2021 (10) TMI 1229 - AT - Service Tax

Classification of services - Right to use of car parking space or not - car parking charges collected by the appellant from its customers - levy of tax on Club Membership Services - Demand of Service Tax on amounts received after 01/07/2010 for Construction Services rendered upto 30/06/2010 - time limitation. Car parking charges collected by the appellant from its customers - Right to use of car parking space or not - time limitation - HELD THAT - The general terms and conditions sheet as well as the sale deed mentions the said amounts against the Right to use car parking space and not as sale of car parking space. The department has not brought any contrary submission to challenge the above finding that the Appellant has provided right to use towards car parking space and not Construction Service towards the same Right to use - the Appellant has made out a case on limitation ground as the said service was introduced w.e.f. 01/07/2010 and there was no clarity as to the taxability of such amounts as received by the Appellant. Hence the Appellant was under a bona fide belief that since it was giving Right to use of car parking space, no tax is payable under the category Construction Services - in the instant case of the Appellant, since the entire demand has been raised by invoking extended period of limitation, the same is set aside. Club Membership Services - HELD THAT - Since there was no club in existence during the period of dispute, there cannot be any demand raised on the said ground. The Architect s Certificate dated 16/08/2016 is testimony to the stated fact and there is no contrary evidence produced by the department to dispute the same - there are merit in the submission of the Appellant and accordingly the demand under the Membership of Club or Association Services also needs to be set aside. Demand of Service Tax on amounts received after 01/07/2010 for Construction Services rendered upto 30/06/2010 - HELD THAT - The essential condition for determining the taxability is (i) whether payment made by the buyer to the builder on or after 01/07/2010 and (ii) whether payment made before or after issuance of completion certificate by the competent authority and since in the case of the Appellant the completion certificate was not issued when the amounts were received, the same is taxable under the Service Tax net - there is no ambiguity in the condition as the same only extends the tax net of the Construction Services to any amounts received prior to obtaining completion certificate - the demand on the Construction of Residential Complex Services as confirmed by the learned Adjudicating authority is set aside in entirety. Time Limitation - HELD THAT - The department has failed to produce sufficient evidence to satisfy the ingredients for invocation of extended period of limitation and hence, the invocation of extended period of limitation to demand duty cannot be sustained in the case at hand. The entire demand cannot be confirmed both on merits and on limitation - Appeal allowed - decided in favor of appellant.

Summary

Issues Involved:
1. Demand of Service Tax on car parking charges.
2. Demand of Service Tax on 'Membership of Club or Association Services'.
3. Demand of Service Tax on advance received for construction services provided before the service became taxable.

Issue-Wise Detailed Analysis:

1. Demand of Service Tax on Car Parking Charges:
The appellant contended that the car parking charges collected from buyers were for the right to use the car parking space and not for construction services. The appellant presented agreements and registered deeds to support this claim. The appellant also argued that car parking was specifically excluded from the definition of 'Preferential Location Services'. The Tribunal found that the appellant provided the right to use car parking space and not construction services. The Tribunal cited the case of Friends Land Developers Vs Commissioner of Central Excise And Service Tax, Ghaziabad, where the demand was dropped on the grounds of limitation due to the ambiguity in the taxability of such services introduced w.e.f. 01/07/2010. Consequently, the Tribunal set aside the demand on the grounds of limitation, acknowledging the appellant's bona fide belief that no tax was payable under 'Construction Services'.

2. Demand of Service Tax on 'Membership of Club or Association Services':
The appellant argued that the amounts collected were deposits towards club construction and not subscription fees for club services, and the club was not operational during the disputed period (April 2008 to June 2010). The Tribunal accepted the architect’s certificate confirming the non-existence of the club during the disputed period. The Tribunal also referenced the Supreme Court's judgment in State of West Bengal Vs Calcutta Club Ltd., which established that no service tax could be levied on services between a club and its members. Thus, the Tribunal set aside the demand under 'Membership of Club or Association Services'.

3. Demand of Service Tax on Advance Received for Construction Services:
The appellant contended that the demand for service tax on amounts received post 01/07/2010 for services rendered up to 30/06/2010 was incorrect, as the services were provided before they became taxable. The Tribunal referred to Rule 6(1) of the Service Tax Rules, which states that no service tax shall be payable for services provided during a period when such services were not taxable. The Tribunal also cited the case of Amit Metaliks Ltd., which held that the taxable event is the rendition of service, not the receipt of payment. Consequently, the Tribunal set aside the demand for service tax on 'Construction of Residential Complex Services'.

Limitation:
The Tribunal found that the department failed to provide sufficient evidence to justify the invocation of the extended period of limitation. The Tribunal concluded that the entire demand could not be confirmed both on merits and on limitation.

Conclusion:
The Tribunal allowed the appeal, setting aside the demands for service tax on car parking charges, club membership services, and advance received for construction services, both on merits and on limitation grounds. The order of the lower authority was modified accordingly, and the appellant was granted consequential relief as per law.