9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2024 (8) TMI 207 - AT - Service TaxLevy of service tax with interest and penalty - reimbursement cost received from the land of owner (also a registered company) for constructing flats in execution of a Joint Development Agreement - proportionate reversal of CENVAT Credit - extended period of limitation. HELD THAT - The principle is settled by this Tribunal in 2017 in the case of MORMUGAO PORT TRUST VERSUS COMMISSIONER OF CUSTOMS, CENTRAL EXCISE SERVICE TAX, GOA- (VICE-VERSA) 2016 (11) TMI 520 - CESTAT MUMBAI that was found approval by the Hon'ble Supreme Court by way of dismissal of appeal of Revenue, where it was held that 'The money flow to the Assessee from SWPL, under the nomenclature of Royalty, is not a consideration for rendition of any services but infact represents the Appellant s share of revenue arising out of the Joint Venture being carried on by the Assessee and SWPL.' Thus, the reimbursable amount that was paid by one member of the joint venture and subsequently repaid by the other member would not be liable to payment of Service Tax. Extended period of limitation - HELD THAT - When Service Tax is held to be not payable, extended period is also not invokable, apart from the fact that in the instant case, as noticed from the relied upon document namely letter dated 27.05.2017 entire factual aspect and modus operandi was known to the Respondent-Department and no proactive action in the nature of investigation, spot visit etc. were initiated by the Respondent-Department till it sought for a detail report from the Appellant on reimbursement expenses by M/s. Bhisma Realty Ltd. through its letter dated 21.02.2022, nearly after 5 years to which Appellant had furnished the figures (₹80,17,30,712/-) as total reimbursement amount received between October, 2016 and June, 2017, on which duty was straight away demanded, that would again take the Appellant out of the purview of wilful suppression since all information were available with it and furnished by it on demand and was also produced during audit. The order passed by the Principal Commissioner of CGST CX, Mumbai East Commissionerate is hereby set aside - Appeal allowed.
Issues Involved:
1. Confirmation of Service Tax demand on reimbursement costs. 2. Applicability of Service Tax on joint development agreements. 3. Inclusion of reimbursable expenses in the gross value of services. 4. Invocation of the extended period for demand. 5. Validity of new arguments at the appellate stage. Issue-wise Detailed Analysis: 1. Confirmation of Service Tax demand on reimbursement costs: The Appellant contested the Service Tax demand of Rs. 12,02,59,606/- for the period from 2016-17 to 2017-18, which was based on the reimbursement costs received from the landowner under a Joint Development Agreement (JDA). The demand included interest and penalties under Sections 73, 75, 77, and 78 of the Finance Act, 1994. The Appellant argued that the reimbursement was a repayment of costs already incurred and not an additional service charge. 2. Applicability of Service Tax on joint development agreements: The Appellant argued that under the JDA, both parties were jointly providing services to customers and not to each other. The agreement stipulated a 60:40 sharing basis, with the Appellant bearing the construction costs and the landowner providing the land. The Tribunal noted that the JDA indicated a joint venture rather than a service provider-client relationship, thus negating the applicability of Service Tax on the reimbursement. 3. Inclusion of reimbursable expenses in the gross value of services: The inclusion of reimbursable expenses in the taxable value was debated, referencing Rule 5 of the Service Tax (Determination of Value) Rules, 2006, which was declared ultra vires by the Delhi High Court. The Tribunal emphasized that the Hon'ble Supreme Court's judgment in the Intercontinental Consultants case allowed for the inclusion of reimbursable expenses only prospectively from May 14, 2015. The Tribunal found that the reimbursement in question was part of the 100% construction cost, on which Service Tax had already been discharged. 4. Invocation of the extended period for demand: The Tribunal observed that the extended period for demand was unjustified as the Respondent-Department was aware of the transactions since 2017, yet no action was taken until 2022. The Tribunal cited precedents, including the Raymond Ltd. case, to conclude that there was no suppression or misstatement by the Appellant, thus invalidating the extended period invocation. 5. Validity of new arguments at the appellate stage: The Tribunal addressed the Respondent's objection to the Appellant raising new arguments about the reimbursement for public parking space construction. It was noted that these points were already mentioned in the Appellant's reply to the show-cause notice. The Tribunal accepted these arguments, citing the principle of mutuality and joint venture obligations, which are not subject to Service Tax. Conclusion: The Tribunal allowed the appeal, setting aside the order passed by the Principal Commissioner of CGST & CX, Mumbai East Commissionerate. The Tribunal concluded that the reimbursed amount was not liable for Service Tax, and the extended period for demand was inapplicable. The order provided consequential relief to the Appellant.
|
