Custom, Excise & Service Tax Tribunal
Cce, Chandigarh vs M/S U.B. Construction (P) Ltd on 25 July, 2008
IN THE CUSTOMS, EXCISE & SERVICE TAX
APPELLATE TRIBUNAL
West Block No. 2, R.K. Puram, New Delhi 110 066.
Date of Hearing : 25.7.2013
No. ST/747/2008 with ST/CO/6/2009
[Arising out of Order-in-Appeal No. 463/CE/CHD/2008 dated 22.8.2008 passed by the Commissioner (Appeals), Central Excise, Chandigarh]
For Approval & Signature :
Honble Mr. Justice G. Raghuram, President
Honble Mr. Sahab Singh, Member (Technical)
1.
Whether Press Reporter may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?
2.
Whether it would be released under Rule 27 of the CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?
3.
Whether their Whether their Lordships wish to see the fair copy of the order?
4.
Whether order is to be circulated to the Department Authorities?
CCE, Chandigarh Appellant
Vs.
M/s U.B. Construction (P) Ltd. Respondent
Appearance:
Shri Govind Dixit, D.R. - for the appellant
Shri Atul Gupta, C.A. - for the respondent
Coram : Honble Mr. Justice G. Raghuram, President
Honble Mr. Sahab Singh, Member (Technical)
F. Order No. 57200/2013 dated 25.7.2013
Per Justice G. Raghuram :
This Revenues appeal is preferred against the order dated 22.8.2008 of the Commissioner (Appeals), Chandigarh reversing the adjudication order dated 21.3.2007 passed by the Additional Commissioner, Central Excise, Chandigarh.
2. Revenue visited the respondent/assessees office premises and during audit realised that the assessee was collecting money from prospective buyers of constructions made on its own property; that the assessee had collected Rs.15,02,18, 189/- during the period 16.6.2005 to 31.3.2006 from buyers; and that on this amount was required to remit service tax for having provided construction of complex service, defined under Section 65(30a) read with Section 65(91a) of the Act. Proceedings were triggered by the issuance of the Show Cause Notice dated 24.11.2006. The assessee remitted tax on the value of Rs.8,26,20,004/- after availing abatement of the cost of their land. Eventually, the adjudication order determined service liability of Rs.22,75,355/-, invoking the extended period of limitation besides interest under Section 75, penalty under Section 77 and penalty equivalent to the tax liability determined, under Section 78 of the Act.
3. Aggrieved, the assessee preferred an appeal which was rejected by the appellate authority by the order dated 24.9.2007, on the ground that the assessee had defaulted in remitting the condition of pre-deposit. The assessee carried the matter further to this Tribunal, which by the Final Order dated 9.5.2008 set aside the order of the Commissioner (Appeals), dated 24.9.2007 and remitted the matter to the Appellate Commissioner for de-novo determination. Eventually by the order impugned in this appeal, passed by the Commissioner (Appeals), the appeal was allowed in toto and the adjudication order rescinded. The appellate authority relied on Boards Circular dated 1.8.2006 which clarified that where a builder, promoter or developer builds a residential complex, having more than 12 residential units, by engaging a contractor for construction of such residential complex, the contractor shall be liable to pay service tax on the gross amount charged for the construction services provided, to the builder/promoter/developer under construction of complex service; and where the builder/promoter/developer undertakes construction work on his own without engaging the services of any other person, in such cases, in the absence of a service provider and service recipient relationship, the question of providing taxable service to any person by any other person would not arise and no tax would be leviable. Another appellate decision of the Commissioner dated 7.4.2008 in the case of M/s Skynet Builders (P) Ltd. and a decision of the High Court of Gauhati in Magus Construction Pvt. Ltd. - 2008-TIOL-321-SC-GUW-ST was also relied upon by the appellate authority.
4. In support of its appeal, ld. DR placed reliance on the decision of Punjab & Haryana High Court in G.S. Promoters Vs. Union of India - 2011 (21) STR 100 (P&H). The writ petition was filed contending that the levy of service tax for provision of construction of complex service, by reference to the explanation appended to Section 65(zzzh) of the Act, with effect from 1.7.2010 by Finance Act 2010 and the complementary Boards Circular No. 334/3/2010-TRU dated 1.7.2010 clarifying liability to levy of tax wherever a construction of complex is undertaken and which is intended for sale, wholly or partly, by a builder or any person authorised by such builder, before, during or after construction (except in cases for which no amount is received from or on behalf of the prospective buyer by the builder or a person authorised by the builder before the grant of completion certificate by the authority competent to do so) shall be deemed to be service provided by the builder to the buyer, was unconstitutional. The High Court rejected the challenge to the constitutionality of the provision by concluding that in the absence of any showing that Parliament had no competence to enact such a provision, the challenge is unsustainable. The issue whether the explanation appended to Section 65(105)(zzzh) is retrospective or merely prospective reach did not fall for consideration nor was decided in G.S. Promoters.
5. In Maharashtra Chamber of Housing Industry Vs. Union of India - 2012 (25) STR 305 (Bom.), the validity of the Explanation added to Sections 65(105)(zzzq) and (zzzh) was challenged on several grounds. The Bombay High Court, also considered the issue whether the explanation was prospective or retrospective in operation and ruled that the explanation inserted by the Finance Act. 2010 brings within the fold of taxable service a construction service provided by the builder to a buyer where there is an intended sale between the parties whether before, during or after construction; that the Explanation was specifically legislated upon to expand the concept of taxable service; that prior to the explanation, the view taken was that since a mere agreement to sell does not create any interest in the property and the title to the property continues to remain with the builder, no service was provided to the buyer; that the service, if any, would be in the nature of a service rendered by the builder to himself; that the explanation expands the scope of the taxable service, provided by builders to buyers pursuant to an intended sale of immovable property before, during or after the construction and therefore the provision is expansive of the existing intent and not clarificatory of the same; and is consequently prospective.
6. In the light of the judgement of Bombay High Court in Maharashtra Chamber of Housing Industry (supra) and in the light of the admitted factual situation that constructions on behalf of the assessee were during the period prior to 1.7.2010 when the explanation was not yet appended to Section 65(106)(zzzh) of the Act, there is no liability on the assessee to remit tax under the then extant legislative regime. On the aforesaid analysis the impugned order passed by the Commissioner (Appeals) is impeccable and warrants no interference. The appeal is without merits and is accordingly dismissed. Cross Objections are also disposed of.
(Justice G. Raghuram) President (Sahab Singh) Member (Technical) RM 1