2019 (4) TMI 1690 - AT - Service Tax

Refund of service tax paid - transaction amounting to sale or service - section 11 (B)(2)(e) of the Central Excise Act, 1944 made applicable to Chapter V of Finance Act, 1994 - HELD THAT - The appellant is not liable to pay service tax as he has purchased the completed flat and not a flat under construction. The authority is directed to refund the service tax paid through the builder - refund allowed - appeal allowed - decided in favor of appellant.

Summary

Issues:
Refund of Service Tax on purchasing a ready flat - Applicability of Service Tax on sale of immovable property

Analysis:
The appellant filed an appeal against the rejection of a refund claim for Service Tax paid on purchasing a flat. The appellant had bought a flat and made full payment, including Service Tax. The appellant later realized that the purchase of a constructed flat might not be liable for Service Tax as the sale of immovable property was excluded from the definition of service. The appellant filed a refund claim supported by legal submissions and relevant judgments. However, the Assistant Commissioner and the Commissioner (Appeals) rejected the refund claim. The appellant argued that the purchase of the flat did not amount to rendition of service but was a sale of immovable property, thus not subject to Service Tax. The appellant relied on judgments emphasizing that composite contracts for construction of complexes should not be subjected to Service Tax. The Tribunal held that the appellant was not liable to pay Service Tax as the flat purchased was completed and not under construction. The authority was directed to refund the Service Tax paid through the builder, and the appeal was allowed.

The key issue in this case was whether the purchase of a ready flat constituted a taxable service under the definition provided in the Finance Act, 1994. The appellant contended that the purchase of the flat was a sale of immovable property and did not satisfy the criteria for attracting Service Tax. The appellant's argument was supported by legal submissions and judgments highlighting that composite contracts for construction projects should not be subject to Service Tax. The Tribunal agreed with the appellant's position, emphasizing that the purchase of the completed flat did not amount to a taxable service, leading to the allowance of the appeal and the direction for refund of the Service Tax paid.

The judgment focused on the interpretation of the definition of service under the Finance Act, 1994 in the context of the purchase of a flat. The Tribunal analyzed the legal submissions, relevant judgments, and the nature of the transaction to determine whether the appellant was liable to pay Service Tax on the purchase of the flat. By considering the specific facts of the case and the exclusion of the sale of immovable property from the definition of service, the Tribunal concluded that the appellant was not subject to Service Tax. The decision was based on the understanding that the purchase of a completed flat did not involve the rendition of a taxable service, leading to the allowance of the appeal and the direction for refund of the Service Tax amount paid.