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TMI Blog2014 (10) TMI 63X X X X Extracts X X X X X X X X Extracts X X X X ..... interest. Equal amount of penalty under section 78 and penalty at the applicable rate under Section 76 of the Finance Act 1994 has also been imposed. The appellants have already deposited an amount of ₹ 2,88,35,867/- with interest according to the appellant in the appeal memorandum. 2. Before proceeding to examine the demand, the brief facts of the case can be stated as follows:- For conducting National Games 2002, IVRCL Ltd. was awarded a contract for construction of National Games Village at Hyderabad. A special purpose vehicle IVR Prime Urban Developers (the present appellant) was created. This was a result of a tripartite agreement dated 17.01.2001 between Sports Authority of Andhra Pradesh (SAAP), Andhra Pradesh Industrial Infrastructure Corporation (APIIC) and M/s IVRCL. According to the agreement, SPV was to execute the project and hand it over to the Organizing Committee. After conclusion of the games, the property was handed over to the appellants and according to the learned counsel, they were allowed to sell the same to buyers. He submitted that for the purpose of organizing games, flats constructed were actually semi- finished and appellants finished the sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... allation service for Mumbai Municipal Corporation. We also find that the submissions made by the learned counsel regarding penalty at this stage also can be accepted. In other cases service tax with interest has been paid. 6. This leaves us with the demand for more than ₹ 6.67 crores relating to construction of National Games village. The learned A.R. vehemently argued that the entire amount is payable by the appellants. 7. The learned counsel relied upon the decision in the case of M/s Krishna Homes Vs CCE Bhopal [2014-TIOL-402-CESTAT-DEL]. He submits that the facts of the case are similar and draws our attention to Para-2 which is reproduced below:- 2. There were two agreements with each customer first agreement was between the appellant as the seller and the prospective buyer/customer as a purchaser for sale of flat, which was to be constructed up to column, beams, roof along with brick work. The second agreement was between the appellant and the prospective buyer/customer for the purpose of carrying on the finishing work on the flat - plastering, water supply, sanitary and electric fittings, flooring etc. The appellant engaged contractors for constru ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ered in their name and then the Developer constructs flats for the original Land Owner, becoming UDS holder after registering UDS in his name, as per the terms of the contract. So this is clearly outside the scope of the clarification given by C.B.E. C. In these cases there is a service provided to the UDS holders including the original Land Owners. 12.5 In the case of Land Owners also the UDS is registered in the name of the land owners. He parts with his rights in the land partially and receives a consideration for parting with such rights. The consideration is the form of constructed flats to be received later. Of course the constructed flat has got both value of material used and the value of service provided by the service provider. Obviously service tax can be levied only on the value of service and cannot be equal to the full value of the land parted with by the land owner. This principle gets complied with when abatement from value of the constructed flat is given to the extent of 67% by Notification No. 1/2006-S.T. and earlier Notifications. However, we find that the decision in the case of Krishna Homes (supra) is the latest in the line of decisions and has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s to the SAAP. We also find that SAAP was the joint seller of the semi-finished flat along with the appellant. Unfortunately this aspect has been ignored and the entire amount collected from the buyers for semi-finished flat and construction work thereafter have been levied to service tax under the Residential Complex Service category. This, in our opinion, in the light of the decision of the Tribunal in the case of Krishna Homes (supra) may not be sustainable. 11. We also find the observations of Commissioner in paragraph 17.3 also reflect the fact that the circular has not been understood correctly and contrary to the decision in the case of Krishna Homes. Paragraph 17.3 is relevant for our observations above and therefore is reproduced. 17.3 It is also contended by the noticee that the construction is for owner for his personal use and the same is excluded from the definition of Construction of Residential Service and relied upon the Boards Circular No. 108/2/2009, dated 29.01.2009 and Master Circular dated 23.08.2007. On a careful reading of the provisions, it is amply clear that the said exclusion applicable only when a complex is constructed by a person dir ..... X X X X Extracts X X X X X X X X Extracts X X X X
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