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TMI Blog2019 (9) TMI 123X X X X Extracts X X X X X X X X Extracts X X X X ..... an exigency when the owner of the house does not pay the maintenance charges after the society is formed. It has, therefore, to be ascertained whether this amount before it is transferred to the society has been utilized. This aspect of the matter, therefore, also needs to be examined on remand. Demand of service tax - late payment charges - HELD THAT:- Any additional amount collected towards delay in making the payment of the installments cannot be subjected to levy of service tax. This position stands clarified by the Circular dated 3 August 2011 issued by the Central Board of Excise and Customs New Delhi - Demand set aside. Short payment of service tax - period 1 July 2011 to 30 September 2012 - payment made on receipt basis instead of accrual basis - HELD THAT:- The payment is made on receipt basis instead of accrual basis had actually deposited the amount prior to the issuance of the show cause notice and that is why the amount has also been appropriated in the impugned order - only aspect that needs to be examined in regard to this issue is about the penalty that has been imposed by the Commissioner. Appeal allowed by way of remand. X X X X Extracts X X X X X X X X Extracts X X X X ..... e tax on receipt basis instead of accrual basis. 4. The appellant filed a to meet the capital expenses for a future date for replacement of items like lift, DG Sets, transformers, security devices, etc. and these funds are to be subsequently transferred to the co-operative society later formed by the members occupying the apartments / flats / properties. It was also stated that the refundable Maintenance Security Deposit was also collected from the flat owners at the time of handing over possession and this amount was also to be transferred to the resident association as and when formed. The appellant therefore, contended that these amount were not towards any specified service and hence were not liable to levy of service tax. 5. In respect of the second issue relating to receipt of the additional amount towards late payment of the monthly installments, it was contended that it was also not liable to levy of service tax as no service was provided. 6. In regard to the third issue relating to payment of service tax on accrual basis with effect from 1 July 2011, the appellant accepted that it had to pay this amount and the short payment was attributed to lack of knowledge about the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e relating to payment of service tax on the amount received from the customers for Corpus Fund / Escrow Fund and Maintenance Security Deposit under the head "management, maintenance or repair" services falling under section 65 (105) (zzg) of the Act, the Commissioner observed as follows: "From the above contention of the noticee, I find that the amount so collected from the customers is for provision of service to the buyers of the property and maintenance of common area of the building by the co-operative societies formed later on, hence I have no doubt that the said amounts received by the noticee in the name of Maintenance security, Corpus Fund and Escrow Fund are value of the taxable service namely Management, Maintenance or Repair Services. The noticee has not submitted any documentary evidence to prove that they have actually transferred the amount to the co-operative societies formed in completed projects nor they have produced any document to show that such amounts are of refundable nature. Further, I find that there is no condition in the agreements executed with the customers about the use of amount collected in the name of Escrow Fund, Corpus Fund and Maintenance Secur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion of the appellant that the extended period of limitation could not have been invoked for issuing the show cause notice was not accepted. The Commissioner also imposed penalty under Section 76 and 78 of the Act. 12. Shri A.K. Prasad, learned counsel for the appellant submitted that the Corpus / Escrow Funds is collected from the buyers / occupants of the property to meet the capital expenses on a future date for replacement of items like D-G Sets, transformers, Security device and these funds are subsequently transferred to the co-operative societies. Likewise, the refundable maintenance security from the flat owners collected at the time of handing over of the possession is also required to be transferred to the resident association. Learned counsel submitted that there was no evidence before the Department to conclude that expenditure had actually been incurred by the appellant towards replacement of lifts / DG Sets or transformers before transferring this amount to the society. Thus, according to the learned counsel, no service had been provided and in the absence of any recipient of service, no service tax could be levied. Learned counsel also submitted that once the funds w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ory of Management, Maintenance and Repair Service is unsustainable. However, this fact needs verification as to how the corpus fund has been put into use. It is also the case of the appellant that an amount of ₹ 13,04,280/- shown in Annexure A5 has not been collected by the appellant, during the relevant time as the project was not completed. That the department has levied the service tax basing upon the amount stated in the agreement. From the records, it is not clear as to whether the department has raised the demand merely basing on agreement and even though appellant has not collected it. This aspect also requires verification. 11. An amount of ₹ 9,87,216/- collected as maintenance charges towards the project 'Courtyard' is admitted by the appellant and the same is not contested by them. 12. From the above discussions, we hold that the demand of service tax on the category of construction of residential complex upto 31-7-2007 is not sustainable and therefore set aside. The demand in respect of corpus collected whether only a deposit or not and whether can be subject to service tax under Management, Maintenance and Repair Service is required to be verified. Simil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Supreme Court in Union of India Vs. Intercontinental Consultants and Technocrats Pvt. Ltd. 2018 (10) GSTL 401 (SC) 20. Learned Authorized Representative for the Department submitted that there is no error in the finding recorded by the learned Commissioner and that late payment are in the nature of a penalty and so, have necessarily to be included in the gross value. 21. We find considerable force in the submission advanced by the learned counsel for the appellant. Any additional amount collected towards delay in making the payment of the installments cannot be subjected to levy of service tax. This position stands clarified by the Circular dated 3 August 2011 issued by the Central Board of Excise and Customs New Delhi. The said circular is reproduced below: "Subject: Clarification regarding Service Tax on delayed payment charges collected by the service provider in respect of Stock Broker's services - Regarding. Representations have been received seeking clarification regarding leviability of Service Tax on the additional amount that is collected towards the delay in making payment to the stock brokers by their customers (delayed payment charges) in respect of Stock Brok ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the amount has also been appropriated in the impugned order. 24. The only aspect that needs to be examined in regard to this issue is about the penalty that has been imposed by the Commissioner. 25. The learned Counsel for the appellant submitted that there was no deliberate attempt on part of the appellant not to make payments of service tax since the appellant had been making the payments on receipt basis instead of accrual basis. 26. The contention of the appellant appears to be justified as it was only with effect from 1 July 2011 that the system of payment of service tax was changed from receipt basis to accrual basis. This amount was also deposited by the appellant before the issuance of the show cause notice. In such circumstances no penalty should have been imposed in view of the provision of section 80 of the Act. 27. It would, therefore, not be necessary to examine the contention of the learned counsel for the appellant relating to invocation of extended period of limitation since the entire demand made in the impugned order is not justified. 28. Thus, for all the reasons stated above, the impugned order dated 28 March 2014 cannot be sustained and is set aside. 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