Custom, Excise & Service Tax Tribunal
M/S Sri Lakshmi Narasimha Enterprises vs Commissioner Of Service Tax - ... on 18 February, 2014
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL SOUTH ZONAL BENCH BANGALORE Final Order No . 20241-20242 / 2014 Application(s) Involved: ST/Stay/25265 & 25270/2013 in ST/25266 & 25267/2013 Appeal(s) Involved: ST/25266/2013-DB, ST/25267/2013-DB [Arising out of Orders-in-Original 123 & 124/2012 dated 16/11/2012 passed by Commissioner of Central Excise and Service Tax , BANGALORE-CUS] M/s Sri Lakshmi Narasimha Enterprises No.4905, 9th Floor, High Point-4, Palace Road BANGALORE-560001 Appellant(s) Versus Commissioner of Service Tax - BANGALORE-SERVICE TAX 1ST TO 5TH FLOOR, TTMC BUILDING,above BMTC BUS STAND,DOMLUR BANGALORE-560071 Respondent(s)
Appearance:
Mr. B.G.CHIDANANDA URS, Adv.
#520, AMRUTH NIVAS, 7TH MAIN, 13TH CROSS, RMV 11 STAGE, DOLLARS COLONY, BANGALORE -560094 For the Appellant Mr. A.K. Nigam, A.R. For the Respondent CORAM :
HON'BLE SHRI B.S.V. MURTHY, TECHNICAL MEMBER HON'BLE SHRI S.K. MOHANTY, JUDICIAL MEMBER ________________________________________ Date of Hearing: 28/02/2014 Date of Decision: 28/02/2014 Per B.S.V. MURTHY In both the appeals, the issue involved is common and therefore, both the appeals are taken up together for the disposal and a common order is being passed.
2. We heard both sides for quite some time and considerable time was taken by learned counsel also to explain as to why their activities come under the category of Site Formation at all. After considering the submissions and going through the records and the impugned orders, we find that the matter is required to be remanded to the original adjudicating authority for fresh consideration. Therefore, we waive the requirement of pre-deposit and take up the appeals for final decision. At this stage, it was made clear that the amount already deposited by the appellants shall remain with the department and the appellants not to claim refund because the impugned orders are being set aside and the matter is remanded to the original adjudicating authority.
3. The appellants undertake all the work involved in converting agricultural land to lay outs where residential sites are formed. Learned counsel on behalf of the appellants took considerable time to explain as to why the activities undertaken by the appellants are works contract and not site formation service as proposed by Revenue; as to why process of conversion of agricultural land to residential site should not be considered as site formation for the purpose of tax. He also took us through the agreements between the appellants and the Societies; and between the appellants and land owners to support these submissions. He also submitted that for the purpose of levy of service tax, land value, portion of the value on which vat has been paid as works contract have not been deducted at all even though pleaded.
4. On the other hand, learned A.R. submits that deductions in respect of cost of land could not be considered by learned original adjudicating authority since the appellants did not give necessary details. He refers to paragraphs 24 & 25 of the adjudication order to support this submission that the assessee did not give necessary details and therefore, the department had no other option but to demand service tax on the entire consideration as per the agreements.
5. We find that one of the main grounds taken by learned counsel before the original adjudicating authority that the service rendered by the appellant is to be classified as works contract and not as site formation has not been discussed but not accepted. This should have been considered in detail by the Commissioner based on the submissions made by the appellants. We felt that the observations in paragraphs 24 & 25 are totally irrelevant and not based on facts and did not interpret the Chartered Accountants certificate produced by the appellants correctly at all. We reproduce the certificate issued by Chartered Accountant herein below :
S V SURANA & CO., CHARTERED ACCOUNTANTS CERTIFICATE Certified that the total receipts of SLN Enterprises of which Sri Pradeep Krishnappa is the proprietor, for the years 2006-07 to 2009-10 and their break-up towards value of land on which stamp duty paid/payable under the Karnataka Stamp Act and developmental charges declared for Value Added tax Purpose in their Annual Statement of Accounts in Form VAT-240 to the Department of Commercial Taxes, as per their of books of accounts produced before me and verified by me, are as under :
Period Total receipts on which stamp duty is paid Total turnover declared on which VAT paid 2006-07 40,92,00,000 -
2007-08 92,16,85,517 7,66,50,368
2008-09 23,28,52,495 8,67,53,159
2009-10 14,91,59,000 10,00,000
FOR S.V. SURANA & CO.
Chartered Accountants
Sd/-xxx
(S.V. SURANA)
Bangalore For Sri Lakshmi Narasimha Enterprises
Sd/-xxx
Date : 13.6.2012 Pradeep Krishnappa
(Proprietor)
We also reproduce the paragraphs 24 & 25 of the Commissioners order for better appreciation as under :
24. Further M/s SLN has submitted that for the year 2008-09 taxable value has been wrongly stated as Rs. 33,28,52,495/- instead of Rs. 23,28,52,495/- as reflected in the Balance Sheet and also certified by the Chartered Accountant. I have examined the statement of total income for the year ending 31.3.2009, as submitted by the assessee vide letter dated 7.4.2010 and found that total amount reflected is Rs. 33,28,52,495/- and not Rs. 23,28,52,495/-.
25. Though, it is very clearly spell out in the said show cause notice till date M/s SLN did not furnish the value of land cost along with any statutory taxes paid to the department in spite of the opportunities provided through the period provided for reply to the notice as well as the multiple personal hearing provided. This either reflects that the assessee has misled the department or does not consider it his obligation to provide the details. Therefore, I am left with no choice but to confirm the entire service tax of Rs. 22,05,10,355/- demanded in the aforementioned show cause notice. The certificate certified total value of land on which duty was paid. Column No. 2 of the Table in the certificate shows total receipts on which stamp duty was paid. In our opinion, it should be the land value since stamp duty was paid on the value. Therefore, the Commissioners observation that the assessee did not furnish the land cost along with any statutory taxes paid is not at all correct because the C.A.s certificate shows the value of the land. Further it also shows the amount of VAT paid. The observation is that the appellant did not furnish the land cost with statutory taxes paid to the department. The appellants had not paid service tax and it has to be understood that statutory tax has to be VAT and stamp duty. While stamp duty may not be relevant, the total turnover on which VAT has been paid could have been relevant because their claim that transaction has to be treated as works contract. Therefore, observation that statutory tax has to be taken as VAT and if this view is taken it would show that the details were available. The paragraphs 24 & 25 of the Commissioners order would show that Chartered Accountants certificate has not been considered properly and has not been appreciated in the manner in which it should have been appreciated and applied to the facts of the case. At this stage, we find that this submission was crucial especially in view of the fact that there is no clear finding on the land value for the purpose of levy of tax after the service was considered as site formation. In the absence of such observation, one can assume that the Commissioner was inclined to exclude land cost but since it was not available, proceeded to confirm demand on the entire value.
6. In view of the infirmity in the impugned order and since we feel that the Commissioner should reconsider all those issues raised by the appellants, the impugned orders are set aside and the matter is remanded to the original adjudicating authority for fresh adjudication. Needless to say that the appellants shall be given reasonable opportunity to present their case before passing a final order. We also request the Commissioner to consider all the issues that will be raised before him and pass a well reasoned order so that repeated litigation can be avoided. The appeals and stay petitions are disposed of by way of remand.
(Order dictated and pronounced in open court) (S.K. MOHANTY) JUDICIAL MEMBER (B.S.V. MURTHY) TECHNICAL MEMBER /vc/