2018 (2) TMI 835 - AT - Service Tax

Demand - Collection in the name of service tax - Construction activity - works contract service - revenue contented that the terms of the contract clearly stipulate that Service Tax is included in the consideration - invocation of Section 73A (2) of FA - Held that - the appellant did establish that they have not collected any amount in any manner representing Service Tax. The existence of clause in the contract to the effect that it will include Service Tax by itself will not give any inference that such Service Tax has been collected from the client. The checklist for RA bills makes it clear that the recipient is also not recognizing any payment in any manner which can be attributed Service Tax - the demand in terms of Section 73A (2) will not survive. Practice venue for the Common Wealth Games - commercial building or not? - Held that - the practice venue for the Common Wealth Games cannot be considered as a commercial building. The said stadium or facility is mainly used for sports activities. This is not disputed - collection of fee and charges for use of the stadium does not make the stadium as a commercial building - the sports facility constructed by the appellant cannot be considered as a commercial construction liable to Service Tax. Demand of interest - construction of independent duplex houses - Held that - having already collected and paid the tax, the appellants are not disputing on merit - Since the Tax liability may not stand there can be no question of interest payment on such non-existing tax liability. Appeal allowed - decided in favor of appellant.

Summary

Issues Involved:
1. Liability under Section 73A(2) of the Finance Act, 1994 for the amount collected as representing Service Tax.
2. Service Tax liability under Works Contract Service for construction of a practice venue for the Commonwealth Games, 2010.
3. Interest liability for delayed payment of Service Tax on construction of residential complexes in Noida.

Issue-wise Detailed Analysis:

1. Liability under Section 73A(2) of the Finance Act, 1994:
The appellants were engaged in construction activities for IOC and had a contract stipulating that the contract value included all taxes and duties, including Service Tax. The impugned order held that the appellants had to pay ?5,51,33,267/- under Section 73A of the Finance Act, 1994, as they collected this amount representing Service Tax. The appellants argued that they did not collect any amount representing Service Tax from their client and that the confirmation under Section 73A(2) was based on presumption. They submitted evidence through RA bills verified by the recipient, showing no Service Tax was claimed. The Tribunal noted that for liability under Section 73A(2), there must be a factual finding that the person collected an amount as representing Service Tax. The Tribunal referred to previous cases, emphasizing that a clause in the contract indicating inclusion of Service Tax does not automatically imply collection of such tax. The Tribunal concluded that the appellants did not collect any amount representing Service Tax and set aside the demand under Section 73A(2).

2. Service Tax liability under Works Contract Service:
The second issue concerned the construction of a practice venue for the Commonwealth Games at JMI University, New Delhi. The appellants argued that the sports facility developed for the Commonwealth Games could not be considered a commercial construction, as it was intended and used for sports activities. The Tribunal referred to previous decisions, noting that the collection of membership or usage fees does not make a sports facility a commercial building. The Tribunal concluded that the sports facility constructed by the appellants could not be considered a commercial construction liable to Service Tax.

3. Interest liability for delayed payment of Service Tax:
The third issue involved the interest liability of ?6,79,414/- for delayed payment of Service Tax on the construction of residential complexes in Noida. The appellants argued that the construction involved independent duplex houses with no common facilities within the approved layout, and thus should not be taxable under the "construction of residential complex service." The Tribunal noted that common facilities provided by municipal authorities do not constitute common facilities within the approved layout for the purpose of Service Tax liability. Since the appellants had already paid the tax and were not contesting it, the Tribunal concluded that there could be no interest liability on a non-existing tax liability.

Conclusion:
The Tribunal set aside the impugned order and allowed the appeal, concluding that:
- The demand under Section 73A(2) was not sustainable as the appellants did not collect any amount representing Service Tax.
- The construction of the sports facility for the Commonwealth Games was not liable to Service Tax as a commercial construction.
- There was no interest liability on the delayed payment of Service Tax for the construction of independent duplex houses, as the tax liability itself was not sustainable.