Custom, Excise & Service Tax Tribunal
M/S Alokik Township Corporation vs Cce & St, Jaipur I on 22 April, 2014
IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL West Block No. 2, R.K. Puram, New Delhi 110 066. Principal Bench, New Delhi COURT NO. I DATE OF HEARING/DECISION : 22/04/2014. Service Tax Misc. Application No. 50002 of 2014 with Stay Application No. 4760 of 2012 in Appeal No. 3769 of 2012 [Arising out of the Order-in-Original No. 27/2012 (ST)-Commissioner dated 27/07/2012 passed by The Commissioner of Central Excise and Service Tax, Jaipur I.] For Approval and signature : Honble Shri Justice G. Raghuram, President Honble Shri Rakesh Kumar, Member (Technical) 1. Whether Press Reporters 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 Lordships wish to see the fair : copy of the order? 4. Whether order is to be circulated to the : Department Authorities? M/s Alokik Township Corporation Appellant Versus CCE & ST, Jaipur I Respondent
Appearance S/Shri Manish Gaur and Pawan Shree Agarwal, Advocates for the appellants.
Shri Amresh Jain, Authorized Representative (DR) for the Respondent.
CORAM : Honble Shri Justice G. Raghuram, President Honble Shri Rakesh Kumar, Member (Technical) Final Order No. 52125/2014 Dated : 22/04/2014 Per. Rakesh Kumar :-
The facts leading to filing of this appeal alongwith stay application and miscellaneous application for early hearing of the stay application are, in brief, as under. 1.1 The appellant are a partnership firm with Shri Anurag Sharma, Shanker Jethani and Shri Hari Prasad Saini as the partners. The firm was incorporated in August 2005. The appellant firm is engaged in development of land for housing projects. On 10/09/05 the appellant entered into an MOU with M/s Gopal Housing and Plantation Corporation (GHP) under which the appellant was to jointly develop the land belonging to GHP into a township comprising of residential and commercial buildings after getting the necessary approval from the Jaipur Development Authority (JDA). However, this MOU was cancelled. Subsequently, the appellant firm entered into a joint venture with GHP for development of a township name Eden Garden on the land belonging to GHP. According to the appellant, this joint venture was also terminated. Subsequently, the appellant firm entered into an agreement with GHP for
(a) development of land belonging to GHP by construction of roads, laying of sewer lines, construction drains, laying of water pipelines, underground cabling works including optical fiber cables, installation of pre-cast iron poles on road sides/dividers with lights, panels and MCBs etc., development of landscaped gardens as per the design of landscaping consultants alongwith Plantation ;
(b) construction of boundary wall ; and
(c) other development works as norms of JDA.
Thereafter the residential complexes were constructed by engaging other contractors. The department was of the view that the activity of the appellant would attract service tax under Section 65 (105) (zzzh) readwith Section 65 (30a) and 65 (91a) of the Finance Act, 1994 as the same is construction of residential complex service. On this basis, a show cause notice dated 31/10/12 was issued to the appellant firm for demand of service tax amounting to Rs. 2,67,60,681/- under proviso to Section 73 (1) of the Finance Act, 1994 alongwith interest thereon under Section 75 ibid on the amount received by the appellant for this activity during the period from 2005-2006 to 2008-2009 and also imposition of penalty on them under Section 76, 77 and 78.
1.2 The above show cause notice was adjudicated by the Commissioner vide order-in-original dated 27/07/12 by which the Commissioner holding that the appellant have provided the taxable service of construction of complex, confirmed the service tax demand of Rs. 81,63,288/- alongwith interest thereon under Section 76 and imposed penalty of equal amount on the appellant under Section 78 ibid and penalty of Rs. 100/- per day upto 17/04/06 and Rs. 200/- per day w.e.f. 18/04/06 under Section 76 ibid for failure to pay the service tax by the due date. Against this order of the Commissioner, this appeal has been filed alongwith stay application. The miscellaneous application has been filed for early hearing of the stay application is allowed.
2. Heard both the sides.
3. Though the matter today was listed for hearing of the stay application, after hearing the same for sometime, the Bench of the view that since a very short issue is involved, the main appeal can be taken up for final disposal. Accordingly, with the consent of both the sides, the requirement of pre-deposit is waived and this appeal is heard for final disposal.
4. Shri Manish Gaur and Shri Pawan Shree Agarwal, Advocates, the learned Counsels on behalf of the appellant, pleaded that the service tax has been demanded from the appellant by treating their activity as construction of complex service taxable under Section 65 (105) (zzzh) readwith Section 65 (30a) and 65 (91a) of the Finance Act, 1994 upto 30th May, 2007 and as works contract service under Section 65 (105) (zzzza) w.e.f. 01/06/07, that the appellant have not constructed any residential complex, but in terms of their agreement with GHP have only developed the land belonging to GHP by leveling the land, construction of boundary wall, construction of roads, laying of underground cables and water pipelines, laying of underground sewerage lines with sewer treatments plant, development of land scaped gardens, development of drainage system, development of water harvesting system, demarcation of individual plots, construction of overhead tanks for storage waters etc., that none of these activities for development of land are construction of complex service or works contract service and that in view of the above, the impugned order confirming service tax demand by treating the appellants activity as construction of complex service upto 30th May 2007 and as Works Contract Service w.e.f. 01/06/2007 is not sustainable.
5. Shri Amresh Jain, the Learned DR defended the impugned order by reiterating the findings of the Commissioner.
6. We have considered the submissions from both the sides and perused the records.
7. The activity of the appellant is in terms of their agreement dated 10th December 2006 with GHP. The specification of the development work to be undertaken by the appellant, as enclosed with the agreement, is as under :-
SPECIFICATION OF PROPOSED DEVELOPMENT WORK Sl. Particulars Contract No. Value
1. Leveling of Land and Preliminary Development 6,525,000 work including Demarcation Boundary of Plot/ Shops etc.
2. Boundary Wall surrounding the Township made 39,550,000 with Stone & Bricks and both side cement plaster and 1.5 iron grills.
3. Construction and Development of Roads (Damar) 46,560,000 as per level of Highway and as per norms of JDA
4. Pre-cast Iron Poles on Road side/Dividers with 9,512,000 Lights, Panels, MCBs etc. as per norms of JDA
5. Under ground cabling work including Optical fiber 8,830,000 Cables of ISI mark and best quality.
6. 3 Nos. completely landscaped gardens as per 5,435,000 the design of landscaping consultants alongwith plantation in township.
7. Construction laying of open and under ground 5,673,000 Drainage lines as per norms of JDA
8. Development of Water harvesting system as 1,327,000 per norms of JDA
9. Construction and Erection of main gate as per 18,200,000 design of Architect.
10. Construction of Dividers and Footpaths along- 3,463,000 with plantation.
11. Development of main town circles alongwith 5,315,000 Statues/figures etc. & construction of temple
12. Construction of underground and overhead 6,542,000 Tank of 01.00 Lacs ltr. Capacity alongwith complete pump room
13. Laying of underground water supply pipe lines 5,318,000 in entire township as per norms of JDA
14. Survey Development & Architect Fee 5,000,000
15. Construction of Sewerage Lines alongwith 28,000,000 Sewerage treatment plant as per norms of JDA
16. Other misc. development work, Project Launching 8,500,000 and advertisement expenses etc.
17. Other development work as per norms of JDA 3,250,000 Total : 207,000,000 7.1 On perusal of the scope of work in terms of the agreement, it is clear that the appellants activity is only of developing the land belonging to GHP for township, which comprises of leveling of the land, demarcation of plots/shops/business premises, construction of boundary wall surrounding the township, construction of roads as per the norms of JDA, erection of the iron poles with lamps, panels, MCBs etc. underground cabling work including laying of optical fiber cables, laying of construction of open as well as underground drainage lines, as per the norms of JDA, development of water harvesting system, construction of underground as well as overhead tanks for storage of water, laying of underground water pipelines in the township, development of landscaped lawns in the earmarked areas etc. The development of land for township is not covered by the definition of construction of complex service as given in Section 65 (105) (zzzh) readwith Section 65 (39a) and 65 (91a) or by the definition of Works Contract Service in Section 65 (105) (zzzza) w.e.f. 01/06/2007. It is not even disputed that the construction of residential complexes was undertaken by other contractors and not by the appellant. In view of this, the service tax demand from the appellant firm by treating their activity as taxable under Section 65 (105) (zzzh) as construction of complex service upto 30/05/2007 and under Section 65 (105) (zzzza) as Works Contract Service w.e.f. 01/06/2007 is not sustainable. The impugned order, therefore, is set aside. The appeal as well as stay application are allowed. The miscellaneous application also stands disposed of.
(Operative part of the order pronounced in the open court.) (Justice G. Raghuram) President (Rakesh Kumar) Member (Technical) PK ??
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