2015 (12) TMI 439 - AT - Service Tax

Demand of service tax - construction of complex service - section 65(30a)/(105) (zzzh) - penalty under section 78 - Held that - The ground plan clearly shows that the complex has more than 12 units. The ground plan also clearly shows and states that it has common community hall, common parking area, and Common Park. We have seen photographs of the complex which make it evident that the complex has buildings having more than 12 residential units. Thus the complex constructed clearly satisfies the definitions of residential complex given in section 65 (91a) ibid and the service of construction of complex (defined in section 65 (30a)/105)/(zzzh) - impugned service clearly gets covered under construction of complex service liable to service tax. However, as conceded by learned DR, the demand has to be worked out on the amount of ₹ 8,80,52,533/- after giving 67% abatement without adding the value of free supplies in the light of the judgment in the case of Bhayana Builders Pvt. Ltd. Vs. CST, Delhi- 2013 (9) TMI 294 - CESTAT NEW DELHI (LB) . As regards cum- tax benefit, learned DR opposed it on the ground that the amount received was not inclusive of service tax. In this regard, it is to be mentioned that Haryana Housing Board is not liable to pay any amount towards service tax in respect of the present case. This inference is supported by the fact that subsequent contracts with Haryana Housing Board clearly make provision for payment of service tax separately. In the circumstances, we are of the view that in view of clear provision of section 67 (2) ibid cum tax benefit is to be extended to the appellant. - Decided partly in favour of assessee.

Summary

Issues involved:
1. Interpretation of construction of complex service under section 65 (30a)/(105) (zzzh) of Finance Act, 1994.
2. Applicability of judgments in similar cases.
3. Abatement calculation and inclusion of value of free supplies.
4. Cum tax benefit eligibility.
5. Wilful mis-statement/suppression of facts and penalty imposition.

Analysis:

1. Interpretation of construction of complex service:
The appeal was filed against the Order-in-Original confirming a service tax demand for construction of a complex. The appellant argued that their case aligns with certain judgments, while the Department argued that the complex constructed falls under the definition of a residential complex as per relevant legal provisions. The Tribunal examined the ground plan and photographs of the complex, concluding that it indeed met the criteria of a residential complex under the law.

2. Applicability of judgments:
The Tribunal found that the judgments cited by the appellant were not applicable to their case as those cases involved individual residential houses, not complexes as defined in the law. Therefore, the service provided by the appellant was deemed to fall under the construction of a complex service liable to service tax.

3. Abatement calculation and value of free supplies:
The Tribunal agreed with the Department that the demand should be computed after giving abatement of 67%, without adding the value of free supplies. This decision was influenced by a judgment in the case of Bhayana Builders Pvt. Ltd. The calculation was based on the total amount paid by the client along with TDS deducted.

4. Cum tax benefit eligibility:
The Tribunal extended the cum tax benefit to the appellant, despite opposition from the Department, as the amount received from the client did not include service tax. The provision for payment of service tax separately in subsequent contracts with the client supported this decision.

5. Wilful mis-statement/suppression of facts and penalty imposition:
The Tribunal found the appellant guilty of wilful suppression of facts as they failed to register, pay service tax, file returns, or respond to requests for information. The mandatory penalty was deemed applicable, and the extended period invoked. The Tribunal also referenced a judgment allowing for the reduction of mandatory penalty if not expressly granted by lower authorities.

In conclusion, the Tribunal upheld the order with modifications, reducing the demand to the service tax calculated on 33% of the total amount, granting cum tax benefit, and modifying the penalty under Section 78. The appellant was given a reduced penalty if the entire demand was paid within the specified timeframe.