2021 (6) TMI 921 - AT - Service Tax

Levy of Service Tax - construction of residential complex services for the period October, 2010 to March, 2014 - advance maintenance charges - club membership charges - amount received on account of cancellation of booking for the period October, 2010 to March, 2012. Construction of residential complex services for the period October, 2010 to March, 2014 - HELD THAT - It is not in dispute that the constitutional validity of Service Tax on construction of residential complex service has been challenged before the Hon'ble Bombay High Court and the Hon'ble Bombay High Court vide its judgment reported as MAHARASHTRA CHAMBER OF HOUSING INDUSTRY AND ANOTHER VERSUS UNION OF INDIA AND OTHERS 2012 (1) TMI 98 - BOMBAY HIGH COURT upheld its validity. Now the issue is pending before the Nine Member Bench of the Hon'ble Supreme Court - the issue is remanded to the adjudicating authority for decision on merit on the basis of outcome of the judgment to be delivered by Nine Member Bench of the Hon'ble Apex Court. Advance maintenance charges - Club membership charges - HELD THAT - It is categorically stated that they can establish before the adjudicating authority about the utilization of the said charges collected for the purpose mentioned in the respective agreement entered with the purchasers as per Maharashtra Ownership of Flats Act, 1963. Prima facie, we find force in the contention of the learned C.A. for the appellant. Therefore, to examine the evidences claimed to have been placed earlier and that would be placed as and when asked by the adjudicating authority to establish the fact of utilization of other charges as per the Act, the matter needs to be remanded to the adjudicating authority for scrutiny of the evidences. Amount received on account of cancellation of booking - period October, 2010 to March, 2012 - HELD THAT - The learned Commissioner has travelled beyond the scope of allegations labeled in the show-cause notice. There is merit in the contention of the learned AR for the Revenue. The point raised by the appellant in their reply to the show-cause notice that the amended definition of 66E(e) is not applicable to the facts of the present case, since the demand pertains to the period prior to 01.07.2012 was not considered as no specific observation in this regard has been made in the impugned order - this issue is also remanded for consideration. Appeal allowed by way of remand.

Summary

Issues Involved:
1. Levy of Service Tax on construction of residential complex services for the period October 2010 to March 2014.
2. Applicability of Service Tax on other charges, namely, advance maintenance charges, club membership charges, etc.
3. Levy of Service Tax on the amount received on account of cancellation of booking during the period October 2010 to March 2012.

Detailed Analysis:

1. Levy of Service Tax on Construction of Residential Complex Services:
The appellants challenged the constitutionality of the levy of Service Tax on construction of residential complexes. The Hon'ble Bombay High Court upheld the validity of the levy, and the matter is now pending before the Nine Member Bench of the Hon'ble Supreme Court. The Tribunal, referencing its decision in Kalpataru Ltd., decided to remand the issue to the adjudicating authority, directing them to decide based on the Supreme Court's forthcoming judgment.

2. Applicability of Service Tax on Other Charges:
The appellants argued that charges such as Township Corpus Fund, Maintenance charges, Electric Meter, Legal charges, and Club Membership charges were collected for specific purposes and should not attract Service Tax. The Hon'ble Bombay High Court's decision in Shri Krishna Chaitanya Enterprises clarified that such charges, collected under the Maharashtra Ownership of Flats Act, 1963, are not taxable services. However, the Commissioner noted that the appellants failed to provide necessary evidence to support their claim. The Tribunal found merit in the appellants' contention and remanded the issue to the adjudicating authority to scrutinize the evidence and determine if the charges were utilized as per the Act.

3. Levy of Service Tax on Cancellation of Booking:
The appellants contended that the demand for Service Tax on cancellation of bookings was based on the definition of taxable service under Section 66E(e) of the Finance Act, 1994, which came into force after 1st July 2012, whereas the demand pertained to a period before this date. The Commissioner had erroneously applied the amended definition, which was not applicable to the period in question. The Tribunal found merit in this argument and directed the Commissioner to re-examine the applicability of the definition of 'construction service' for the relevant period and record specific findings.

Conclusion:
The Tribunal set aside the impugned order to the extent of confirming the demands on the contested issues and remanded the matter to the adjudicating authority for determination in accordance with the observations made. The appeal was disposed of by way of remand to the adjudicating authority.