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2024 (7) TMI 66 - AT - Service TaxLiability to pay service tax under Works Contract Services as a promoter/ developer/ builder for the period up to 01.07.2010 and for the period after 01.07.2010 to September 2011 - penalties. Demand for the period up to 01.07.2010 - HELD THAT - The issue as to whether a promoter/ developer/ builder is liable to pay service tax on construction of residential complex services for the period upto 01.07.2010 is settled by the decision in the case of M/S KRISHNA HOMES VERSUS CCE, BHOPAL AND CCE, BHOPAL VERSUS M/S RAJ HOMES 2014 (3) TMI 694 - CESTAT AHMEDABAD . The Board s Circular No.108/2/2009 ST dated 29.01.2009 has clarified that the promoter/ developer/ builder is not liable to pay service tax for the period up to 01.07.2010. This Tribunal in the case of M/S. HELIOS ESTATES PVT. LTD. VERSUS THE COMMISSIONER OF CGST CENTRAL EXCISE, CHENNAI 2024 (6) TMI 17 - CESTAT CHENNAI had occasion to consider the very same and after following the decision in M/s. Krishna Homes set aside the demand interest and penalties for the period prior to 01.07.2010. Thus, the demand interest and penalties for the period up to 01.07.2010 cannot sustain and require to be set aside. Demand Post 01.07.2010 up to September 2011 - HELD THAT - This issue requires to be remanded to the adjudicating authority who is directed to re-quantify the service tax demand for the period 01.07.2010 to September 2011 after perusing the evidence furnished by appellant. Needless to say, that the appellant is liable to pay the redetermined service tax demand along with interest. Penalties - HELD THAT - The appellant has discharged the service tax on their share of consideration for the disputed period. However, they failed to discharge the service tax on the land owner s share. There was much confusion as to the liability of a promoter/ developer/ builder to pay service tax. Being a transitional period (with regard to 01.07.2010) and also taking note of the fact that the appellant has discharged service tax on their share, it is found that it is a fit case to invoke Section 80 of the Finance Act 1994 as it stood during the relevant period - the penalties under Section 76 and 78 of the Finance Act 1944, set aside by invoking Section 80 Act ibid. Appeal allowed in part.
Issues Involved:
1. Liability to pay service tax under Works Contract Services for the period up to 01.07.2010. 2. Liability to pay service tax under Works Contract Services for the period from 01.07.2010 to September 2011. 3. Correct quantification of service tax for the period from 01.07.2010 to September 2011. 4. Imposition of penalties under Sections 76 and 78 of the Finance Act, 1994. Detailed Analysis: 1. Liability to Pay Service Tax Up to 01.07.2010: The core issue was whether the appellant, as a promoter/developer/builder, was liable to pay service tax on construction of residential complex services for the period up to 01.07.2010. The Tribunal referred to the Board’s Circular No.108/2/2009 ST dated 29.01.2009 and the decision in the case of M/s. Krishna Homes vs. C.C.E., which clarified that the promoter/developer/builder is not liable to pay service tax for this period. The Tribunal quoted the relevant sections and definitions from the Finance Act, 1994 and noted that the explanation added to Section 65(105)(zzzh) effective from 01.07.2010 was prospective in nature. Consequently, the Tribunal concluded that the demand, interest, and penalties for the period up to 01.07.2010 could not be sustained and required to be set aside. 2. Liability to Pay Service Tax from 01.07.2010 to September 2011: For the period post 01.07.2010, the appellant conceded the liability to pay service tax. The Tribunal upheld this liability but noted the appellant's contention regarding the incorrect quantification of the service tax demand. The appellant argued that the adjudicating authority had used the value mentioned in an earlier agreement rather than the supplemental agreement, which stated a lower value for the landowner's share. The Tribunal agreed that this issue needed reconsideration and remanded the case to the adjudicating authority for re-quantification of the service tax demand based on the supplemental agreement. 3. Correct Quantification of Service Tax: The appellant contested the quantification of the service tax, arguing that the value of the landowner’s share used by the department was incorrect. The Tribunal directed the adjudicating authority to re-quantify the service tax demand for the period from 01.07.2010 to September 2011 after considering the supplemental agreement, which indicated a lower value. The appellant was held liable to pay the re-determined service tax along with interest. 4. Imposition of Penalties: Regarding the penalties imposed under Sections 76 and 78 of the Finance Act, 1994, the appellant argued that there was significant litigation and confusion about the liability of promoters/developers/builders to pay service tax on the landowner's share. The Tribunal noted that the appellant had discharged the service tax on their share and had not paid the tax on the landowner’s share due to a bona fide belief. Considering the transitional period and the appellant's compliance for their share, the Tribunal invoked Section 80 of the Finance Act, 1994, and set aside the penalties for the period from 01.07.2010 to September 2011. Conclusion: The Tribunal modified the impugned order as follows: - The demand, interest, and penalties for the period up to 30.06.2010 were entirely set aside. - The liability to pay service tax for the period from 01.07.2010 to September 2011 was upheld, but the issue was remanded to the adjudicating authority for re-quantification of the service tax demand. The appellant is liable to pay the re-quantified service tax with interest. - The penalties imposed for the period from 01.07.2010 to September 2011 were entirely set aside. The appeal was partly allowed with consequential reliefs, if any.
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