2018 (9) TMI 916 - AT - Service Tax

Liability of Service tax - amount calculated of the share of the land owners in the developed property - case of the appellants before the lower authorities that the value of the services rendered to the land owners is already built on the amounts charged by them to independent flat owners - Held that - Identical issue decided in the case of VASANTHA GREEN PROJECTS VERSUS CCT, RANGAREDDY GST 2018 (5) TMI 889 - CESTAT HYDERABAD , where it was held that the amount attributable to the consideration received by appellant in the form of land rights from the land owner stands included in the value of villas sold to prospective customer which would mean that whatever consideration was received by the appellant in form of developmental right was considered in assessable value. Appeal allowed - decided in favor of appellant.

Summary

Issues:
Service tax liability on land owner's share in the development of property.

Analysis:
The judgment by the Appellate Tribunal CESTAT Hyderabad dealt with three appeals concerning the service tax liability on the land owner's share in the construction of flats. The appellants had agreements with land owners for development, where the land owners would receive 40% of the developed residential apartments. The issue was whether the appellants were liable to pay service tax on the amount attributable to the land owners' share. The appellants argued that the tax liability was already covered in the amounts charged to flat owners. The Tribunal referred to a previous Final Order in a similar case and held that the gross amount charged by the builder is liable to tax. The Tribunal found that the appellants had already discharged the service tax liability on the gross amount received from land owners and buyers. Therefore, demanding service tax on the same amount again would result in double taxation. As the facts were identical to the previous case, the Tribunal set aside the impugned orders and allowed the appeals.

In conclusion, the Tribunal ruled in favor of the appellants, stating that they had already fulfilled their service tax liability on the gross amount received from land owners and buyers. The judgment emphasized that taxing the same amount again would lead to double taxation, which is impermissible. The decision was based on the interpretation of Section 67 of the Finance Act, 1994, and relevant rules. The Tribunal's decision was consistent with a previous ruling on a similar issue, ensuring uniformity in the application of tax laws.