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TMI Blog2018 (2) TMI 1056X X X X Extracts X X X X X X X X Extracts X X X X ..... epair of properties, whether immovable or not, or maintenance or repair including reconditioning on restoration, or servicing of any goods, excluding a motor vehicle. Then, there is an explanation which clears doubts and it declares that for the purposes of this clause, namely, 65 (64), goods includes computer software and properties include information technology software. The words “Taxable service” is defined in Section 65, Clause (105) to mean any service provided or to be provided to any person by any person in relation to management, maintenance or repair. Since the MOFA has been referred by the counsel appearing before us, we would be required to make a reference to its provisions. The MOFA is an Act to regulate in the State of Maharashtra, the promotion of the construction of the sale and management, and the transfer of Flats on ownership basis. It was brought to the notice of the State Government that, consequent on the acute shortage of housing in several areas of the State of Maharashtra, sundry abuses, malpractices and difficulties relating to the promotion of construction, and the sale and management and transfer of Flats taken on ownership basis exist and are incre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... i i/by UBR Legal, Mr. M.H. Patil with Ms Padmavati Patil i/by Ms Aparna Hirandagi ORAL JUDGMENT ( Per Shri S.C. DHARMADHIKARI, J .): 1. All these appeals involve similar questions of law and facts and were heard together. They are, therefore, being disposed of by this common Judgment and Order. 2. The Central Excise Appeal No.289 of 2016, from which we take the facts, is directed against the order of the Customs, Excise Service Tax Appellate Tribunal ( CESTAT for short), West Zonal Bench, Mumbai, dated 7-3-2016. 3. By the order under appeal, the CESTAT held that the assessee before us could not be called upon to pay service tax on amounts which are collected as maintenance charges for upkeep of the apartment or premises. The CESTAT further held that the issue is settled in favour of the assessee and against the Revenue by its prior orders. 4. To appreciate the correctness of this legal conclusion and finding that even otherwise the appeals involve substantial questions of law, we proceed to admit these appeals on the following substantial questions of law: (a) Whether the CESTAT was right in holding that the assessee was not providing Management, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of service tax with effect from 1-7-2010, it was indeed providing taxable service but due to lack of knowledge, the registration could not be obtained within the prescribed time limit. The assessee admitted that the service tax for the period July, 2010 to June, 2012 was not paid on due dates and the interest for the delay was also not paid. As per the Service Tax Returns for this period, the assessee declared total taxable income of ₹ 34,88,18,870/- and the taxable value, after availing abatement of 75%, comes to ₹ 8,72,04,718/- and the service tax payable works out to ₹ 89,82,087/- . The assessee paid ₹ 87,59,633/- leaving a short-payment of ₹ 2,22,454/- which is due to non-revision of the Service Tax Returns for the period April, 2011 to September, 2011. 9. The assessee provided an explanation in reply to this Show Cause Notice and as far as the subject of the present appeal is concerned, the assessee stated it is following the project completion method for accounting of income and the said amount was received against the Flat bookings before 1-7-2010 and therefore that amount was not taxable. As regards the amount of ₹ 99,08,640/- , charge ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e amendment to the statutory provision from 01.07.2010. The case cited above has been accepted by the department. 12. As regards service tax on the amount collected as a builder/promoter towards the maintenance of common facilities and service tax liability thereof, the CESTAT held as under: (ii) As regards service tax on an amount collected as a builder/promoter towards maintenance of common facilities and service tax liability thereof, the CESTAT observed that the issue is no more re-sintigra as this bench in the case (a) Kumar Behary Rathi 2014 (34) S.T.R. 139 (b) Goel Nitron Constructions 2015-TIOL-1787-CESTAT-Mum (c) Hiranandani Constructions Pvt. Ltd. 2015-TIOL-2135CESTAT-Mum, held that service tax is not leviable on such amounts which are collected as maintenance charges for up keep of the apartment's premises. Accordingly, the CESTAT set aside that portion of the order which confirmed the demand along with interest and penalty. Thus, that portion of the Order-in-Original which confirmed the demand under this head along with interest and penalty, was set aside. 13. The Revenue has brought this appeal only in relation to the finding of the Tribun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Works Contract Services is concerned, came to the conclusion that post-amendment to the statutory provision with effect from 1-7-2010, the matter must go back for reconsideration by the Adjudicating Authority. Therefore, it is submitted that insofar as this aspect is concerned, there is no expression of opinion on merits. That part of the order of the Tribunal, therefore, raises no substantial question of law. 16. As far as the conclusion on the other and debatable point, Mr. Raichandani and Mr. Patil would submit that we should not loose focus and sight of the Maharashtra Ownership Flats (Regulation of the Promotion of Construction, Sale, Management and Transfer) Act, 1963 ( MOFA for short). The assessee is a promoter within the meaning of this law. The Tribunal, on appreciation and appraisal of all the factual materials and in the backdrop of the obligations and duties, particularly mentioned in Sections 5 and 6 of the MOFA, correctly concluded that service tax is not leviable on such amounts which are collected as maintenance charges for the upkeep of the apartment or premises. The Tribunal committed no error in following Kumar Behary Rathi (supra). Both would, theref ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m, in relation to, (a) Management of properties, whether immovable or not; (b) Maintenance or repair of properties, whether immovable or not; or (c) Maintenance or repair including reconditioning on restoration, or servicing of any goods, excluding a motor vehicle. Explanation. - For the removal of doubts, it is hereby declared that for the purposes of this clause (a) goods includes computer software; (b) properties includes information technology software. 19. A perusal of the same would indicate that management, maintenance or repair means any service provided by any person under a contract or an agreement, or a manufacturer or any person authorised by him, in relation to, the management of properties, whether immovable or not, maintenance or repair of properties, whether immovable or not, or maintenance or repair including reconditioning on restoration, or servicing of any goods, excluding a motor vehicle. Then, there is an explanation which clears doubts and it declares that for the purposes of this clause, namely, 65 (64), goods includes computer software and properties include information technology software. The words Taxabl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the MOFA, 1963 indicate that initially the Government of Maharashtra appointed a committee known as the Paymaster Committee to study and report various aspects of the business of construction and sale of flats on ownership basis. The Committee submitted its report to the Government of Maharashtra on 29th June, 1961. On the basis of the findings of this Committee, the Government introduced a Bill. The object behind the legislation was to see that there is integrity of purpose on the part of the promoter and that there is willingness and earnest cooperation of the flat purchaser and to solve the enormous problem of housing to some extent. It is in these circumstances, that MOFA, 1963 was promulgated. The preamble of this Act would show that it is enacted to regulate in the State of Maharashtra, the promotion of construction, sale, management and transfer of flats taken on ownership basis. 18. Section 2 of this Act (MOFA, 1963) is the Definitions Section. The words Competent Authority have been defined in Section 2(a) to mean a Competent Authority appointed under Section 5A of the Act. The word Flat is defined in section 2(a1) to mean a separate and self-contained set of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for registration of the organisation of persons who take the flats as a cooperative society or, as the case may be, as a company; and the promoter shall join, in respect of the flats which have not been taken, in such application for membership of a cooperative society or as the case may be of a company. Nothing in this section shall affect the right of the promoter to dispose of the remaining flats in accordance with the provisions of this Act. 21. Thereafter, the MAO Act was brought into force w.e.f. 19th February, 1971. Because of this, Section 10 of MOFA, 1963 was amended in 1971 and read thus: 10. Promoter to take steps for formation of cooperative society or company: (1) As soon as a minimum number of persons required to form a cooperative society or a company have taken flats, the promoter shall within the prescribed period submit an application to the Registrar for registration of the organisation of persons who take the flats as a cooperative society or, as the case may be, as a company; and the promoter shall join, in respect of the flats which have not been taken, in such application for membership of a cooperative society or as the case may be of a compan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rovision opens with a non-obstante clause and states that, notwithstanding anything in any other law, a promoter who intends to construct or constructs a block or building of Flats, all or some of which are to be taken on ownership basis, shall in all transactions with persons intending to take or taking one or more of such Flats, be liable to give or produce, or cause to be given or produced, the information and the documents mentioned in this section. Then, by subsection (2) the liabilities are set out. The promoter before accepting advance payment or deposit has to enter into Agreement and the Agreement to be registered. That is an aspect taken care of by Section 4 and by Section 4A, the effect of nonregistration of Agreement required to be registered under Section 4 is set out. 24. By Section 5, it is stated that the promoter shall maintain a separate account in any Bank of the sums taken by him, from persons intending to take or who have taken, Flats, as advance or deposit, including any sums so taken towards the share capital for the formation of a cooperative society, or towards the outgoings, including ground rent if any, municipal or other local taxes, taxes on income, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lders and developers obtain rights from the land owners so as to enable them to pull down the existing structure and exploit the potential of the land to its optimum. The covenants with the owner are that such land would be exploited to its optimum and with its exploitation and usage the builder and developer can construct building/s comprising of units and flats which can be sold in the open market. The consideration for this agreement is strictly a sum payable in money so also certain number of units or Flats to be handed over to the owner. The cost of construction and other charges are defrayed or reimbursed by the promoter or builder by selling units or Flats other than those reserved for the owner of the land, in open market at the price which it commands on the given date. It is also clear from the provisions of law that it is not necessary that any or all the Flats should be ready or the building itself should be completely constructed and fit for occupation. The Flats in the buildings under construction can also be sold and the agreement for sale with individual Flat takers can provide for appropriate stipulation with regard to payment of money and consideration. This is ag ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the statutory obligations are fully discharged. This is not a service of the nature understood by Section 65 (64) of the Finance Act, 1994. It is not a contractor simplicitor of maintenance of immovable property. It is not as if there is a existing building comprising of Flats, fully occupied, the maintenance and upkeep of which is handed over under a contract. It is a statutory obligation superimposed on a contract to sell a Flat/unit in a building to be constructed on a piece or parcel of land. That cannot be confused with a taxable service as defined under the Finance Act, 1994. The day-to-day upkeep, maintenance and repair is till the statutory duty is fully performed as noted above. 28. True that while defining the term Service in the Consumer Protection Act, 1986, the Legislature did not exclude construction or building activity and therefore provided that the definition under that {Section 2(o)} means service of any description which is made available to potential users and includes the provision of facilities in connection with banking, financing, insurance, transport, processing, supply of electrical or other energy, board or loading or both, and by amendment housing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the form of charges and taxes as it is the builder's obligation to collect these amounts from individual Flat takers and make it over to these authorities. After formation of the legal entity, the obligation ceases and it is taken over by the cooperative housing society or the company. Until that takes place, the promoter continues to be liable. If this aspect is ignored, then, the narrow or restricted construction placed on the provision by the Revenue can be accepted. The tax then can be justified on the ground that it is a taxable service provided by the builder. However, if all this has been seen not de hors the MOFA by the Tribunal, then, it has not committed any error of law apparent on the face of the record, or perversity. It has construed the definition of the above provision consistent with the provisions of MOFA and mindful of the same. When such is the exercise undertaken by the Tribunal, we do not think that its conclusions are so vitiated or perverse so as to enable us to interfere therewith in our further appellate jurisdiction. 29. As a result of the above discussion, we answer the substantial questions of law in favour of the assessee and against the Reven ..... X X X X Extracts X X X X X X X X Extracts X X X X
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