharged.

III. Valuation of services rendered and taxability of the amount notionally considered as received from landowners:
The issue revolved around &8377; 1,73,17,823/- notionally attributed as consideration to the area shared with landowners for construction undertaken on a development basis. The Tribunal noted that the appellant had included the value of the land in addition to the value charged to flat owners and had paid service tax on that. Relying on precedents, the Tribunal found the demand on this point unsustainable, setting aside the demands, interest, and penalties.

In conclusion, the Tribunal disposed of the appeal by setting aside the demands, interest, and penalties based on the detailed analysis and legal interpretations provided for each issue raised in the case.

Judges: Mr. M.V. Ravindran, Member (Judicial) and Mr. P.V. Subba Rao, Member (Technical)