2023 (6) TMI 1157 - AT - Service Tax

Levy of Service Tax - construction of residential complex service - dispute in the present appeal relates to the period prior to July 01, 2010 and also post July 01, 2010 - HELD THAT - If there was no liability of service tax prior July 01, 2010, all that is required to be seen is whether there was any delay in deposit of the amount so as to attract interest. For this period, penalty could not have been imposed as there was no liability to pay service tax. For the period from July 01, 2010, onwards, the situation is different because the appellant is liable to pay service tax. Service tax should have been collected at the time each installment was paid by the purchaser and not when the last installment was paid. The Principal Commissioner has not examined this issue from this perspective and therefore, the matter would have to be remanded to enable him to examine when the liability to pay service tax arose and when service tax was actually deposited by the appellant and whether interest was liable to be paid by the appellant. The matter is remitted to the Principal Commissioner to separately examine the factual position prior to July 01, 2010 and post July 01, 2010 after hearing the appellant - Appeal disposed off.

Summary

Issues involved:
The judgment involves the demand of service tax in connection with five show cause notices, focusing on the construction of residential complex service under section 65(105) (zzzh) of the Finance Act, 1994. The key issues revolve around the applicability of service tax prior to and post July 01, 2010, the collection of service tax by the appellant, liability to pay interest, and penalty.

Issue 1: Demand of service tax pre-July 01, 2010:
The appellant had been collecting service tax from purchasers before July 01, 2010, but only when the last installment was paid. Despite service tax not being leviable on "construction of residential complex service" before July 01, 2010, the Principal Commissioner held that the appellant was bound to pay the collected amount to the Department under section 73(A) of the Finance Act, along with interest under section 73(B).

Issue 2: Demand of service tax post-July 01, 2010:
After July 01, 2010, the appellant was liable to pay service tax when each installment was paid by the purchaser, not just the final one. The Principal Commissioner did not thoroughly analyze this aspect, leading to the need for a remand to determine when the liability to pay service tax arose, when it was deposited, and if interest was due.

Decision and Remand:
The Tribunal remitted the matter to the Principal Commissioner to separately assess the factual position pre and post July 01, 2010. The Principal Commissioner was directed to examine the issue expeditiously, considering the liability, deposit timing, and interest payment. The penalty was deemed inapplicable based on a prior Tribunal decision. The impugned order was to abide by the outcome of the Principal Commissioner's reassessment within six months.