2019 (6) TMI 866 - AT - Service Tax

Valuation - inclusion of value of free supply of steels/cement was not being included by them in their gross amount charged for payment of service tax - benefit of N/N. 15/2004-ST dated 10/09/2004 and 01/2006-ST dated 01/03/2006 - Extended period of limitation - HELD THAT - The issue has been settled in favor of the appellant by the decision of this Tribunal in case of M/S BHAYANA BUILDERS (P) LTD. OTHERS VERSUS CST, DELHI OTHERS. 2013 (9) TMI 294 - CESTAT NEW DELHI (LB) where it was held that Value of free supplies by service recipient do not comprise the gross amount charged under Notification No. 15/2004-ST, including the Explanation thereto as introduced by Notification No. 4/2005-ST. - demand set aside. Construction building for Jaipur National University and Bhagwan Mahavir Cancer Hospital - HELD THAT - It is not in dispute that they are the educational institute recognized by the Government and is also charitable institute for health care services. Thus, the appellants have rightly placed reliance on the CBEC Circular dated 17/09/2004 which exempted the institute established for educational, religious charitable and philanthropic purposes - Reliance placed in the case of Banna Ram Choudhary vs. CCE 2017 (9) TMI 86 - CESTAT NEW DELHI - demand set aside. Construction of individual houses - HELD THAT - These houses have been built by the individuals, namely, Shri C Sharma, Uttam Chan Jain, Dr. Hemawati Gupta (Bansal) etc., for their personal use which is clearly excluded from the definition of Construction of Residential Complex Service under the Act - Reliance placed in the case of Macro Marvel Project Ltd. vs CCE 2008 (9) TMI 80 - CESTAT, CHENNAI - demand set aside. Time Limitation - HELD THAT - The appellant was under bonafide belief of non levy of service tax under the Act, as per the CBEC Circular dated 17/09/2004. There was no malafide intention to evade the payment of tax and hence the extended period is not invokable. Appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Demand of service tax along with interest and penalty under Sections 76 and 78 of the Finance Act for the period 2005-06 to 2008-09.
2. Inclusion of value of free supply of material in gross amount charged for service tax payment.
3. Construction of buildings for specific institutions and clients without paying service tax.
4. Applicability of abatement under Notification No. 15/2004-ST and 01/2006-ST.
5. Claim of exemption for educational and charitable institutions.
6. Construction of individual houses and liability for service tax.
7. Invocation of extended period for demand of service tax.
8. Sustainability of the order passed by the Adjudicating Authority.

Analysis:
1. The appeal challenged a demand for service tax, interest, and penalty for the period 2005-06 to 2008-09. The order was based on a Show Cause Notice alleging non-inclusion of the value of free supplies in the gross amount charged for service tax payment.

2. The appellant was engaged in providing various services and faced allegations of not including the value of free supplies in their service tax calculations. The appellant argued that the issue was settled in their favor by a previous Tribunal decision.

3. Construction of buildings for specific institutions and clients without paying service tax was also contested. The appellant relied on Circulars and case laws to support their exemption claim for educational and charitable institutions.

4. The abatement under Notification No. 15/2004-ST and 01/2006-ST was a crucial aspect of the case. The Tribunal found in favor of the appellant based on previous decisions and Circulars exempting certain institutions from service tax.

5. The construction of individual houses raised questions about liability for service tax. The Tribunal concluded that houses built for personal use by individuals were excluded from the definition of Construction of Residential Complex Service under the Act.

6. The appellant argued that the demand was barred by limitation as they believed in good faith that their construction work was not subject to service tax. The Tribunal agreed that there was no malafide intention to evade tax, thereby ruling out the invocation of the extended period.

7. Ultimately, the Tribunal set aside the impugned order on both merits and limitation grounds, granting the appellant consequential benefits as per the law. The decision was pronounced on 17.06.2019.