2019 (12) TMI 1170 - AT - Service Tax

Classification of services - works contract services or not - agreement/ sale deed for sale of undivided portion of the land together with the semi finished portion of the flat - agreement for construction with their customers after sale - HELD THAT - There is no dispute that the show cause notice demanded service tax only on the amounts received after sale has been completed. Therefore, the amounts received towards sale deed were supposed not to have been included in the demand. However, prima facie, looking at the annexure to the SCN and the table presented before us by the learned CA as well as the reply to RTI query received by him, it does appear that sale deed value has been included while computing the demand and confirming it. Since the dispute is only regarding the computation of the demand and not on any specific point of law, it is a fit case to be remanded to the original authority to recalculate the demand after excluding the sale deed value - appeal allowed by way of remand.

Summary

Issues:
1. Classification of construction services under works contract services.
2. Dispute regarding demand for service tax on amounts received before and after sale completion.
3. Incorrect recording of demand by the original authority.
4. Request for remand based on lack of deduction of sale deed value.

Analysis:
1. The appeal concerned the classification of construction services provided by the appellant under works contract services. The appellant entered into agreements for the sale of undivided portions of land and semi-finished flats, followed by agreements for construction with customers. The show cause notice alleged that services rendered post-sale deed execution were classifiable under works contract services. The appellant did not dispute this assertion but contested the demand for service tax on amounts received before and after sale completion.

2. The original authority recorded that no service tax was demanded on the sale deed value, and the demand was confined to the construction agreement post-sale deed execution. However, the appellant argued that the demand was confirmed on the entire gross amount received, including the sale deed value. Discrepancies were highlighted between the appellant's calculations and the show cause notice, indicating the inclusion of sale deed value in the demand calculation.

3. The appellant sought clarification through an RTI query regarding the deduction of the sale deed value by the original authority. The response indicated a lack of separate mention or deduction of the sale deed value, suggesting an oversight in the computation of the demand. The appellate tribunal acknowledged the dispute over the demand calculation and decided to remand the matter to the original authority for recalculation after excluding the sale deed value.

4. The tribunal, after considering arguments from both sides and examining the records, concluded that the dispute centered on the computation of the demand rather than a legal point. Consequently, the appeal was allowed by way of remand to ensure accurate calculation of the demand by deducting the sale deed value, which was not explicitly part of the show cause notice. The decision aimed to address the discrepancy in the demand calculation and provide a fair resolution to the issue raised by the appellant.

This detailed analysis of the judgment from the Appellate Tribunal CESTAT HYDERABAD highlights the key issues, arguments presented, discrepancies in demand calculation, and the decision to remand the matter for recalculating the demand after excluding the sale deed value.