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TMI Blog2025 (2) TMI 104X X X X Extracts X X X X X X X X Extracts X X X X ..... under the law. Construction of residential complexes having more than twelve residential houses or apartments together with common areas and other appurtenances were subjected to levy of service tax in the Union Budget for the year 2005. Further, in the definition of the taxable services of 'Construction of Complex service' itself an explanation was provided that unless the entire consideration for the property is paid after the completion of construction (i.e. after issuance of completion certificate by the competent authority), the activity of construction would be deemed to be a taxable service provided by the builder/promoter/developer to the prospective buyer and the service tax would be charged accordingly. The certificate issued by MCGM on completion of building under the Mumbai Municipal Corporation Act is not only termed as occupancy certificate but also completion certificate with title "FULL OCCUPANCY CERTIFICATE Under Regulation 6(7) and BUILDING COMPLETION CERTIFICATE Under Regulation 6(6)". However, the appellants have not provided any such certificate issued by the competent authority i.e., MCGM. There is no 'Full Occupancy Certificate' or 'Building Comp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r, referred to, as 'the impugned order') passed by the Commissioner (Appeals-Thane), CGST and CX, Mumbai. 2.1 Brief facts of the case, leading to this appeal, are summarized herein below: 2.2 The appellants are a proprietorship firm engaged in providing taxable services of Construction of Residential Complex and for this purpose are registered with the jurisdictional Service Tax authorities holding Service Tax Registration No. AAAPT7765KSD001. 2.3 During the course of an investigation conducted by the department and scrutiny of Annual Financial reports for the years 2010-11 to 2014-15, it was found that the appellants were aware of the provisions of service tax law, but had obtained their service tax registration belatedly and without properly determining their service tax liability and correct payment of service tax in respect of taxable services. Further, it was also found that the appellants had opted not to file the periodical ST-3 returns with the intention of evading service tax. Therefore, the department conducted detailed investigation and issued show cause notice dated 15.05.2017, demanding service tax on various amounts received by the appellants along with applicable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts, site supervisor, may be occupied subject to certain conditions specified therein; such letter had also carried an endorsement dated 01.04.2010 for water connection in 'P' form certified for domestic purpose. Further, the appellants also submitted copy of the Balance Sheet as on 31.03.2010, wherein the 'Notes to Accounts' had made a declaration that '2. During the year the building project (B to F) was completed and sales have been recognised in the books of account.' On the above basis, the appellants have claimed that the construction in respect of B, C, D, E, F, G & H wings of the project was completed before the Service tax was made applicable to the Construction of Residential Complex services. Further, they also claimed that certain non-taxable amounts, receipt of amount/advance received for the completed flats have been taken into account for demand of service tax. In view of the above, the appellants have pleaded that their appeal against the impugned order be entertained. 4. On the other hand, learned Authorized Representative (AR) appearing for Revenue reiterated the findings in the impugned order and brought to the notice of the Tribunal that the Municipal Corporatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... elation to, residential complex; (91a) "residential complex" means any complex comprising of-- (a) a building or buildings, having more than twelve residential units; (b) a common area; and (c) any one or more of facilities or services such as park, lift, parking space, community hall, common water supply or effluent treatment system, located within a premises and the layout of such premises is approved by an authority under any law for the time being in force, but does not include a complex which is constructed by a person directly engaging any other person for designing or planning of the layout, and the construction of such complex is 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,-- "personal use" includes permitting the complex for use as residence by another person on rent or without consideration; "residential unit" means a single house or a single apartment intended for use as a place of residence; (105) "taxable service" means any service provided or to be provided, … (zzzh) to any person, by any ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ity that the said amount was received by the appellant on 18/11/2010….. 6.3 … The advances received amounting to Rs. 6562801/- for the SRA project has been shown as advances received in the Balance Sheet… In this regard, I agree with the appellant since the Balance Sheet as on 31/03/2010 shows an amount of Rs. 11,33,801/- under the Head of Advances against booking (SRA). Therefore evidently the amount of advances received amounting to Rs. 11,33,801/- would be out of the ambit of the service tax levy. Further since the appellant have not disputed the liability to service tax on the remaining Advance amount of Rs. 5429000/-, the matter is set at rest and the appellant's contention is allowed to this extent. 6.4 As regards, the deposits of Rs. 156830/-, …towards one time deposit collected for maintenance relevant provisions of the Maharashtra Ownership Flats (Regulation of the Promotion of construction, Sale, Management and Transfer) Act, 1963,…..I find that the appellant has also not produced the corresponding documents as required by the adjudicating authority at this appellate stage also to substantiate that the amounts were indeed one ti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... contention of the appellant is rejected.…… 6.10 The appellant had maintained that Rs. 3,62,74,184/- out of Rs. 5,08,97,299 shown as Advances received for SRA projects in their Balance Sheet as on 31/03/2013 would only be subject to service tax…. In this regard, I observe that the Balance Sheet as on 31/03/2012 indicates Advances received for SRA Projects as Rs. 14623115/-. Therefore the amounts received as Advances for SRA projects for 2012- 13 would be Rs. 3,62,74,184/-, which is subject to service tax as contended by the appellant. Similarly, Advances received for A Wing as on 31/3/2012 is Rs. 6007134/-. Therefore the amounts received as Advances for SRA projects for 2012-13 would be Rs. 637800/-, which is subject to service tax as contended by the appellant. 6.11 It is contended that Other Advances of Rs. 1022000/- for FY 2012-13 pertains to sale of shops,of which O.C. was obtained on 25/01/2010….Since the letter dated 25/01/2010 cannot be treated as O.C, as already discussed above, the subject contention of the appellant is rejected.…… 6.12 As regards, the deposits of Rs. 539500/-, the adjudicating authority same has repudia ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arate account in such cases since the same is to be treated as a deposit by the society with the appellant……. 6.18 As regards the Advance received from Shri D.B. Tripathi amounting to Rs. 22311000/- against the sale of shops, it is contended that the O.C. was received on 25/01/2010… Therefore the appeal to this extent cannot be allowed… 6.19 As regards the Cenvat credit available to the appellant for utilization to discharge their service tax liabilities, apparently the appellant had not produced before the adjudicating authority the details of payments made against the invoices on which Cenvat credit was claimed. It was observed that the amount so claimed as Cenvat credit was already accounted for in their books of account. I find that the appellant have not produced the requisite details or evidences to answer and clarify the charge made at para 28 of the impugned order that "double benefit of the credit has been availed by the appellant deliberately". Therefore, in the absence of any clarifications forthcoming from the appellant in this regard, I find no grounds to allow the benefit of Cenvat credit of the amount of RS. 1297934/- claim ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion was provided that unless the entire consideration for the property is paid after the completion of construction (i.e. after issuance of completion certificate by the competent authority), the activity of construction would be deemed to be a taxable service provided by the builder/promoter/developer to the prospective buyer and the service tax would be charged accordingly. 11. In the present factual matrix of the case, the competent authority for issue of Completion Certificate is 'Municipal Corporation of Greater Mumbai' (MCGM) and they derive the authority for such issue under the Mumbai Municipal Corporation Act, 1888. The relevant legal provision of such act are extracted and given below for ease of reference: "270A. No person shall occupy or permit to be occupied, or use or permit to be used, any premises or part thereof constructed or reconstructed after the date of the coming into force of the Bombay Municipal Corporation (Amendment) Act. 1953, until he has obtained a certificate from the Commissioner to the effect that there is provided within or within a reasonable distance of the premises, a supply of pure water to the persons intending to occupy or use such premise ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... res that after submission of compliance of the conditions of Intimation of Disapproval (IOD), the Commencement Certificate (CC) will be issued to start the work upto the plinth level. After completion of plinth, a site inspection will be conducted to verify whether the plinth construction is in accordance with the approved plans; Thereafter the 'Further Commencement Certificate' (FCC) will be granted on submission of compliance of 'Further CC' conditions and payment as per demand note for 'Further CC' Stage. After completion of building, the applicant is required to submit the 'Building completion certificate' (BCC) and request for a Joint Site Inspection through 'Common Completion Request Form' along with compliance of OC/BCC conditions as per Standard Operating Procedures. Thereafter the Occupancy Certificate/BCC is granted by the MCGM authorities. Therefore, it clearly transpires from the above that the certificate issued by MCGM on completion of building under the Mumbai Municipal Corporation Act is not only termed as occupancy certificate but also completion certificate with title "FULL OCCUPANCY CERTIFICATE Under Regulation 6(7) and BUILDING COMPLETION CERTIFICAT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 88) as is clearly required under the provisions of Finance Act, 1994. Further, the advance/sum of money received towards sale of flats/shops, even though was shown to have been accounted during the year 2020- 2021 in the appellants books of accounts, to the extent that such sum was relatable to the flats/shops for whose 'completion certificate' was issued subsequent to the levy of service tax and is not covered by the exclusion part of the explanation to Section 65(105)(zzzh) ibid, I do not find that there is any need to interfere with the findings arrived at by the learned Commissioner (Appeal) on these aspects for demanding service tax leviable thereon.
13. In view of the above discussions and analysis, I do not find any grounds for interfering with the impugned order dated 29.03.2019 passed by the learned Commissioner (Appeals).
14. In the result, the impugned order dated 29.03.2019 is upheld and the appeal filed by the appellants is dismissed.
15. Miscellaneous application for submission of additional grounds by the appellants having been taken up for consideration in this appeal on merits, is also disposed of.
( Order pronounced in the open court on 31. 01. 2025 ) X X X X Extracts X X X X X X X X Extracts X X X X
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