2013 (9) TMI 952 - AT - Service Tax

Waiver of pre-deposit - Service Tax liability - Construction of Complex Service or Commercial or Industrial Construction Service - The demand has arisen on the ground that the appellant has taken advances from the buyers as a builder/developer - Held that - The deeming provision would be applicable only from 1-7-2010. Our attention has also been taken to the texts of certain other Explanations figuring under Section 65(105). In some of these Explanations, there is an express mention of retrospective effect. Therefore, there appears to be substance in the learned counsel s argument that the deeming provision contained in the explanation added to Section 65(105)(zzq) and (zzzh) of the Finance Act, 1994 will have only prospective effect from 1-7-2010. Apparently, prior to this date, a builder cannot be deemed to be service provider providing any service in relation to industrial/commercial or residential complex to the ultimate buyers of the property. - Services rendered by the appellant would be taxable from 1.7.2010 only and any demand prior to that period prima facie seems to be not sustainable - Following decision of MOHTISHAM COMPLEXES (P) LTD Versus COMMISSIONER OF CENTRAL EXCISE, MANGALORE 2011 (5) TMI 549 - CESTAT, BANGALORE stay granted.

Summary

Issues:
Waiver of pre-deposit of service tax liability under the category of 'construction of residential complex' service, interest, and penalties.

Analysis:
The appellant filed a stay petition seeking waiver of pre-deposit of a substantial amount confirmed as service tax liability, interest, and penalties related to the construction of a residential complex. It was undisputed that the appellant had entered into agreements with the landowner and other parties for construction services during a specific period. The Revenue contended that the appellant was liable to pay service tax for the relevant period from 1.6.2000 to 30.9.2010.

Upon hearing both sides, the Tribunal referred to a previous case and highlighted that the appellant had received advances from prospective buyers before completing the construction, indicating that the appellant could not be deemed a service provider to the buyers before a certain date. The Tribunal noted that the deeming provision for service tax liability had prospective effect from 1-7-2010, and the dispute in the present case pertained to a period before this date. The appellant had also made a prima facie case against the demand for service tax and penalties, further supported by the fact that the appellant and their contractors had already paid a significant amount towards the tax liability.

The Tribunal acknowledged that post the introduction of an explanation from 1.7.2010, the appellant might have a liability for service tax for a specific period. However, considering that the appellant had already deposited a substantial amount towards the tax liability and was contesting the issue on merits, the Tribunal deemed the deposited amount sufficient for hearing and disposing of the appeal. Consequently, the application for waiver of pre-deposit of the remaining amounts was allowed, and the recovery was stayed pending the appeal's disposal.