2009 (8) TMI 616 - AT - Service Tax

Security Agency Services Reimbursement of Tax The Appellant are engaged in construction of residential buildings and are registered under commercial or industrial service and construction of complex services. The appellants were found to have rendered various other services without paying tax due. In this case (Tri-Bang) waives pre-deposit of the adjudged dues and stay recovery thereof.

Summary

Issues:
Waiver of pre-deposit of service tax dues, interest, and penalties imposed on the appellant.

Analysis:
1. Service Tax Dues: The appellants, engaged in construction services, were found to have rendered various services without paying due taxes. The Tribunal noted that the taxable service under works contract covers construction of complexes, which were assessed to Service tax by the authorities for the period before 1-6-2007. The Tribunal held that activities forming part of works contracts could not have been taxed separately before 1-6-2007. Citing judicial authorities, the Tribunal ruled that the main activity of construction and sale of flats did not involve taxable services, and ancillary activities could not be subjected to tax.

2. Health & Fitness Service: The Tribunal examined the provision of gym facilities in residential complexes by the appellants. It clarified that taxable activities under "Health & Fitness service" include specific services for physical well-being. However, as the gym facilities were owned by flat owners and not provided by the appellants, the demand under this category was deemed unsustainable.

3. Real Estate Agent Service: The Tribunal analyzed the role of the appellants in transactions related to the sale of flats. It concluded that the consideration received by the appellants in such transactions did not constitute payment for services rendered as a real estate agent. Therefore, the demand under this category was found to be unsustainable.

4. Maintenance or Repair Services: The Tribunal considered the maintenance of flats by the appellants until transferred to the owners' association. It noted that the expenses incurred were reimbursed by flat owners and not payments for services rendered. Relying on circulars by the CBEC, the Tribunal found the demand in this category unsustainable.

5. Cenvat Credit: Regarding the demand for recovering Service tax credit availed in excess, the Tribunal determined that the construction of flats for landowners did not involve exempt services. The demand based on Rule 6(3) of the Cenvat Credit Rules was deemed incorrect, as no exempt services were provided. Consequently, the demand for Cenvat credit availed in excess was considered unsustainable.

6. Decision: The Tribunal ordered a complete waiver of pre-deposit of the adjudged dues and stayed the recovery pending the appeal's decision. The operative portion of the order was pronounced in court at the conclusion of the hearing.