Custom, Excise & Service Tax Tribunal
Vinamra Enterprises & Nav Bharat Nirman ... vs Udaipur on 25 September, 2025
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL
New Delhi
PRINCIPAL BENCH - COURT NO. III
Service Tax Appeal No.50933 Of 2019
[Arising out of Order-in-Appeal No. 1232(CRM)JDR/2018 dated 12.11.2018 passed
by the Commissioner (Appeals) of Central Excise & Central Goods, Service Tax,
Jodhpur]
M/s Vinamra Enterprises & Nav : Appellant
Bharat Nirman Company
C-7, Vallabhbadi, Kota (Raj.)
Vs
Commissioner of Central Goods, Service : Respondent
Tax, Central Excise, Customs, Udaipur 142-B, Sector 11, Hiran Magri, Udaipur (Raj.) APPEARANCE:
Shri Ankit Totuka, Advocate for the Appellant Ms. Jaya Kumari, Authorized Representative for the Respondent CORAM :
HON'BLE MS. BINU TAMTA, MEMBER (JUDICIAL) HON'BLE MS. HEMAMBIKA R. PRIYA, MEMBER (TECHNICAL) FINAL ORDER No. 51357/2025 Date of Hearing:04.06.2025 Date of Decision:25.09.2025 HEMAMBIKA R. PRIYA The present appeal has been filed by M/s Vinamra Enterprises & Nav Bharat Nirman Company1 to assail the Order-in-Appeal No. 1232(CRM)JDR/2018 dated 12.11.2018 wherein the Commissioner (Appeals) confirmed the demand of service tax Rs. 1,72,20,400/-
along with interest and penalty.
2. The brief facts of the case are that the appellant having registered office at C-9, Vallabhbari, Kota were engaged in the 1 The appellant 2 construction of EWS & LIG Flats as per Model No. 2 of Affordable Housing Policy, 2009 of Government of Rajasthan. A Show Cause Notice dated 21.04.2017was issued to the appellant alleging that they were providing taxable service of 'Construction of Residential Complex Services',as defined in Section 65(30a) of the Finance Act, 1994 & taxable under clause of 65(105) (zzzh) of the Finance Act, 1994 up to 30.06.2012. From 01.07.2012, the said services of construction of complex, building or civil structure or part thereof was covered under declared service Section 66E(b) of the Finance Act 1994. The notice alleged that the appellant had evaded Service tax amounting to Rs.1,72,20,400/- for the period 2011-12 (Oct-2011 to March-12) to 2014-15. The matter was adjudicated vide Order-in-Original No. 4/ST/UDR/2017-18 dated 24.01.2018, the Joint Commissioner confirmed the demand along with interest and penalty. Aggrieved by the said order-in-original, the appellant filed an appeal before the Commissioner(Appeals), who rejected the appeal and upheld the order-in-original. The appellant filed the present appeal before the Tribunal.
3. Learned counsel for the appellant submitted that the demand for the period from October, 2011 to 30.06.2012 is not sustainable as UIT Kota, a local authority is a nodal agency of the Government of Rajasthan and is not covered under the definition 'Person'.
4. Learned counsel contended that the definition of taxable service is clear that taxable service provided by any person to any person in relation to construction of complex service. The word ‗person' was defined only with effect from 01.07.2012 with the insertion of Section 65B(37) of the Act. Therefore, resorting to definition of 'Person' as per 3 General Clauses Act, 1897, as given in Section 3(42) Person' shall include any company or association or body of individuals, whether incorporated or not. In the present case, the appellant had provided construction service to Urban Improvement Trust2, Kota, which is a nodal agency of Government of Rajasthan-Local Self Government. Consequently UIT Kota was not covered under the definition of "Person" and therefore, the service is not taxable under the provisions of Section 65(105)(zzzh) of the Finance Act, 1994. The Finance Act, 1994 has defined 'person' under Section 65(B)(37) of the Act with effect from 01.07.2012 whereby 'person' included Government and Local Authority. Learned counsel stated that it is settled law that liability of service tax is to be decided with reference to the taxable service at the relevant time. Hence, the Commissioner (Appeals) had grossly erred in holding that the Section 65B (37) provides that 'person' includes government and local authority and is applicable even for the prior to 01.07.2012. In support of his submission, the learned counsel relied upon the following decisions:-
(i) Dy. Commissioner of Police, Jodhpur vs. Commissioner of Central Excise3 (ii) Commissioner vs. Dy. Commissioner of Police, Jodhpur4 (iii) Indfos Industrial Limited vs. Commissioner of Central Excise, Noida5 2 UIT 3 2017 (48) STR 275 (Tri.-Del.) 4 2018 (11) GSTL J133 (S.C.) 5 2012 (26) STR 129 (Tri.-Delhi) 4
4.1 Learned counsel further submitted that even otherwise, the said services were exempt in terms of Notification No. 28/2010 dated 22,06.2010 and Notification No. 6/2011-ST dated 01.03.2011. As per both these notifications, the taxable service of construction of complex referred to in sub-clause (zzzh) of clause (105) of section 65 of the Finance Act, when provided to Jawaharlal Nehru National Urban Renewal Mission and Rajiv Awaas Yojana is exempt from the whole of the service tax leviable thereon under section 66 of the Finance Act. In term of letter dated 22.01.2016 issued to the appellant, the Kansua Housing scheme, Kota, satisfied the criterion of Jawaharlal Nehru National Urban Renewal Mission and Rajiv Awaas Yojana. 4.2 Learned counsel further added that the demand for the period from 01.07.2012 to 31.03.2015 was also not sustainable as the appellant was entitled to benefit of exemption under S.No.12 of Notification No. 25/2012-ST dated 20.06.2012. He submitted that after introduction of negative list, "construction of complex, building, civil structure or a part thereof including complex or building intended for sale to a buyer wholly or partly" is a Declared Service under Section 66E of the Finance Act, 2012.
4.3 Learned counsel stated that the appellant had claimed exemption from payment of service tax under Notification No.25/2012-ST (SI. No.12) as they had provided service to the Local Authority-UIT, Kota for new construction of flats for residential purposes for economically weaker sections (EWS) and LIG persons under the Government of Rajasthan "Affordable Housing Policy-2009". The Commissioner (Appeals) had disallowed the exemption contending that "the exemption is available only when the services as 5 detailed in clause 12 are provided to the Government, a local authority or Government Authority for civil structures or any other original works meant predominantly for use other than for commerce, industry or any other business or profession. His contention was that services had been provided for construction of houses which were meant for sale by the UIT, to the buyers for a consideration and thus cannot be treated as for use other than for commerce or business. This contention of the Commissioner was against the Government of Rajasthan "Affordable Housing Policy-2009 (with focus on EWS/LIG Housing) for urban areas of Rajasthan for construction/allotment of EWS/LIG/MIG-House/Flats. In support of his contention, the learned counsel relied on the following decisions:-
(i) Commissioner of Central Excise & Service Tax, Allahabad vs. Ganesh Yadav6
(ii) G. N. Construction vs. Commissioner of Central Excise7
(iii) Bharat Bhushan Gupta & Company vs. State of Haryana8 4.4 Learned counsel for the appellant further submitted that the impugned order had invoked extended period of limitation under proviso to section 73(1) alleging that, had the department not initiated the inquiry, the non-payment of service tax would not have been unearthed. He submitted that the appellant had a bonafide belief that the service of construction of EWS/LIG flats- under Affordable Housing Scheme, 2009 provided to UIT, Kota was not 6 2017 (6) GSTL 428 (Tri.-All.) 7 2020 (37) GSTL 305 (Tri.-Chan.) 8 2016 (44) STR 195 (P & H) 6 taxable under the provisions of Finance Act, 1994. In support of his submissions, learned counsel relied on the decision of the Tribunal in Commissioner of Central Excise Pune Vs. Central Panchayat9.As regards suppression of facts, learned counsel for the appellant submitted that suppression of facts would arise when facts which are required to be disclosed according to the statute are not declared or deliberate with holding of information. He stated that they had furnished the relevant information regarding 'construction service' provided by them to the UIT, Kota during the relevant period and hence there was no suppression of any fact from the department.
Learned counsel submitted that the Hon'ble Supreme Court in the case of Continental Foundation Jt. Venture Vs. CCE, Chandigarh-110has held that since the expression "suppression" in proviso to Section 11A is accompanied by very strong words such as "fraud" or "collusion", it has to be construed strictly and mere omission to give information is not suppression of facts unless it was deliberate act to evade payment of duty. It is a settled legal position that when the matter relates to interpretation, extended period cannot be invoked and no penalty is imposable as held in Larsen and Toubro Ltd. Vs Commissioner of Central Excise11. In view of the above submissions, learned counsel rout ended that the demand was not sustainable. Consequently, no interest under section 75 and no penalty equivalent to 50% of the service tax demand was sustainable. Learned counsel relied on Hon'ble Supreme Court's decision in the case of M/s HMM Lid. Vs. Commissioner of Central 9 2015 (37) STR-1038 (Tri-Mumbai).
10 [2007 (216) ELT-177-SC] 11 [2007 (211) ELT 513 (SC)] 7 Excise12wherein it was held that there is no penalty and interest if the demand is held to be unsustainable. The learned counsel also relied on the following decisions:-
(i) Commissioner of Central Excise vs. Kisan Mouldings Limited13
(ii) Commissioner of Central Excise vs. Dinesh Chandra Agarwal14
(iii) Commissioner of Central Excise vs. Gamma Consulting Private Limited15 In view of above submissions, learned counsel prayed that the impugned order may be set-aside and the appeal may be allowed.
5. Learned Authorized Representative for the Department submitted that an exhaustive and inclusive definition of ‗person' was provided in clause 37 of Section 65B includes individuals, and certain specified types of entities/bodies etc. including government. Thus, it was entirely wrong and incorrect on the part of the service provider to claim that the word 'person' was not defined in Finance Act, 1994. Learned AR stated that UIT, Kota have been set by the Rajasthan Urban Improvement Act, 1959 as a local government body for systematic development of urban areas. Therefore, the contention of the service provider is not correct and acceptable that UIT a Local body is not covered under the definition of 'Person' and therefore the service is not taxable as the Section 65B(37) clearly provides that 12 1995 (76) ELT-497 (SC) 13 2010 (260) ELT 167 (SC) 14 2013 (31) STR 5 (Guj.) 15 2006 (4) STR 591 (Tri.-Mumbai) 8 'person' includes Government and local authority. Learned AR further stated that a letter dated 14.07.2016 was written by the jurisdictional Range Office seeking details of the Kansua Housing Scheme and sought details of the proposal, if any, sent to the Central Sanctioning and Monitoring Committee in the Ministry of Housing & Urban Poverty Alleviation and the approval details by the competent authority. Learned AR submitted that the UIT had not given any details or specific reply on the said point. She further stated that the service provider themselves had stated that the project was approved by Government of Rajasthan but the appellant failed to provide details of the approval by the competent authority empowered under the 'Scheme of Affordable Housing in Partnership' framed by the Ministry of Housing and Urban Poverty Alleviation, Government of India. Further, the appellant also did not submit any document to substantiate the fact that the said project was submitted by the State Level Steering Committee to the Central Sanctioning and Monitoring Committee in the Ministry of Housing & Urban Poverty Alleviation for project sanction. Consequently, the said project was not covered under clause (c) of Sl. No. 14 of Notification No. 25/2012-ST dated 20.06.2012 above and is not eligible for exemption from levy of service tax.
5.1 Learned Authorized Representative further submitted that the clause (ca) was added to Serial No. 14 of Notification No. 25/2012-5T w.e.f. 01.03.2016, which provided exemption to construction of low cost housing up to carpet area of 60 Square meter per house in a housing project approved by competent authority under:- 9
(i) The "Affordable housing in partnership" component of the Housing for all (Urban)Mission/Pradhan Mantri Awas Yojana.
(ii) Any housing scheme of a State Government.
Thus, insertion of clause (Ca) in Serial No. 14 of Mega exemption Notification with effect from 01.03.2016, to include all housing project of Urban Mission/PradhanMantri Awas Yojana and any housing Scheme of a State Government for exemption from levy of service tax clearly implied that such projects were not covered under clause (c) earlier and therefore, a specific clause has been inserted on 01.03.2016 to clarify the position. Learned Authorized Representative further submitted that exemption under Sl. No. 12 of Notification No. 25/2012 dated 20.06.2012 was available only when the services as detailed in clause 12 were provided to the Government, a local authority, or a Government Authority for civil structure or any other original works meant predominantly for use other than for commerce, industry or any other business or profession. In this case the services have been provided for construction of houses which are meant for sale by UIT. The houses were to be sold by UIT to the buyers for a consideration and thus could not be treated for use other than for commerce or business and, therefore; did not merit consideration under the clause 12 (a).In respect of residential complex, a separate and distinct entry was available up to 31.03.2015 under sub clause (f) of S. No. 12 of the above Notification which read as under:
(f) a residential complex predominantly meant for self-use or the use of their employees or other persons specified in the Explanation 1 to clause 44 of section 65B of the said Act. 10
The above clause was specifically meant for residential complexes and thus the intention was very clear that the residential complex were not covered clause (a) and further even under clause (f) only this residential complex were covered which were predominantly meant for self-use or the use of their employees or other persona specified in the explanation I to clause 44 of section 65 B of the said Act. 5.2. As regards Point of Taxation Rules, learned Authorized Representative submitted that as per the second proviso to the rule, in case of continuous supply of service where the provision of the whole or part of the service is determined periodically on the completion of an event in terms of a contract, which requires the receiver of service to make any payment to service provider, the date of completion of each such event as specified in the contract shall be deemed to be the date of completion of provision of service. In the instant case, the "construction of residential complex" service provided by the service provider fall under the category of continuous supply of service. Further, as per the para 24 of the agreement entered by the service provider with the UIT, the payment was to be released to them on completion of stages as laid down thereunder. Further the UIT vide their letter dated 06.07.2016 had also clarified that payment of Running Bills No. I to VI had been released for the work done by them from the date 15.12.2011 to 20.06.2012. Thus, the date of receipt of payment by the service provider implied completion of provision of services for different stages, as agreed in the agreement. Consequently, the date of receipt of payment was the relevant date for computation of the service tax liability.As per the Affordable Housing Scheme (Model No. 2), which is in respect of 11 Private Developer on Private Land - the land owner will provide his land for conversion and development before the UIT und the UIT under this scheme will not charge any conversion fees, development fees, building plan fees, external development charge etc. from the land owner and land will be converted for Commercial use. In such scheme, the land owner will use only 40% land for construction of EWS & LIG Flats under affordable housing project, whereas entire land was to be converted by UIT for commercial use. Thus, it is apparent that the service provider had been given the benefit of 100% land and further they were required to use only 40% of the land for construction of EWS and LIG flats. The remaining 60% land which in their possession, they were required to construct MIG A houses in 20% of the area, and the remaining area could be used by them for consideration provided to the service provider and is in the cost of construction of affordable housing scheme. The services provide by them to the UIT for Affordable Housing Scheme are taxable services and they were liable to pay service tax on the said services as computed in the notice issued to them in terms of proviso to section 73(1) of the Finance Act, 1994 along with interest under section 75 of the Act read with Section 174 of the Central Goods and Service Tax Act 2017.Learned Authorized Representative submitted that the appellant had suppressed the facts with intent to evade the due service tax and had the investigation against them not been initiated, the said non-payment of service tax would have remained unearthed and they have not obtained the registration and have violated the provisions of section 69 of the Act and have rendered themselves liable for penalty u/s 77(1) of the Act. In the light of the 12 above submissions, learned Authorized Representative prayed that the present appeal may be dismissed.
6. We have heard the Learned Counsel for the appellant and the learned Authorized Representative for the Department. The issue for our consideration is whether service tax is leviable on the amount received from the Urban Improvement Trust, Kota on ―construction of residential complex' for the period covering pre and post negative list, October, 2011 to March, 2015. We will consider each period independently:
October 2011-June 2012 6.1 The appellant entered into an agreement with the Urban Improvement Trust, Kota for construction of 1216 EWS flats and 512 LIG flats under the Kansuwa Affordable Housing Scheme. For the said construction, the appellant received the fixed consideration of Rs. 2.45 lakh per EWS flat and Rs. 3.75 lakh per LIG flat. It has been submitted that for the said period, the appellant did not take registration as the UIT, Kota was not covered by the definition of the term ‗person' in the Finance Act, 1994. Learned Counsel submitted that in addition to the fact that UIT was not covered by the definition of person, the appellant had provided the services of construction to the nodal agency of the State Government of Rajasthan. Hence, the service was not taxable.
In order to appreciate the submissions, we would need to go back to the relevant section, which is reproduced hereinafter. The service 'Construction of complex' was introduced with effect from 16.06.2005 under Finance Act, 1994. Sec. 65 (30a) defines the service 'construction of complex' as-
13―(a) construction of a new residential complex or a part thereof; or
(b) completion and finishing services in relation to residential complex such as glazing, plastering, painting, floor and wall tiling, wall covering and wall papering, wood and metal joinery and carpentry, fencing and railing, construction of swimming pools, acoustic applications or fittings and other similar services; or
(c) repair, alteration, renovation or restoration of, or similar services in relation, residential complex.‖ 6.1.1 It is evident that the construction of residential complex was subject to service tax with effect from 16.06.2005. Sec. 65(91a) defines the term 'residential complex'. According to this section 'residential complex' means any complex comprising of-
(i) a building or buildings, having more than twelve residential units;
(ii) a common area; and
(iii) 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. 6.1.2. In the instant case, it is an admitted fact that the appellant provided construction of 1216 EWS flats and 512 LIG flats under the Kansuwa Affordable Housing Scheme for UIT, Kota. It has been submitted by the ld. Counsel that UIT, Kota cannot be considered as ‗person' as the term had not been defined in the Finance Act, 1994. It has been submitted that the impugned order has relied on the definition of person as per the General Clauses Act, 1897, wherein ‗Person' includes any company, or association body of individuals, whereas the appellant had provided to the UIT, Kota which was the agency of the Government of Rajasthan. As rightly pointed out by the learned Counsel for the appellant that the term ―person‟ appearing in 14 the definition must be construed to be a natural person and by no stretch of imagination will include the State or its officers or the posts created under a statute as held by the Constitution Bench of the Hon‟ble Supreme Court in the case of West Bengal Vs. Union of India.16 6.1.3. In this context, we take note of the Tribunal decision in the case of Dy Commissioner of Police, Jodhpur vs Commissioner of Central Excise17 wherein it was held that the term ‗person' was defined under section 65B(37) post 1.7.2012 and the same cannot be imported for the period prior to the said definition. The relevant paras are reproduced hereinafter:-
―10. The appellants have argued that the term ―person‖ appearing in the definition must be construed to be a natural person as well as a juristic person and by no stretch of imagination, the same will include the State or its officers or the posts created under a statute. They cited the judgment of the Constitution Bench of the Hon'ble Supreme Court in the case of West Bengal v. Union of India18 in which the Apex Court has held as under:- ―the definition is an enlargement of the natural meaning of the expression „person‟, even the extended meaning does not include the State.‖ Their submission is that Superintendent of Police is an authority of the State Govt. to carry out statutory and constitutional duties. The definition of the term ―person‖, (which does not cover the Govt.) in the General Clauses Act, 1897 is given as follows :-
"42. "Person" shall include any company or association or body of individuals, whether incorporated or not,". In the light of the definition of the term "person" in the General Clauses Act, 1897, which has also been examined and clarified by the Apex Court, it would appear that the Superintendent of Police, which is an agency of the State Govt. does not appear to be covered within the term "person".
16 [AIR 1963 SC 124] 17 [2017 (48) STR 275(Tri.Del)] 18 [AIR 1963 SC 124] 15 It is also noteworthy that in the year 2012 when the pattern of levy of service tax was changed and the concept of negative list was introduced with effect from 1-7-2012, a definition was introduced for the term ―person‖ in Section 65B(37), of the Act, which includes the Govt., local authorities, etc. From this, it is evident that such a definition for the term ―person‖ has become part of the statute only from this date. To decide the meaning of ―person‖ up to this date, we will have to refer to the General Clauses Act, 1897 as well as relevant case laws. The Apex Court has clearly held that the definition of ―person‖ cannot be extended to include State. Consequently, we are of the view that the Superintendent of Police will not be covered within the term ―person‖.‖ 6.1.4 In view of the above, we agree with the submissions of the ld counsel that the UIT, Kota does not fall within the ambit of the definition of ‗person' as defined in the General Clauses Act. In this context, we note that the impugned order has taken note of the findings of the original authority relying on the definition of person as per in Section 65B(37) which was introduced with effect from 1.7.2012 only. However, in view of the above decision and the fact that the said definition was not introduced with retrospective effect, the submissions made by ld AR cannot be accepted Consequently, the demand for the period upto 30.06.2012 cannot be sustained. Consequently, we are not considering the submissions that the appellant was even otherwise covered by the exemption provided to Jawahar Nehru National Urban Renewal Mission and Rajiv Awaas Yojana.
July, 2012 to March, 2015 6.2 It has been submitted by the ld counsel that the appellant was eligible for the exemption under sl no. 12 of Notification No. 25/2012- ST dated 20.06012. In this context, we note that the construction of complex was covered under ‗Declared service' under section 66E of the Finance Act, 1994.
16―SECTION 66E. Declared services. -- The following shall constitute declared services, namely:--
(a) renting of immovable property
(b) construction of a complex, building, civil structure or a part thereof, including a complex or building intended for sale to a buyer, wholly or partly, except where the entire consideration is received after issuance of completion-
certificate by the competent authority.
Explanation. -- For the purposes of this clause, -- (I) the expression ―competent authority‖ means the Government or any authority authorised to issue completion certificate under any law for the time being in force and in case of non-requirement of such certificate from such authority, from any of the following, namely:--
(A) architect registered with the Council of Architecture constituted under the Architects Act, 1972 (20 of 1972); or (B) chartered engineer registered with the Institution of Engineers (India); or (C) licensed surveyor of the respective local body of the city or town or village or development or planning authority; (II) the expression ―construction‖ includes additions,alterations, replacements or remodelling of any existing civil structure;...................‖ 6.2.1 The ld Counsel has claimed exemption under sl no 12 of the aforesaid notification 25/2012 dated 20.6.2012. The said clause of the notification is reproduced for ease of reference:
―12. Services provided to the Government, a local authority or a governmental authority by way of construction, erection, commissioning, installation, completion, fitting out, repair, maintenance, renovation, or alteration of -
(a) civil structure or any other original works meant predominantly for use other than for commerce, industry, or any other business or profession 17
(b) a historical monument, archaeological site or remains of national importance, archaeological excavation, or 2/8 antiquity specified under the Ancient Monuments and Archaeological Sites and Remains Act, 1958 (24 of 1958);
(c) a structure meant predominantly for use as (i) an educational
(ii) a clinical, or (iii) an art or cultural establishment;
(d) canal, dam or other irrigation works;
(e) pipeline, conduit or plant for (i) water supply (ii) water treatment, or (iii) sewerage treatment or disposal; or
(f) a residential complex predominantly meant for self use or the use of their employees or other persons specified in the Explanation 1 to clause 44 section 65B of the said Act;....................................................‖ 6.2.2.It has been contended before us that the appellant had constructed residential flats which are new construction for EWS and LIG under the Affordable Housing Policy-2009 of the Government of Rajasthan. It is an admitted fact that the such flats were constructed under the aegis of the policy of the State Government, however the exemption is categorical that it has to be for the purpose other than business or commerce. It is seen that the UIT, Kota was established by the Rajasthan State Government in 1970 under the Rajasthan Urban Improvement Act, 1959. The UIT is responsible for overall development of the city. From the above, it is evident that the UIT is a Trust and not a governmental agency, as claimed by the appellant. UIT is a statutory, government affiliated body but it does not enjoy tax exemptions as a municipality. Although their functions are similar to municipal bodies, but they are not considered as municipalities. In this context, we place reliance on the Supreme Court's judgment dated 12.12.2018 in the case of ITO vs Urban Improvement Trust in Civil Appeal No. 10577-586 of 2018 wherein the Apex Court held as follows:
―37. We, thus, are of the view that Scheme of the Rajasthan Urban Improvement Act, 1959 does not permit acceptance of the 18 contention of the appellant assessee that Urban Improvement Trust is a Municipal Committee within the meaning of Section 10(20) Explanation (iii). The purpose and object for expression ―Municipal Committee‖ used in Section 10(20) Explanation (iii) has been explained, as already noticed above, by this Court's judgment in Agricultural Produce Market Committee Narela, Delhi (supra).
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39. The High Court based its decision on the fact that functions carried out by the assessee are statutory functions and it is carrying on the functions for the benefit of the State Government for urban development. The said reasoning cannot lead to the conclusion that it is a Municipal Committee within the meaning of Section 10(20) Explanation Clause (iii). The High Court has not adverted to the relevant facts and circumstances and without considering the relevant aspects has arrived at erroneous conclusions. Judgments of the High Court are unsustainable.............................................‖ 6.2.3 Although the aforesaid judgment was in respect of the Income Tax Act, but the ratio can be applied in the instant case. In view of the above, it cannot be accepted that the UIT, Kota is a governmental authority.
6.2.4 Further, there is nothing contrary to the finding that the said construction of residential complex was for sale to EWS/LIG category, but it was for the purpose of commerce, albeit not at the market rate.
It is also an admitted fact that the Kansuwa Housing Project was not approved under the Central Scheme of Affordable Housing in Partnership of the Ministry of Housing and Urban Poverty Alleviation in order to be eligible for the benefit of exemption under sl no. 14(ca), we note that the exemption to such State Government projects became eligible only with effect from 01.03.2016. The appellant has 19 relied on certain Tribunal decisions in support of their contention that they were eligible for the exemption under sl no. 12 of the Mega Exemption 25/2012-ST. However, we note that the Constitution Bench of the Supreme Court in its judgment dated 30.07.2018 in the case of Commissioner of Customs vs Dilip Kumar and Company19 held that every taxing statue including, charging, computation and exemption clause should be interpreted strictly. Further, in case of ambiguity in an exemption provision, benefit must go to the Revenue. Thus, the ‗burden of proof' is upon the taxpayer claiming the benefit of exemption or exception clause to prove the applicability of such exemption. The relevant paras are reproduced hereinafter for ease of reference: -
―52. To sum up, we answer the reference holding as under -
(1) Exemption notification should be interpreted strictly;
the burden of proving applicability would be on the assessee to show that his case comes within the parameters of the exemption clause or exemption notification.
(2) When there is ambiguity in exemption notification which is subject to strict interpretation, the benefit of such ambiguity cannot be claimed by the subject/assessee and it must be interpreted in favour of the revenue.
(3) The ratio in Sun Export case (supra) is not correct and all the decisions which took similar view as in Sun Export Case (supra) stands over-ruled.
53. The instant civil appeal may now be placed before appropriate Bench for considering the case on merits after obtaining orders from the Hon'ble Chief Justice of India.‖ 6.2.5 In view of the categorical judgment of the Apex Court, we hold that the appellant was not eligible for the benefit under sl no. 12 of 19 [AIR 2018 Supreme Court 3607] 20 Notification No. 25/2012 ST dated 20.6.2012. The appellant was eligible for the benefit under sl 14(ca) with effect from 1.3.2016 only. Consequently, the demand for the period July 2012 to March 2015 is upheld.
6.3 As regards the submissions regarding the quantification of demand, we note that in case of continuous supply of service where the provision of the whole or part of the service is determined periodically on the completion of an event in terms of a contract, which requires the receiver of service to make any payment to service provider, the date of completion of each such event as specified in the contract shall be deemed to be the date of completion of provision of service. In the instant case, we note that the "construction of residential complex" service provided by the appellant falls under the category of continuous supply of service. Further, as submitted by the Ld AR, we note that para 24 of the agreement entered by the appellant with the UIT, the payment was to be released to them on completion of stages as laid down thereunder. Further, the UIT vide their letter dated 06.07.2016 had also clarified that payment of Running Bills No. I to VI had been released for the work done by them from the date 15.12.2011 to 20.06.2012. Thus, the date of receipt of payment by the appellant, i.e. the service provider, implied completion of provision of services for different stages, as agreed in the agreement. Consequently, we uphold the findings of the impugned order in this regard.
6.4 Ld Counsel for the appellant has submitted that extended period is not invokable in the instant case, as suppression of facts would arise when only when the facts which are required to be disclosed 21 according to the statute are not declared or deliberate with holding of information. He stated that the appellant had furnished the relevant information regarding 'construction service' provided by them to the UIT, Kota during the relevant period and hence there was no suppression of any fact from the department. Ld Authorized Representative has submitted that the appellant did not take registration and had violated the provisions of the Finance Act, 1994 and suppressed facts with an intent to evade. In the instant case, we note that the appellant had provided their services to UIT, Kota and was under the bonafide belief that they were exempted from payment of service tax. The Supreme Court in Pushpam Pharmaceuticals Company20 had examined whether the Department was justified in initiating proceedings for short levy after the expiry of the normal period of six months by invoking the proviso to section 11A of the Excise Act. The proviso to section 11A of the Excise Act carved out an exception to the provisions that permitted the Department to reopen proceedings if the levy was short within six months of the relevant date and permitted the Authority to exercise this power within five years from the relevant date under the circumstances mentioned in the proviso, one of which was suppression of facts. It is in this context that the Supreme Court observed that since ―suppression of facts‟ has been used in the company of strong words such as fraud, collusion, or wilful default, suppression of facts must be deliberate and with an intent to escape payment of duty. The observations are as follows:
―4. Section 11A empowers the Department to re- open proceedings if the levy has been short-levied or not levied 20 [1995 (78) E.L.T. 401 (SC)] 22 within six months from the relevant date. But the proviso carves out an exception and permits the authority to exercise this power within five years from the relevant date in the circumstances mentioned in the proviso, one of it being suppression of facts. The meaning of the word both in law and even otherwise is well known. In normal understanding it is not different that what is explained in various dictionaries unless of court the context in which it has been used indicates otherwise. A perusal of the proviso indicatesthat it has been used in company of such strong words as fraud, collusion or wilful default. In fact it is the mildest expression used in the proviso. Yet the surroundings in which it has been used it has to be construed strictly. It does not mean any omission. The act must be deliberate. In taxation, it can have only one meaning that the correct information was not disclosed deliberately to escape from payment of duty.Where facts are known to both the parties the omission by one to do what he might have done and not that he must have done, does not render it suppression.‖ (emphasis supplied) 6.4.1 The Delhi High Court in Bharat Hotels Limited vs. Commissioner of Central Excise (Adjudication)21 also examined at length the issue relating to the extended period of limitation under the proviso to section 73 (1) of the Finance Act and held as follows:
21 [2018 (12) GSTL 368 (Del.)] 23 ―27. Therefore, it is evident that failure to pay tax is not a justification for imposition of penalty. Also, the word ―suppression‟ in the proviso to Section 11A(1) of the Excise Act has to be read inthe context of other words in the proviso, i.e. ―fraud, collusion, wilful misstatement‖. As explained in Uniworth (supra), ―misstatement or suppression of facts‖ does not mean any omission. It must be deliberate. In other words, there must be deliberate suppression of information for the purpose of evading of payment of duty. It connotes a positive act of the assessee to avoid excise duty.
xxxx Thus, invocation of the extended limitation period under the proviso to Section 73(1) does not refer to a scenario where there is a mere omission or mere failure to pay duty or take out a license without the presence of such intention.‖ xxxx The Revenue has not been able to prove an intention on the part of the Appellant to avoid tax by suppression of mention facts. In fact it is clear that the Appellant did not have any such intention and was acting under a bonafide belief.‖ (emphasis supplied) 6.4.2 In the instant case, there is no evidence led by the Department that the appellant intended to evade payment of the tax. The appellant was under bonafide belief that construction of EWS/LIG flats under the Housing scheme of the State Government was not exigible to tax. Consequently, we hold that the extended period is not invokable and penalties are to be set-aside.
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7. In view of the above discussions, we pass the following order:
(i) The demand for the period October 2011-June 2012 is set aside
(ii) The demand for the period July 2012 to March 2015 is upheld for the normal period.
(iii) The demand for the extended period is set aside
(iv) The penalties are also set aside
8. The impugned order stands amended to the extent and the appeal is allowed to the extent, indicated above.
(Pronounced in the open court on 25.09.2025) (BINU TAMTA) MEMBER (JUDICIAL) (HEMAMBIKA R. PRIYA) MEMBER (TECHNICAL) G.Y.