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TMI Blog2024 (8) TMI 207X X X X Extracts X X X X X X X X Extracts X X X X ..... t venture and subsequently repaid by the other member would not be liable to payment of Service Tax. Extended period of limitation - HELD THAT:- When Service Tax is held to be not payable, extended period is also not invokable, apart from the fact that in the instant case, as noticed from the relied upon document namely letter dated 27.05.2017 entire factual aspect and modus operandi was known to the Respondent-Department and no proactive action in the nature of investigation, spot visit etc. were initiated by the Respondent-Department till it sought for a detail report from the Appellant on reimbursement expenses by M/s. Bhisma Realty Ltd. through its letter dated 21.02.2022, nearly after 5 years to which Appellant had furnished the figures (₹80,17,30,712/-) as total reimbursement amount received between October, 2016 and June, 2017, on which duty was straight away demanded, that would again take the Appellant out of the purview of wilful suppression since all information were available with it and furnished by it on demand and was also produced during audit. The order passed by the Principal Commissioner of CGST CX, Mumbai East Commissionerate is hereby set aside - Appeal a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0% from presently availed 100% CENVAT Credit by the Appellant and for its recovery. 2.1 Nearly about 5 years thereafter on dated 01.02.2022 detail of receipt of reimbursement amount by the Appellant was sought for by the jurisdictional Commissioner which was furnished by the Appellant vide its reply letter dated 21.02.2022 and 07.03.2022 with required detail covering period from October, 2016 to June, 2017 for an amount of ₹80,17,30,712/-, that was allegedly not declared in the ST-3 return as gross taxable value receipt. Accordingly Appellant was put to show-cause notice dated 05.04.2022 for payment of Service Tax of ₹12,02,59,606/- with interest and penalty as noted above including equal penalty for extended period under Section 78 of the Finance Act, 1994 on the reimbursement amount. Appellant contested the same and its unsuccessful attempt before the adjudicating authority namely the Commissioner of CGST CX, Mumbai East Commissionerate has brought the dispute to the present forum. 2.2 Before entering into controversy in detail, it is imperative to zoom into the development of law concerning Service Tax on reimbursement amount that was first brought into Service Tax d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d owner is a customer and builder is a service provider. He justified invocation of extended period by attributing the fact of backward investigation into the matter upon receipt of letter from the Audit party containing allegation against the Appellant regarding such non-payment of Service Tax. Through this appeal, legality of the said finding is assailed by the Appellant. 3. During course of hearing of the appeal learned Counsel for the Appellant Mr. Arjun Raghavendra submitted that Respondent- Department has proceeded on a wrong premises that Appellant was providing construction service to the owner of the land namely M/s. Bhisma Realty Ltd. while in reality, through a Joint Development Agreement (JDA), both the Appellant and owner were jointly providing service to the customers by constructing residential premises and selling those to intended buyers and as per JDA, at point number 18, it is clearly mentioned that Municipal Commissioner of Mumbai would permit them to construct flats on additional FSI (Floor Space Index) provided Appellant and its other partner M/s. Bhisma Realty Ltd. would construct public parking lot at their own cost and hand it over to the Municipal Corporat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecedent decisions on the issue even settled at the Hon'ble Apex Court level including that of Commissioner of Central Excise, Indore Vs. Raymond Ltd. reported in 2017 (6) GSTL 225 (SC), wherein it was held that materials on the basis of which claims/demands have been raised were before the Revenue at all material point of time for which no question of suppression or misstatement can be legitimately arised to enable the Revenue to avail the benefit of extended period of limitation, apart from the fact that after Audit was conducted, Department can t invoke extended period for a transaction pertaining to the said period [Delhi International Airport Ltd. Vs. Commissioner of CGST, Delhi as reported in (2019) 24 GSTL 403 (Tri.- Del.)]. In toto he pleads for acceptance of the appeal filed by the Appellant by setting aside order passed by the Principal Commissioner. 4. Learned Authorised Representative Mr. Ajay Kumar Shrivastava objected to such submission. He supported the reasoning and rationality of the order passed by the Principal Commissioner and explained in his written submission that wholly a new argument was led by the Appellant in putting forth a newly developed story that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ellant for construction of flats, in which case reimbursement of the said amount would be subjected to Service Tax since the same was an additional expenditure on which Service Tax was not discharged. The very said letter dated 27.03.2017 carries answer to it in para 3 last part and para 4. It states that Appellant was availing entire CENVAT Credit on input services used and consumed in construction of entire flats and therefore, it was either required to reverse the same to the extent of 60% or pay tax on reimbursable amount. 6. We will not deal with proportionate reversal of CENVAT Credit that had not formed part of the allegation in the show-cause notice and, therefore, reimbursement of approximately 33.33% of construction cost to the Appellant by M/s. Bhisma Realty Ltd., its collaborator is to be analysed and the period for which service was provided against such subsequent reimbursement is to be looked into. As has been held by Hon'ble Supreme Court in the above referred M/s. Intercontinental Consultants and Technocrats Pvt. Ltd. cited supra judgement, reimbursement can be included in the consideration value for service that was provided after 14.05.2015. In the instant ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ferent from what is being observed by the Respondent-Department. We have skipped through the Joint Development Agreement (JDA) of 2019 and the written submission filed on behalf of the Appellant. As has been noticed by us M/s. Bhisma Realty Ltd. would provide land to the Appellant over which construction would commence and Appellant would bear its entire cost. After completion of the project they would share the flats at 60:40 basis for sale to prospective buyerscustomers. Parking space would also be constructed and Appellant would bear 100% cost of the construction of flats and parking space cost to be shared equally. They have a futuristic plan to offer the parking space to the Municipal Corporation of Mumbai for acquiring the same and providing public parking against which they would get free FSI i.e. additional space for construction. In the event they succeed in their proposal, then they would make construction over the additional space and meet the expenditure @ 50:50 basis that would again be offered for sale to customers (para-5 of JDA). This being the agreed upon stand, the very conception of adding the reimbursement cost @33.33% to the cost of construction of flats is on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d during the adjudication proceeding. Instead of offering our answer to this it would be worthwhile to reproduce three paragraphs from the reply to showcause notice submitted by the Appellant to the Principal Commissioner on dated 05.05.2022, it reads: The Developer and the Owner will, after obtaining all the necessary approvals/permissions/sanctions, develop multi storied/parking lots/ Parking reservation for public purpose ( the Project Car Park ) as per Development Control Regulations for Grater Bombay, 1991 ( DCR ) and hand over the same to the Municipal Corporation of Greater Mumbai free of cost. Both Parties shall bear equally all costs, expenses and charges to develop the Project Car Park . The incentive facilities in the form of additional Floor Space Index ( FSI ) which will be over and above the FSI permissible under any other provision of the DCR, will be divided between the Parties in equal shares. The construction cost for the development of the incentive FSI as above would be borne equally by the Parties , subject to the ceiling stipulated for owners share of costs, as stated in the DA. As per the Supplemental Agreement between the Parties dated 30th July, 2010, a new ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Corporation handles contracts and documentation, M/s Reliance Industries Ltd manages financial and commercial requirements and the appellant vested with responsibility for technical operations. The deployment of personnel is in pursuance of that obligation. No business venture can function without capital and the by-passing of transubstantiation of accumulated capital, in the form of cash and bank balances, into these rights and competencies does not derogate from that. Hence, the activity undertaken by the appellant with its cost equivalence recorded in the books is nothing but capital contribution. The adjudicating authority has erred in concluding that the mechanism of cash call prescribed in the joint operations agreement is consideration for services; it is intended as the vehicle for contribution by the participating interests to the capital requirements of the venture. As such capital contributions are obligated for the establishment and operation of a business venture, it is not consideration for rendering of any taxable service. 17. .whatever the partner does for the furtherance of the business of the partnership, he does so only for advancing his own interest as he has a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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