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TMI Blog2019 (12) TMI 14X X X X Extracts X X X X X X X X Extracts X X X X ..... period - extended period cannot be invoked in subsequent SCN, more so, when the first SCN itself was issued invoking extended period. Classification of services - Construction of Residential Complex service or not - construction of villas - HELD THAT:- The construction of villas would not fall within the ambit of construction of residential complex service and no service would be liable to be paid on villa receipts. Regarding the activity of construction undertaken by the appellant in respect of other residential complexes, we find that the appellants have submitted various decisions. They appear to be diverse and the issue has not reached finality - the demand on this count if any is sustainable for the normal period i.e. 1-4-2011 to 31-3-2012. Learned Counsel further submits that the Commissioner has not considered their submissions in the impugned order - the case needs to go back to the original authority, to appreciate the evidence submitted by the appellants and to re-quantify the duty liability for the period 1-4-2011 to 31-3-2012. Consulting Engineer Service - penalty - appellants have submitted that they are not contesting the duty paid by them in respect of Co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nstruction of Residential complexes under taken by them due allowance was not given for the value of the materials. He however, submits that they are not pressing on the levy of Service Tax demanded on Consulting Engineer Service since they have paid duty before issue of Show Cause Notice. 3.1. Learned counsel submits that the Commissioner has confirmed the demand inter alia on the ground that the explanation inserted to Section 65(105) (zzzh) w.e.f. 01.07.2010 is clarificatory in nature and hence retrospective. Therefore, the Appellants were liable to pay service tax on the activity of sale of flats/villa from the period April 2007; in respect of demand for an earlier period, confirmed vide Order-in-Original Sl.No.3/2011 dated 31.01.2011, this bench, vide Final Order No.20942-20943/2018 dated 04.07.2018/10.07.2018, decided in favour of the Appellants and held that the Appellants were not required to pay any service tax for the construction services before 01.07.2010. Hon ble Tribunal in the following cases have also held that the insertion of explanation w.e.f. 01.07.2010 is prospective in nature and the builders were not liable to service tax prior to 01.07.2010:- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... terms of Article 265 of the Constitution of India, no tax should be levied or collected except by the authority of law. Therefore, the basic requirements under Article 265 are that (a) There must be a law (b) The law must authorize the tax and(c) The tax must be levied and collected according to the law. In the present case, the tax is not levied and collected in accordance with the law, as there is no statutory provision or a Rule determine the quantum of service portion in a composite transaction involving construction and sale of land. Therefore, any demand of service tax on a composite transaction involving construction and sale of land without a statutory machinery to determine the value of service, is in violation of Article 265 of the Constitution of India. He relies upon (a). Govind Saran Ganga Saran Vs CST1985 Supp SCC 205 (b). CCE Cus. Kerala Vs Larsen Toubro Ltd 2015 (39) STR 913 (SC) (c). Suresh Kumar Bansal Vs. UOI in 2016 (43) STR 3 (Del.) It has been held that neither the Finance Act nor the Rules framed therein provide for a machinery provision for excluding all components other than service components for ascertainin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Learned Counsel further submits that Commissioner in the impugned order has taken the cumulative figure declared in the balance sheet as the gross amount. The Appellants submit that on receiving the receipts from the prospective buyers of various projects, the same would be accumulated year on year under the head flat advances (liability side of the balance sheet), till the sale entry is accounted in the books of accounts. The sale entry would be accounted only on handing over the possession of the apartment/villa. Therefore, unless sale entry is accounted in the books of accounts and the amounts received would be reflected in each year s balance sheet as flat advances . The Appellants submit that the actual receipts pertaining to the financial year 2007-08 though it was offered to tax in the same financial year, was again adopted as the taxable value by Commissioner for the subsequent periods. The Commissioner in the impugned order has adopted the same calculation pattern for the subsequent financial years also. Hence, in the impugned order, the Commissioner has confirmed the demand of service tax on the very same receipts more than once. This manner is accounting is in accorda ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... terest much before the issuance of the show cause notice and in any case, the amount of service tax paid under reverse charge was available as Cenvat credit to the Appellants. The delay in payment under reverse charge was of the bona fide belief that no service tax was payable. Immediately on releasing that the same was payable, the Appellants remitted the service tax with interest. Penalties imposed are liable to set aside in terms of Section 80 as the Appellants had a reasonable cause for the non-payment of service tax. 4. Learned AR for the department reiterates the findings of the OIO. 5. Heard both sides and perused the records of the4 case. The brief issue involved in this case is to decide whether the appellants are liable to pay service tax on the constructions of complex services and Consulting Engineer Service for the period 01.04.2007 to 31.03.2012 and whether the SCN is time barred. We find that the present SCN is issued on 19.10.2012. We find that the explanation was added on 1-7-2010, the services rendered by the appellants before the issuance of completion certificate were not taxable as they were deemed to be services rendered by the builder to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s intended for personal use as residence by such person. Explanation.-for the removal of doubts, it is hereby declared that for the purposes of this clause,- (a) personal use includes permitting the complex for use as residence by another person on rent or without consideration; (b) residential unit means a single house or a single apartment intended for use as a place of residence; As per the above, residential complex should have more than twelve residential units in it. This is the first and foremost condition under the definition. The other conditions liked parking facility, common areas, common facilities, common layout etc., are only supplementary to the main condition that complex should have a building having more than twelve residential units or the buildings in the complex should have more than twelve residential units in it. Villa is a single residential unit and the entire project would not have a building with more than twelve residential units to fall within the ambit of definition of residential complex under Section 65 (91a). We find that the case of the appellants is covered by the case law cited by them and it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tions and judicial pronouncements, it is not proper to allege that the appellants had a mens rea in the case. Therefore, for extended period penalty is not imposable. For normal period also, we find that there are enough conditions to waive penalty in terms of Section 80 of Finance Act, 1994. In respect of Consulting Engineer s Service as the demanded duty is paid before the issuance of notice, we hold that no penalty can be imposed. Accordingly, we set aside the penalty imposed under Section 78 of Finance Act, 1994. 10. In view of the above, the appeal is partially allowed in the following terms: (i). Demand under Construction of Residential Complex is held to be time barred. Demand in respect of Construction of Villas is set aside. (ii). Demand under Construction of Residential Complex on construction of complexes other than Villas is sustained for the period 1-4-2011 to 31-3-2012 and remanded back to the original authority for re-quantification in terms of the discussion. (iii). Demand under Consulting Engineer s Service has been accepted by the appellants. (iv). Penalty imposed under Section 78 of Finance Act, 1962 is set asi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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