2014 (10) TMI 772 - AT - Service Tax

Construction of complex service - renting of immovable property service - transport of goods by road service - Held that - demand of ₹ 8,81,135/- has been confirmed on an amount of ₹ 23705930/- the details of which are available in the table given in para 10.5 of the same order - It is evident from the details given against these serial numbers 2e, 3c, 4c & 5b that this amount represents the payment received for construction of office building (load dispatch data center). Thus, it is clear that this amount does not pertain to construction of any residential complex or completion & finishing of residential complex or repair, alteration, renovation or restoration in relation to residential complex. Thus it hardly requires any further discussion to hold that the said component of impugned demand confirmed under the Construction of Complex Service is totally untenable. Renting of immovable property service - it is seen that at the time of adjudication, the had not claimed the exemption on the basis of what is stated at the time of appeal before the Tribunal. Regarding the contention in their appeal that vide their letter dated 12.10.2012 they had brought this to the notice of the adjudicating authority, we have perused that letter and it nowhere clearly brings out that the rental income was from for renting out the property for hostel/residential purpose and was not for business or commerce. Therefore it is only fair that this portion of the demand is remanded for denovo adjudication so that the appellants can submit their claim along with the evidence before the adjudicating authority. Regarding the impugned demand of ₹ 11,75,604/- under GTA service, the appellants have claimed that the same is not sustainable because the freight was less than ₹ 750/- for each trip. The appellants have submitted certain invoices in support of their claim. However the adjudicating authority in the impugned Order-in-Original has observed that the only defense which the appellants had taken at the time of adjudication was that this point was not raised in the audit report. The adjudicating authority rightly observed that merely because the point was not raised in the audit report, that cannot be a ground that a Show Cause Notice in that regard cannot be issued. - Decided in favour of assessee.

Summary

Issues:
1. Confirmation of service tax demands under different categories.
2. Classification of demand under construction of complex service.
3. Demand confirmed under renting of immovable property service.
4. Demand confirmed under GTA service.

Issue 1: Confirmation of service tax demands under different categories

The appellants filed a miscellaneous application for early hearing of their stay application as the interim stay granted by the High Court was expiring soon. The Order-in-Original confirmed service tax demands under construction of complex service, renting of immovable property service, and transport of goods by road service. The appellants contended that the demand under construction of complex service was unsustainable as they did not construct a residential complex. The Tribunal, with the consent of the learned AR, decided to waive the pre-deposit and proceed to hear the appeal.

Issue 2: Classification of demand under construction of complex service

The demand under construction of complex service was divided into two parts: one related to the construction of a load dispatch center and the other to the construction of an office building for a university. The Tribunal analyzed the definition of construction of complex and residential complex as per the Finance Act, 1994. It was found that the demand related to the office building construction was wrongly classified under construction of complex service. The Tribunal held that this component of the demand was unsustainable.

Issue 3: Demand confirmed under renting of immovable property service

The appellants argued that the rental income was from flats rented to a law university and a police force for non-commercial purposes. The Tribunal examined the definition of renting of immovable property service under the Finance Act, 1994. While the appellants' contention seemed valid, they had not raised this argument during adjudication. Therefore, the Tribunal remanded this portion of the demand for fresh adjudication to allow the appellants to present their claim with supporting evidence.

Issue 4: Demand confirmed under GTA service

The demand under Goods Transport Agency (GTA) service was challenged by the appellants, claiming the freight charges were below the taxable threshold. The Tribunal noted that the appellants had not raised this defense during adjudication, but presented evidence later. As this evidence needed verification, the Tribunal remanded this component of the demand for re-examination by the adjudicating authority.

In conclusion, the Tribunal set aside the order confirming the demand under construction of complex service. For the demands under renting of immovable property service and GTA service, the Tribunal remanded the case for fresh adjudication to allow the appellants to present their claims and supporting evidence.