Tata Housing Development Company Ltd vs Commissioner Of Central Tax, Bangalore ... on 9 May, 2025

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Custom, Excise & Service Tax Tribunal

Tata Housing Development Company Ltd vs Commissioner Of Central Tax, Bangalore ... on 9 May, 2025

ST/21027/2018

CUSTOMS, EXCISE & SERVICE TAX APPELLATE
TRIBUNAL
BANGALORE
REGIONAL BENCH - COURT NO. 1

Service Tax Appeal No. 21027 of 2018

(Arising out of Order-in-Original No. BLR-NORTH-COM-47/2017-18
dated 28.03.2018 passed by the Commissioner of Central Tax,
Bengaluru.)

Tata Housing Development
Company Limited,
Ground Floor, A Wing, Appellant(s)
Corniche Al Latheef,
No. 25, Cunningham Road,
Bengaluru - 560 052.

VERSUS
The Commissioner of Central
Tax GST Bengaluru North
Commissionerate, Respondent(s)
No. 59, HMT Bhavan, Ground Floor,
Bellary Road,
Bengaluru - 560 032.

APPEARANCE:
Shri. Harish Bindu Madhavan, Advocate for the Appellant
Shri. M.A. Jithendra, Assistant Commissioner (AR) for the Respondent

CORAM:

HON'BLE DR. D.M. MISRA, MEMBER (JUDICIAL)
HON'BLE MRS. R. BHAGYA DEVI, MEMBER (TECHNICAL)

Final Order No. 20577 / 2025

DATE OF HEARING: 09.01.2025
DATE OF DECISION: 09.05.2025

PER : R. BHAGYA DEVI

This appeal is filed by the appellant M/s. Tata Housing
Development Co. Ltd. against Order-in-Original No. 47/2017-18
dated 28.03.2018 passed by the Commissioner of Central Tax,
North Commissionerate, Bengaluru.

2. Briefly the facts of the case are that appellants are
primarily engaged in providing 'Construction of residential

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complex' service. Revenue alleged that appellant had not paid
service tax on various considerations received by them and
wrong availment of cenvat credit as per Cenvat Credit Rules,
2004 (as amended). The various issues that have been dealt in
the impugned order are as follows:
a. Reversal of Cenvat credit of Rs.63,07,843/- during the
period from August 2012 to September 2015.
b. "Non-payment of service tax on consideration received
towards construction / development of parking area in 'The
Promont' Project, during the period from March, 2012 to
September, 2012" and the amount involved is
Rs.3,19,777/-.
c. Non-payment of service tax on the consideration received
towards development costs from M/s. Promont Hilltop
Private Limited by wrongly claiming it as 'Sale of
Development Rights', in respect of 'The Promont' Project,
during the period from October, 2012 to June, 2015 and
the duty amount involved is Rs. 5,54,63,589/-.
d. Non-payment of service tax on compensation received
towards cancellation/termination of Joint Development
Agreement and Power of Attorney dated 06 January, 1998
and Supplemental Agreement dated 22 nd May, 1998
entered into with Smt. Divya Singh, Ms. Beejaksharee
Varman and Mr. Tika Sahil Varman, on 10th April, 2013
under the declared service category listed in Section
66E(e) of the Finance Act, 1994 and the amount involved
is Rs. 24,72,000/- .
e. Non-payment of service tax on income recognized as
forfeiture income' on account of cancellation of bookings
made by the customers under the declared service
category of 'agreeing to the obligation to refrain from an
act, or to tolerate an act or a situation, or to do an act' as
listed in Section 66E(e) of the Finance Act, 1994, during
the period from April, 2014 to March, 2015 and the
amount involved Rs.2,06,186/-

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f. Short payment of service tax on the services received from
M/s Suying Design Private Limited, Singapore on account
of retention of a part-value of 'interior design consultancy'
service, in terms of erstwhile first proviso to Rule 7 of Point
of Taxation Rules, 2011 and the amount involved is
Rs. 1,27,726/-.
g. Non-reversal of proportionate input service credit
attributable to retention charges, in respect of the services
received from contractors / sub-contractors and the
amount involved is Rs.5,80,728/-.

3. The submissions made by the learned counsel for the
appellant is summarised below:

(i) Demand of service tax of Rs.5,54,63,589 on sale of
development rights.
• Existence of service provider-recipient relationship is
inconceivable. Moreover, there is no provision of service
pursuant to the Development Agreement. Thus, demand is
unsustainable.
• Notwithstanding the above, Transfer of Development Rights
with respect to the project amounts to transfer of right
relating to immovable property. Since such rights partake the
nature of immovable property, the transaction is not exigible
to service tax.
• Without prejudice, transfer of business as a going concern is
exempted from levy of Service Tax.

(ii) Demand for non-reversal of proportionate cenvat credit of
Rs.63,07,843/- attributable to sale of flats post grant of
completion certificate is unsustainable.
• Issue is no longer res integra. Explanation to Rule 6 of CCR,
2004 was inserted only w.e.f. 1st April 2016. For period prior
to that, CENVAT credit availability is not hit if the eligibility is
met at the time of its availment.

(iii) Demand of service tax of Rs.24,72,000/-for non-payment of tax
under Section 66E(e) on compensation received towards

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cancellation/termination of Joint Development Agreement (JDA)
is unsustainable.
• Compensation received for termination of JDA is in the
nature of liquidated damages. Thus, they are not exigible to
Service Tax. Issue is no longer res integra.

(iv) Demand of service tax of Rs.5,80,728/- towards non-reversal of
proportionate cenvat credit attributable to retention charges is
unsustainable.
• Rule 4(7), as it existed during the relevant period, is linked
with the invoice/bill/challan of input service, and not with
payment of invoice. Thus, Appellant is entitled to CENVAT
credit equal to amount of service tax. Issue is no longer res
integra.

(v) Demand of service tax of Rs.3,19,777/- on consideration
received towards construction/development of parking area in
the 'THE PROMONT' project is agreed and will be paid.
• Since the Appellant is unable to retrieve documents pertaining
to this issue, they are unable to effectively contest the demand.
Hence, the Appellant is accepting this demand and shall
undertake to pay the same.
• However, it is submitted that the demand itself is based on
details provided by the Appellant. Thus, imposition of penalty is
contested.

(vi) Demand of service tax of Rs.2,06,186/- for non-payment of tax
under Section 66E(e) on forfeitures from customs on
cancellation of bookings is unsustainable.
• Forfeiture money is in the nature of liquidated damages
received for breach of contact. The Appellant adopts the
submissions made for demand (C) supra, and it applies
on all fours to this issue. Thus, it is submitted that the
demand is unsustainable.

(vii) Demand for short payment of service tax of Rs.1,27,726/-was
already paid and appropriated. Therefore, no further demand
remains in this respect. Thus, only imposition of penalty is
being contested in respect of this demand.

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4. Learned Authorized Representative for the Revenue
reiterated the findings of the impugned order made the following
submissions:

• There is no doubt about the fact that sale of flat after
completion certificate is an exempted service and in
respect of exempted service Rule 6 of CENVAT credit Rules
is attracted. As they have not opted for any of the
provisions contained in Rule 6 of CCR 2004 the department
is left with no option but to charge 6% on the value of
exempted services.

• In respect of sale of parking space what is demanded is
the works contract service rendered for developing the
parking lot and not the sale of immovable property per se.
Hence the claim of the Appellant that it is a sale of
immovable property cannot be accepted.

• In respect of receipt of Development cost from promount
Hilltop it is to submit that the same is for works contract
done until the point of transfer. The Appellant had incurred
expenses towards developing the land and buildings
instead of selling it in terms of each flat to individual
buyers that same have been supplied to promount Hilltop
for which a consideration has been charged. The same is
liable to service tax as works contract as service portion is
inherently available in the construction done.

• A consideration has been received for termination of the
contract for joint development, here they have agreed to
give up their right for land development which was entered
into earlier. What has been paid is the loss of opportunity
cost which is a consideration for Agreeing to do an act or
refrain from an Act which is a declared service.

• The Nonpayment of service tax on import of services in
respect of the amounts retained /retention charges is
required to be paid in terms of POTR 2011. The point of

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taxation for such transaction is the date on which the same
is accounted in the books of accounts. As the transaction
has already been accounted by the Appellant he ought to
have paid service tax on such import of services on the
whole amount.

4. Learned Authorised Representative for the Revenue
reiterated the findings of the impugned order made the following
submissions:

• In respect of receipt of Development cost from promount
Hilltop it is to submit that the same is for works contract
done uptill the point of transfer. The Appellant had
incurred expenses towards developing the land and
buildings instead of selling it in terms of each flat to
individual buyers that same have been supplied to
promount Hilltop for which a consideration has been
charged. The same is liable to service tax as works
contract as service portion is inherently available in the
construction done.

• A consideration has been received for termination of the
contract for joint development, here they have agreed to
give up their right for land development which was entered

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into earlier. What has been paid is the loss of opportunity
cost which is a consideration for Agreeing to do an act or
refrain from an Act which is a declared service.

• The Nonpayment of service tax on import of services in
respect of the amounts retained /retention charges is
required to be paid in terms of POTR 2011. The point of
taxation for such transaction is the date on which the same
is accounted in the books of accounts. As the transaction
has already been accounted by the Appellant he ought to
have paid service tax on such import of services on the
whole amount.

• In light of the above submissions the OIO may kindly be
upheld and the Appeal may be dismissed in the interest of
Justice.

5. Heard both sides.

6. The issues are examined individually after taking into
consideration the arguments of both the appellant and the
Revenue.

(a) Reversal of Cenvat credit of Rs.63,07,843/-during the
period from August 2012 to September 2015.

6.1 Admittedly, the appellant had received a consideration of
Rs.11,15,29,085/- from the prospective buyers of flats in Tata
Aquila Heights' Project who had booked and purchased the flats
after obtainment of Partial Occupancy Certificate(s)/ Final
Occupancy Certificate, the appellant also admitted that they
have not paid service tax, since, the same was received after
issuance of Occupancy/Completion Certificate by the Competent
Authority. Since, no service tax is payable on the consideration
received from such prospective buyers of flats, the consideration
so received from them, towards construction of flats on which no
service tax is leviable, indisputably, amounts to provision of an
exempted service. There is no dispute that the appellant had

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availed credit on the input services on the construction of these
flats which were sold without payment of service tax.

6.2. The appellant had also not disputed availing credit of
service tax paid on input services used in construction of such
flats that were sold after obtaining Occupancy Certificate. The
claim of the appellant is that sale of flats after grant of
Completion Certificate amounts to sale of immovable property,
and such activity is specifically exempted from scope of taxable
activity under Section 66E(b) of Finance Act, 1994 and Section
65B (44) specifically lays down that 'service' does not include an
activity which constitutes merely a transfer in title of immovable
property, by way of sale, gift or in any other manner. It is stated
that for the period prior to 01.04.2016, cenvat credit availability
is not hit if the eligibility is met at the time of its availment. By
virtue of exception in Section 65B (44), sale of flats after grant
of Completion Certificate becomes a 'non-service'. Only with
effect from 1st April 2016, Explanation 3 was added to Rule 6 of
Cenvat Credit Rules (CCR), 2004 vide Notification No. 13/2016-
C.E. (N.T.) dated 1st March 2016, to create a deeming fiction
that 'an exempted service under Rule 2(e) shall include an
activity which is not a service as defined in Section 65B(44) of
Finance Act, 1994'. In other words, prior to that, a 'non-service'
was never treated as an exempted service, to attract mischief
under Rule 6. Thus, as regards the period prior to insertion of
Explanation, it is submitted that cenvat credit was legally and
validly availed prior to 1st April 2016 and that an ex-post facto
change in law cannot invalidate a vested right. In this regard,
reliance is placed on Tractor and Farm Equipment Ltd. v.
CCE: 2014 (12) TMI 905 - Madras High Court which was
upheld in CCE vs. Tractor and Farm Equipment Ltd.: 2016
(1) TMI 1006 - SC. As per scheme of CCR, 2004, Appellant is
not required to wait till output service is sold to service recipient.
They can take credit immediately after invoice/bill for input
service is received. Thus, since at the time of availment, the
Appellant was not engaged in providing exempted service, there

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is no application of Rule 6. It is submitted that this issue is no
longer res integra and has been settled in favour of the Appellant
in following cases:
a. Albemic Ltd. & Shreno Ltd. v. CCE: 2018 (10) TMI 1557 -
CESTAT Ahmedabad;
b. Principal Commissioner v. Albemic Ltd.: 2019 (7) TMI 908 -
Gujarat High Court;
c. Principal Commissioner v. Shreno Ltd.: 2019 (4) TMI 1915 -
Gujarat High Court;
d. TPL Developers v. Commr.: 2019 (3) TMI 37 - CESTAT
Bangalore;
e. J Krishna Palemar v. C.C.E: 2019 (11) TMI 1259 - CESTAT
Bangalore;
f. Worthwhile Properties Pvt. Ltd. v. Asst. Commr. of CE: 2023
(6) TMI 147 - CESTAT Mumbai;
g. Chheda Developments v. Commissioner of CGST: 2024 (9)
TMI 928 - CESTAT Mumbai;
h. Prajapati Developers v. CCT, Rangareddy: 2019 (2) TMI 1361
- CESTAT Hyderabad.

6.3. Let's examine the relevant Rules and the Notification
during the disputed period August 2012 to September 2015.
Section 65B 'Interpretations' was introduced w.e.f. 01.06.2012 which
defined service under clause 65B(44) which reads as "service" means
any activity carried out by a person for another for
consideration, and includes a declared service, but shall not
include -
(a) an activity which constitutes merely-
(i) a transfer of title in goods or immovable property, by way of
sale, gift or in any other manner; or
(ii) such transfer, delivery or supply of any goods which is
deemed to be a sale within the meaning of clause (29A) of
article 366 of the Constitution; or
(iii) a transaction in money or actionable claim"

As per the above definition, any activity carried out for
consideration was a service rendered and it also included in
'declared services' which was defined under Section 66E as 'the
following shall constitute declared services, namely: -
a. Renting of immovable property;

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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.

Therefore, Section 65B(44) read with Section 66E, construction
and sale of flats for consideration are liable to pay service tax
except where the entire consideration is received after issuance
of completion-certificate, thus, implying that the flats sold after
receipt of completion-certificate and the consideration received
after that are exempted from service tax, so the question of
availing cenvat credit on the flats sold after receipt of completion
certificate does not arise. Rule 2(e) of the Cenvat Credit Rules,
during the relevant period reads as follows:

Rule 2(e) as amended by CENVAT Credit (Sixth Amendment)
Rules, 2012 vide Notification No. 28/2012-C.E. (N.T.) dated
20.06.2012 w.e.f. 01.07.2012:

(e) "exempted service" means a-

(1) taxable service which is exempt from the whole of the service tax
leviable thereon; or

(2) service, on which no service tax is leviable under section 66B of the
Finance Act; or

(3) taxable service whose part of value is exempted on the condition that
no credit of inputs and input services, used for providing such taxable
service, shall be taken;

but shall not include a service which is exported in terms of rule 6A of the
Service Tax Rules, 1994.

Rule 6(1) as amended by CENVAT Credit (Amendment) Rules,
2011 vide Notification No. 3/2011-C.Ε. (Ν.Τ.) dated 01.03.2011
w.e.f. 01.04.2011:

(1) The CENVAT credit shall not be allowed on such quantity of input
used in or in relation to the manufacture of exempted goods or for
provision of exempted services, or input service used in or in relation to
the manufacture of exempted goods and their clearance upto the place of

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removal or for provision of exempted services except in the circumstances
mentioned in sub-rule (2).

Provided that the CENVAT credit on inputs shall not be denied to job
worker referred to in rule 12AA of the Central Excise Rules, 2002, on the
ground that the said inputs are used in the manufacture of goods cleared
without payment of duty under the provisions of that rule.

Rule 6(1) as amended by CENVAT Credit (Amendment) Rules,
2015 vide Notification No. 6/2015-C.Ε. (Ν.Τ.) dated 01.03.2015
w.e.f. 01.03.2015:

Rule 6(1) as amended by CENVAT Credit (Third Amendment)
Rules, 2016 vide Notification No. 13/2016-C.Ε. (Ν.Τ.) dated
01.03.2016 w.e.f. 01.04.2016:

(1) The CENVAT credit shall not be allowed on such quantity of input as is
used in or in relation to the manufacture of exempted goods or for
provision of exempted services or input service as is used in or in relation
to the manufacture of exempted goods and their clearance upto the place
of removal or for provision of exempted services and the credit not
allowed shall be calculated and paid by the manufacturer or the provider
of output service, in terms of the provisions of sub-rule (2) or sub-rule
(3), as the case may be :

Explanation 3. For the purposes of this rule, exempted services
as defined in clause (e) of rule 2 shall include an activity, which

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is not a 'service' as defined in Section 65B(44) of the Finance
Act, 1994.

6.4 From the above Notifications, it is clear that the
Explanation under the amended Rule 6 stating that the
exempted services as defined in Rule 2(e) of Cenvat Credit
Rules, 2004 shall include an activity, which is not a 'service' as
defined in section 65B (44) of the Finance Act, 1994 is only
clarificatory in nature in as much as the pre-amended Rule 6
also defined the categories of sales which cannot fall under the
exempted category and the clearances made by the appellant
after receipt of completion certificate which were not liable to
service tax clearly fall under the exempted category. The claim
of the appellant that only from 01.04.2016 the flats sold by them
without payment of service tax is to be considered as exempted
service is misplaced since all goods and services on which
duties/service tax was not paid are considered as exempted and
they are not eligible for the input credit.

6.5 The Learned Counsel has placed reliance on the Tribunal's
decision in the case of M/s. Alembic Ltd. & Shreno Ltd. Vs.
CCE and ST, Vadodara-I (supra) to state that they are not
liable to reverse any credit. The facts therein are:

"2.1 It was further argued that both the Appellants had duly informed the
Revenue Authorities in writing, at the time of receiving completion
certificate, whereby they had informed that since completion certificate
was obtained for the project, they shall be availing credit only in respect
of the percentage of property on which service tax was paid (on square
foot basis) whereas no credit will be availed in respect of the percentage
of property (on square foot basis) which was converted into immovable
property and for which no advance was ever received by them at all.

2.2 It is the case of the Appellants that they had duly maintained
separate accounts, on scientific basis, whereby they had only availed
proportionate credit periodically after receipt of completion certificate on
basis of the square foot property on which service tax was paid by them
whereas they had not availed any Cenvat credit on input services which
were exclusively pertaining to sale of immovable property and they had

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also not availed proportionate credit in respect of input services
pertaining to the percentage of property converted into immovable
property after receipt of completion certificate, on basis of the square
foot area. The Appellants have also relied upon two separate CA
Certificates dated 03.07.18 as well as letter dated 26.04.18 issued by
both the Appellants to the Revenue Authorities, intimating the fact of
proportionate availment of Cenvat credit in the above manner. The said
certificates are also supported with detailed certified workings and
calculations, along with invoices on sample basis, which shows that while
a higher service tax was actually paid on input services, the Appellants
had availed only proportionate credit based on the percentage of
immovable property which had suffered service tax levy in the manner
stated hereinabove".

Based on these facts, the Tribunal concluded as follows:

"24. The specific questions framed in this regard therefore have to be
answered as follows:

a. For the above reasons, the Appellants are not liable to pay 8%/10%
amount of value of service became exempted after receipt of
completion certificate under Rule 6 of the CCR, 04.
b. The Cenvat Credit on input services received after obtaining
Completion Certificate cannot be wholly allowed to the Appellant, and
since they had availed only proportionate credit by maintaining
separate accounts, the same is therefore sufficient compliance of the
legal obligation cast upon them.
c. The Appellants can be said to have "maintained proper separate
accounts" as required under Rule 6 of the CCR, 04, having availed
credit only to the extent input services in taxable activity, on the
scientific basis after obtaining Completion Certificate.
d. The Appellants are not required to reverse Cenvat Credit availed
during the period when output service was wholly taxable before
receipt of Completion Certificate, in accordance with law.
e. Connected to (d) above, the Appellants are eligible to seek refund of
the amount paid under protest towards Credit availed from 2010 till
receipt of completion certificate, based on CERA audit objection
wherein such credit was sought to be reversed based on considering
square foot area where Service Tax was paid and balance area where
Service Tax will not be paid after Completion Certificate, in
accordance with law.

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25. Since we have already reached to the above conclusion, we are not
addressing the issue whether the revenue authorities ought to have
raised separate and specific demand under Rule 6 read with Rule 14 of
the CCR, 04 for such amounts paid under protest for the input services
availed during the period 2010 till obtaining Completion Certificate.

6.6 This decision of the Tribunal was upheld by the Hon'ble
Gujarat High Court in the case of Principal Commissioner v.
Albemic Ltd. (supra), wherein their Lordships had categorically
observed as:

"13. From the above provisions, it is clear that with effect from
13.4.2016, Explanation 3 was amended specifically dealing with a
situation as in the present case, where a deeming fiction was created that
for the purposes of Rule 6 of the Rules, exempted services as defined in
clause (e) of rule 2 shall include an activity, which is not a service as
defined in section 65B(44) of the Finance Act, 1994 provided that such
activity has used inputs or input services. However, there was no such
stipulation prior to 13.4.2016 in law and prima facie, such situation was
not to be treated as exempted service and did not attract the mischief
created under rule 6 of the Rules. Therefore, for the period prior to
13.4.2016, the situation would be governed by rule 3 of the Rules for
availing Cenvat Credit till such time i.e. till the time rule 6 was specifically
made applicable by virtue of the deeming fiction created.

14. As per rule 3 of the Rules, Cenvat credit of service tax paid on input
services used to provide output service, is eligible. In the facts of
present case, it is evident that the respondent has started taking only
proportionate credit after receipt of completion certificate which was after
due intimation to the revenue department and also certified by
independent CA. Therefore, rule 6 of the Rules in toto cannot apply prior
to 13.4.2016 to the facts of the case since sale of immovable property is
not exempt service at all. Therefore, in the light of the provisions of Rule
3 of the Rules, respondent cannot avail full Cenvat credit on input
services received after obtaining completion certificate. Hence, the
respondent cannot be expected to pay an amount equal to 8%/10% of
sale price of immovable property after obtaining such completion
certificate where no service tax is paid as if it is sale of immovable
property since Rule 6 of the Rules perse does not apply to the
present case until 13.4.2016 at all.
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15. Even after 13.4.2016, since the respondent had availed only
proportionate credit, the respondent was not legally required to pay
8%/10% amount under rule 6(3) of the Rules, since it can be said to
have maintained separate accounts as required under rule 6(2) of the
Rules. As respondent has taken only proportionate credit on input
services after receipt of completion certificate, duly backed by CA
certificate and certified work sheets for the proportionate credits availed
after completion certificate, it has fulfilled its obligation under Rule 3 of
the Rules read with Rule 6 thereof and therefore, no liability to pay any
amount equal to 8%/10% of the sale price of immovable property can be
fastened after receipt of completion certificate under Rule 6 of the Rules.
While the law does not intend to allow any undue benefit to a service
provider in terms of Cenvat credit of service tax paid on input services
used in providing non-taxable output activity, however, once it is legally
and validly availed, the same cannot be denied and/or recovered unless
specific provisions exist for the same and credit entitlement is on the date
of receipt of inputs when the output activity was wholly dutiable and
merely because the finished goods eventually became exempt later on,
the credit availed on inputs which were contained in semifinished/
finished goods state was held as not deniable".

6.7 In the present case, the dispute is that the partial
occupancy certificate was issued on 4th May 2011 in respect of
Polaris B block and on 23.11.2011 for Vega Block C and final
Occupancy Certificate dated 04.10.2012 for all the blocks A,B,
and C and the flats sold after that have received consideration of
Rs. 11,15,29,085/- on which no service tax is paid. The claim of
the appellant is that they are not liable to reverse cenvat credit
in view of the above judgments, is totally misplaced, since the
facts of that case is that proportionate credit was reversed or not
taken and the only dispute was the demand of 8% credit on
exempted goods which was allowed. However, in the instant
case, neither the appellant had availed proportionate cenvat
credit nor had maintained separate accounts, therefore, the
decisions relied upon by the appellant are not applicable.

6.8 Section 65B(44) of the Finance Act, 1994 w.e.f.
01.07.2012 does not include an activity which constitutes merely

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a transfer of title in goods or immovable property, by way of
sale, gift or in any other manner. Since, the clearance of flats
after the receipt of completion certificate are considered to be
sale of immovable property, they are not liable to pay service
tax. The Explanation (3) introduced under Rule 6 of the Cenvat
Credit Rules, 2004 w.e.f. 01.04.2016 only explains that the above
clearances under Section 65B(44) are deemed to be exempted
services. Even without this Explanation, there is no doubt that the
clearances under Section 65B(44) are not liable to service tax in
view of the fact that Section 66E clearly held that the flats sold
after the receipt of the Completion Certificate are not liable to
service tax, hence, the question of availing cenvat credit on such
services does not arise. Therefore, the appellant has to necessarily
reverse the proportionate credit availed on such flats which have
been sold and consideration received on or after receipt of the
Completion Certificate. At para 21.2, the learned Commissioner
notes that the appellant has stated that the ineligible input credit
has to be computed as per Rule 6(3A) which works out to
Rs.29,67,608/- as against the demand of Rs.63,07,843/- by the
Revenue. In view of the above discussions, we hold that appellants
are required to reverse the cenvat credit of Rs.29,67,608/-, the
proportionate credit availed on those flats which are cleared after
the receipt of the Completion Certificate. Consequently, reversal of
cenvat credit of Rs.63,07,843/- is set aside but reversal of
proportionate credit is upheld. Hence, it is remanded for limited
purpose of re-quantification of proportionate cenvat credit.

(b) "Non-payment of service tax of Rs.3,19,777/- on
consideration received towards construction /
development of parking area in 'The Promont' Project,
during the period from March, 2012 to September, 2012"

7. The demand of service tax on the consideration received
for 'parking area' service is accepted by the appellant and only
penalty is being disputed. Hence, on merit this amount is
confirmed along with interest.

(c) Non-payment of service tax of Rs.5,54,63,589/- on the
consideration received towards development costs, from
M/s Promont Hilltop Private Ltd.

Page 16 of 43
ST/21027/2018

8.1 In the impugned order, the Commissioner makes the
following observations:

"23.3.1. I have perused the relevant Development Agreement dated
18th October, 2012 (effective from 01st October, 2012) and
Supplementary Agreement dated 21st November, 2012 entered into by
the noticee with PHTPL. As per the Development Agreement, M/s Tata
Housing has agreed to grant exclusive and unconditional rights to PHTPL
to develop the entire Project at its cost with and to receive 100% of the
revenues from the Project in the manner set forth, including any amounts
remaining to be paid by Transferees in connection with the said Premises.
In terms of the agreement both M/s Tata Housing and PHTPL shall jointly
execute the agreements and sale deeds with the Transferee (s) in respect
of the said Premises; that PHTPL shall market the flats being constructed
in the said property and thereafter, both M/s Tata Housing and PHTPL
shall jointly transfer the said premises to the Transferee (s) at the price,
as decided by PHTPL and that they shall share in the Gross Proceeds
arising out of transfer of the said premises. As per the initial agreement in
consideration for grant of rights, PHTPL should ensure that the noticee
received 22.5 % share of the Gross Proceeds, within the prescribed time,
over the life of the Project and in consideration of PHTPL developing the
said Property at its cost, PHTPL shall be entitled to retain remaining
77.5% of the Gross Proceeds.

23.3.2. In terms of the Supplementary Agreement dated 21st
November, 2012 entered into with M/s Promont Hilltop Private Limited,
the ratio of revenue sharing was amended / modified. As per the
amendment, the noticee would receive the following as their share of
revenue:

(a) an amount equivalent to Rs.124,88,00,208/- which is inclusive of the
development costs; and
(b) an amount equivalent to 2.5% of the Gross Proceeds received by M/s
Promont Hilltop Private Limited within each calendar quarter to be
paid by M/s Promont Hilltop Private Limited to M/s Tata Housing
Development Company Limited within 15 days from the end of each
calendar quarter over the life of the Project".

8.2 The above facts are not in dispute. It is also a fact the
Development Agreement dated 18th October, 2012, entered into

Page 17 of 43
ST/21027/2018

by the appellant defined 'Development costs' means "the entire
cost and expense of Development and construction, marketing
and sales of the Project including cost of obtaining Approvals,
third party costs to be incurred by and on behalf of PROMONT for
the Project, interest paid/payable to any banks / financial
institutions for any loans, finance and / or credit facilities
PROMONT has availed of for the purpose of the Project, fees,
direct and indirect taxes thereon or other payments (including
statutory dues to workmen, employees, etc.,) payable to the
Principal Architect, engineers, contractors, staff and workmen."

8.3 The fact that the appellant had incurred a total expenditure
of Rs. 109,74,67,523/- including accrued land cost of
Rs.50,91,58,064/- and development expenses of
Rs.58,83,09,459/- towards development of the said Property,
charged to 'Work-In- Progress (WIP)' in their Books of Accounts
and had received consideration of Rs. 124,88,00,208/- and
Rs.3,98,97,135/- as revenue from operations under 'Sale of
Development Rights' is also not in dispute.

8.4 The demand is being contested on the ground that the
amounts received cannot be classified as works contract service
since the Transferee was incorporated only on 24 th September
2012 and the Appellant merely relinquishes all rights, assets and
liabilities pertinent to 'The Promont' project for a 'consideration',
pursuant to the Development Agreement. There is no existence
of service provider-recipient relationship and no provision of
service pursuant to the Development Agreement. Reliance is
placed on Cricket Club of India Ltd. v. Commr. - 2015 (40)
S.T.R. 973 (Tri-Mum). It is also argued that as per exclusion
(a) to Section 65B(44) of Finance Act, 1994, 'an activity which
constitutes merely a transfer of title in goods or immovable
property, by way of sale, gift or in any other manner' is not a
service'. As per Section 3(26) of General Clauses Act, 1897,
'immovable property' shall include land, benefits to arise out of
land, and things attached to the earth, or permanently fastened
to anything attached to the earth. Right to develop the project
Page 18 of 43
ST/21027/2018

transferred vide the Development Agreement amounts to
transfer of bundle of rights that arise out of and relate to the
land. Reliance is placed on Sadoday Builders Pvt. Ltd. v. Joint
Charity Commissioner - 2011 (6) TMI 936 - Bombay High
Court, wherein it was held that 'transferable development right'
is an immovable property. The transaction is merely a transfer of
going concern exempted vide Sl. No. 37 of the Mega Exemption
Notification No. 25/2012 dated 20th June 2012 and non-taxability
of such transfer is clarified by the Education Guide dated 20th
June 2012 published by CBEC.

8.5 Let's examine the clauses of the agreement to see whether
the amounts are in the nature of sale proceeds of the immovable
property or it is the remuneration received for the sale of
development rights. The relevant Clauses G and I are
reproduced below:

"G. In pursuance to the discussions between the parties, PROMONT has
agreed to undertake the Development of the Project, inter alia by
construction of the Said Premises (defined hereunder) In accordance with
the provisions of this Agreement.

I. The Parties shall do all such acts, deeds and things and render all
possible assistance to each other as may be necessary and expedient to
facilitate the Development of the said Property, Including registering the
same with the concerned registration authorities."

8.6 The above Clause-G does not speak of any sale or transfer
but states that PROMONT undertakes the development of the
project as per the provisions of the agreement and there is no
dispute that the amount received by the appellant is towards the
development cost which includes development, construction,
marketing, etc. Moreover, the 'Project' has been defined as
development of the said premises on the said property known as
'The PROMONT'. It also states the parties that shall do all such
acts implying that both are party to each and every act in terms
of the agreement. The other relevant clauses are reproduced

Page 19 of 43
ST/21027/2018

below which also emphasises the fact that both are jointly party
to all the transactions:

"5.1. Both Tata Housing and PROMONT shall jointly execute the
agreements and sale deeds with the Transferee/s in respect of the said
Premises being jointly developed in the said Property in terms of this
Agreement.
5.4 In consideration of the foregoing and in consideration for grant of
rights as provided in this Agreement for the Development of the Project,
PROMONT shall ensure that Tata Housing receives 22.5% share of the
Gross Proceeds received by PROMONT from Transfer of the said
Premises, within each calendar quarter to be paid by PROMONT to Tata
Housing within 15 days from the end of each calendar quarter over the
life of the Project ("TATA HOUSING SHARE OF REVENUE").

5.5. In consideration of the foregoing and in consideration of PROMONT
developing the said Property at its cost as per the terms hereof, after
payment of the TATA HOUSING SHARE OF REVENUE, PROMONT shall be
entitled to retain the remainder of Gross Proceeds from the Transfer of
the Sald Premises to the Transferees revenue ("PROMONT SHARE OF
REVENUE")."

8.7 The Supplementary Agreement dated 21.11.2012 with
regard to remuneration was revised and the Clauses 4A and B
are reproduced below:

"4. However, notwithstanding anything contained in Clause 5.4 of the
Development Agreement it is hereby agreed between the Parties that,
Tata Housing shall receive the following as TATA HOUSING SHARE OF
REVENUE:

(A) an amount equivalent to Rs.124,88,00,208/- (Rupees One Hundred
Twenty-Four Crore Eighty-Eight Lac Two Hundred and Eight only)
which is inclusive of the development costs; and

(B) an amount equivalent to 2.5% of the Gross Proceeds received by
PROMONT within each calendar quarter to be paid by PROMONT to
Tata Housing within 15 days from the end of each calendar quarter
over the life of the Project."

Page 20 of 43
ST/21027/2018

8.8 Further, the clauses reproduced below clearly establish the
fact that the agreement is jointly executed by the appellant and
PROMONT.

"8.13. During the course of Development and on Project Completion (or
parts thereof) as herein contemplated, Tata Housing and PROMONT shall
jointly execute Documents and Instruments necessary for the Transfer in
favour of the Transferees, an undivided share in the said Property, as
requested by PROMONT.

......

10.7. Negotiate for and raise loans or funds for the Development and completion of the Project and to create mortgage, charge or other encumbrance on the said Property and/or the Sald Premises and execute and register necessary Documents and Instrument/s for the purpose. On its part, Tata Housing shall facilitate such loans by creating appropriate mortgage, charge or other Encumbrance on the said Property and executing and registering necessary Documents and Instrument/s for the purpose, if so desired by PROMONT in that behalf. Additionally, Tata Housing agrees and confirms that it shall execute the Documents, If any, required by bank/financial institution or other parties from whom the finance will be arranged, upon the intimation of the same by PROMONT. 10.8 Together with Tata Housing, appear before the concerned registration and other Authorities for the purpose of registering any Documents and Instruments and to present the same before them and admit the execution thereof and to do all such acts, deeds, matters and things as may be necessary or advisable for that purpose. On its part, Tata Housing shall execute and register all such Documents and Instruments as are required to transfer the said Property to Transferees of the Said Premises, In undivided shares and Interest or otherwise."

8.9 From the above Clauses of the Agreement, it is clear that there is no sale of an ongoing concern as claimed by the appellant as there is nothing in the Agreement to deem it to be sale or transfer, instead it establishes the fact that the Agreement is based on sharing of 22.5% of the gross proceeds which later was revised to 2.5% of gross proceeds. The actual consideration charged as development costs, which includes construction, marketing and sales of the project, which is in the Page 21 of 43 ST/21027/2018 nature of works contract, hence, the Commissioner after deducting the cost of land has determined the value as Rs.112,18,36,343/- and rightly provided 40% abatement. However, the demand is upheld only for the normal period, hence, it is remanded for limited purpose for re-quantification.

(d) Non-payment of service tax of Rs. 24,72,000/- on compensation received towards cancellation/termination of Joint Development Agreement and Power of Attorney under the declared service category listed in Section 66E(e) of the Finance Act,1994.

9.1 It is submitted that certain disputes arose between the Prospective Owners and M/s. Tata Housing, in view of which, several proceedings were initiated by the Prospective Owners and M/s. Tata Housing against each other and Writ Petitions were filed pending which both the parties M/s. Tata Housing and the prospective owners, agreed to amicably settle the dispute amongst themselves and cancel the said Joint Development Agreement, Supplemental Agreement and every part thereof. Accordingly, vide 'Deed of Cancellation of Joint Development Agreement' and 'Power of Attorney' both dated 6th January, 1998 and Supplemental Agreement dated 22 nd May, 1998 and 'Deed of Cancellation' dated 10th April, 2013. The above-mentioned Agreements and Power of Attorney were cancelled, towards which the Prospective Owners agreed to pay M/s. Tata Housing a sum of Rs.2,00,00,000/- upon execution of this Cancellation Deed being compensation for relinquishing the rights under the said Agreements and Power of Attorney and towards the reimbursement of any cost incurred towards execution of a tentative project on the said Property. As per the 'Deed of Cancellation' of Joint Development Agreement and 'Power of Attorney' dated 6th January, 1998 and 'Supplemental Agreement' dated 22nd May, 1998 and 'Deed of Cancellation' dated 10th April, 2013, the rights, title, interests and claims whatsoever accruing to M/s. Tata Housing Development Company Limited in respect of the said Property by virtue of the said Agreements and Power of Attorney, would, upon execution of this Deed of Cancellation, Page 22 of 43 ST/21027/2018 be extinguished fully and subsequent to execution of this Deed of Cancellation, the Parties would unconditionally withdraw the disputes filed against each other and M/s. Tata Housing would not thereafter claim any rights, title and interest in the said Property or any part thereof. These facts are not in dispute and a total sum of Rs.2,00,00,000/- was received by way of compensation for relinquishing its rights under the said Agreements and Power of Attorney and towards reimbursement of cost incurred towards execution of a tentative project on the said Property in full and final settlement. The Commissioner referring to Para 6.7 of the Education Guide under guidance note for Declared Services wherein it was clarified that "6.7 Agreeing to the obligation to refrain from an act, or to tolerate an act or a situation, or to do an act -

In terms of this entry the following activities if carried out by a person for another for consideration would be treated as provision of service.

• Agreeing to the obligation to refrain from an act. • Agreeing to the obligation to tolerate an act or a situation. • Agreeing to the obligation to do an act."

The Commissioner held that the consideration of Rs.2,00,00,000/- paid as compensation to M/s. Tata Group is absolutely a Declared service covered under Section 66E(e) of the Finance Act, 1994, on the basis of above-mentioned statutory provisions and based on the clarification given by the Board that it was a taxable amount under Section 66E(e) of the Finance Act, 1994.

9.2 The appellant admits to have recovered an amount of Rs.2,00,00,000/- from the prospective owners towards cancellation of agreement, but, contest that that there is no activity involved in cancellation of agreement and the amount of Rs 2,00,00,000/- received by them was not for providing any service. The Appellant had entered into Joint Development Agreements with prospective owners. However, due to certain disputes, legal proceedings were initiated between the parties Page 23 of 43 ST/21027/2018 inter se. Thereafter, it was decided to settle the dispute amicably. Consequently, 'Deed of Cancellation' of Joint Development Agreement and 'Power of Attorney' dated 6th January, 1998 and 'Supplemental Agreement' dated 22nd May, 1998 and 'Deed of Cancellation' dated 10th April, 2013, the prospective owners agreed to pay the Appellant a sum of Rs. 2,00,00,000/- towards compensation for relinquishing rights under the said Agreements and towards reimbursement of cost incurred towards execution of project, as full and final settlement. By virtue of Section 66E(e) of Finance Act, 1994, agreeing to cancel Joint Development Agreement (JDA) for consideration amounts to a taxable service. The learned counsel for the appellant submitted that the compensation received for termination of JDA is in the nature of liquidated damages are not exigible to Service Tax. In this regard, reliance is placed on Circular No. 178/10/2022-GST dated 3rd August, 2022, which has been adopted for Service tax demands under Section 66E(e) vide Circular No. 214/1/2023-S.T. dated 28th February, 2023. Reliance is also placed on South Eastern Coalfields Limited vs. CCE: 2023 (12) TMI 1241 - CESTAT New Delhi and Commissioner vs. Repco Home Finance Ltd.: 2020 (7) TMI 472 - CESTAT Chennai.

9.3 We have perused the Deed of Cancellation of Joint Development Agreement dated 22.05.1998 which is placed on record which reads 'that the owners have agreed to pay the developer a sum of Rs.2,00,00,000/- (Rupees Two crores Only) upon the execution of this Cancellation Deed being compensation for relinquishing its rights under the said agreements and Power of Attorney and for reimbursement of cost incurred towards execution of its project on the said property'. Therefore, it is clearly a compensation paid to the appellant and the Board's circulars relied upon the appellant are reproduced below:

Liquidated damages -- Levy of Service Tax on declared services in "Agreeing to the obligation to refrain from an act, or to tolerate an act or a situation, or to do an act" under Section 66E(e) of Finance Act, 1994 - Clarification Page 24 of 43 ST/21027/2018 C.B.I. & C. Circular No. 214/1/2023-S.T., dated 28-2-2023 F. No. CBIC-110267/14/2023-CX-VIII SECTION-CBEC Government of India Ministry of Finance (Department of Revenue) Central Board of Indirect Taxes & Customs, New Delhi Subject : Leviability of Service Tax on the declared service "Agreeing to the obligation to refrain from an act, or to tolerate an act or a situation, or to do an act" under clause (e) of section 66E of the Finance Act, 1994 - Regarding.

An issue has arisen on the levy of service tax on liquidated damages arising out of breach of contract, forfeiture of salary or payment of bond amount in the event of the employee leaving the employment before the minimum agreed period and similar other issues arising out of clause (e) of section 66E of the Finance Act, 1994. Reference has also been invited to Circular No. 178/10/2022-GST, dated 3rd August, 2022 [2022 (63) G.S.T.L. C29] regarding applicability of GST on liquidated damages, compensation and penalty arising out of breach of contract or other provisions of law, and its applicability to service tax related issues.

2. It may be seen that "Agreeing to the obligation to refrain from an act, or to tolerate an act or a situation, or to do an act" is a Declared Service as per clause (e) of section 66E of the Finance Act, 1994. A service conceived in an agreement where one person agrees to an obligation to refrain from an act or to tolerate an act or to do an act, would be a 'declared service' under section 66E(e) read with section 65B(44) and would be leviable to service tax.

3. The description of the declared service in question, namely, agreeing to the obligation to refrain from an act or to tolerate an act or a situation, or to do an act is similar in GST. "Agreeing to the obligation to refrain from an act or to tolerate an act or a situation, or to do an act" has been specifically declared to be a supply of service in para 5(e) of Schedule II of the CGST Act, 2017.

4. As can be seen, the said expression has three limbs : - (i) Agreeing to the obligation to refrain from an act, (ii) Agreeing to the obligation to tolerate an act or a situation, (iii) Agreeing to the obligation to do an act.

Service of agreeing to the obligation to refrain from an act or to tolerate an act or a situation, or to do an act is nothing but a contractual agreement. A contract to do something or to abstain from doing Page 25 of 43 ST/21027/2018 something cannot be said to have taken place unless there are two parties, one of which expressly or impliedly agrees to do or abstain from doing something and the other agrees to pay consideration to the first party for doing or abstaining from such an act. Such contractual arrangement must be an independent arrangement in its own right. There must be a necessary and sufficient nexus between the supply (i.e. agreement to do or to abstain from doing something) and the consideration.

5. The issue also came up in the CESTAT in Appeal No. ST/50080 of 2019 in the case of M/s. Dy. GM (Finance) Bharat Heavy Electricals Ltd. in which the hon'ble Tribunal relied on the judgment of divisional bench in case of M/s. South Eastern Coal Fields Ltd. v. CCE, Raipur {2021(55) G.S.T.L. 549 (Tri. - Del.)}. Board has decided not to file appeal against the CESTAT order ST/A/50879/2022-CU[DB], dated 20-9-2022 in this case and also against Order A/85713/2022, dated 12-8-2022 in case of M/s. Western Coalfields Ltd. Further, Board has decided not to pursue the Civil Appeals filed before the Apex Court in M/s. South Eastern Coalfields Ltd. supra (C.A. No. 2372/2021), M/s. Paradip Port Trust (Dy. No. 24419/2022, dated 8-8-2022), and M/s. Neyveli Lignite Corporation Ltd. (CA No. 0051-0053/2022) [2022 (59) G.S.T.L. J55 (S.C.)] on this ground.

6. In view of above, it is clarified that the activities contemplated under section 66E(e), i.e. when one party agrees to refrain from an act, or to tolerate an act or a situation, or to do an act, are the activities where the agreement specifically refers to such an activity and there is a flow of consideration for this activity. Field formations are advised that while taxability in each case shall depend on facts of the case, the guidelines discussed above and jurisprudence that has evolved over time, may be followed in determining whether service tax on an activity or transaction needs to be levied treating it as service by way of agreeing to the obligation to refrain from an act, or to tolerate an act or a situation, or to do an act. Contents of Circular No. 178/10/2022-GST, dated 3rd August, 2022, may also be referred to in this regard.

9.4 The CBIC vide Circular No.178/10/2022-GST dated 03.08.2022 has clarified that:

"7. There has to be an express or implied agreement, oral or written, to do or abstain from doing something against payment of consideration for doing or abstaining from such act, for a taxable supply to exist. An Page 26 of 43 ST/21027/2018 agreement to do an act or abstain from doing an act or to tolerate an act or a situation cannot be imagined or presumed to exist just because there is a flow of money from one party to another. Unless there is an express or implied promise by the recipient of money to agree to do or abstain from doing something in return for the money paid to him, it cannot be assumed that such payment was for doing an act or for refraining from an act or for tolerating an act or situation. Payments such as liquidated damages for breach of contract, penalties under the mining act for excess stock found with the mining company, forfeiture of salary or payment of amount as per the employment bond for leaving the employment before the minimum agreed period, penalty for cheque dishonour etc. are not a consideration for tolerating an act or situation. They are rather amounts recovered for not tolerating an act or situation and to deter such acts, such amounts are for preventing breach of contract or non-performance and are thus mere events' in a contract. Further, such amounts do not constitute payment (or consideration) for tolerating an act, because there cannot be any contract. (a) for breach thereof, or (b) for holding more stock than permitted under the mining contract, or (c) for leaving the employment before the agreed minimum period or (d) for doing something leading to the dishonour of a cheque. As has already been stated, unless payment has been made for an independent activity of tolerating an act under an independent arrangement entered into for such activity of tolerating an act, such payments will not constitute 'consideration' and hence such activities will not constitute "supply within the meaning of the Act. Taxability of these transactions is discussed in greater detail in the following paragraphs.

Liquidated Damages 7.1 Breach or non-performance of contract by one party results in loss and damages to the other party. Therefore, the law provides in Section 73 of the Contract Act 1872 that when a contract has been broken, the party which suffers by such breach is entitled to receive from the other party compensation for any loss or damage caused to him by such breach. The compensation is not by way of consideration for any other independent activity: it is just an event in the course of performance of that contract.

7.1.1 It is common for the parties entering into a contract, to specify in the contract itself, the compensation that would be payable in the event of the breach of the contract. Such compensation specified in a written contract for breach of non-performance of the contract or parties of the Page 27 of 43 ST/21027/2018 contract is referred to as liquidated damages. Black's Law Dictionary defines Liquidated Damages' as cash compensation agreed to by a signed, written contract for breach of contract, payable to the aggrieved party.

7.1.2 Section 74 of the Contract Act 1872 provides that when a contract is broken, if a sum has been named or a penalty stipulated in the contract as the amount or penalty to be paid in case of breach, the aggrieved party shall be entitled to receive reasonable compensation not exceeding the amount so named or the penalty so stipulated.

7.1.3 It is argued that performance is the essence of a contract. Liquidated damages cannot be said to be a consideration received for tolerating the breach or non-performance of contract. They are rather payments for not tolerating the breach of contract. Payment of liquidated damages is stipulated in a contract to ensure performance and to deter non-performance, unsatisfactory performance or delayed performance Liquidated damages are a measure of loss and damage that the parties agree would arise due to breach of contract. They do not act as a remedy for the breach of contract. They do not restitute the aggrieved person. It is further argued that a contract is entered into for execution and not for its breach. The liquidated damages or penalty are not the desired outcome of the contract. By accepting the liquidated damages, the party aggrieved by breach of contract cannot be said to have permitted or tolerated the deviation or non-fulfilment of the promise by the other party.

7.1.4 In this background a reasonable view that can be taken with regard to taxability of liquidated damages is that where the amount paid as liquidated damages is an amount paid only to compensate for injury, loss or damage suffered by the aggrieved party due to breach of the contract and there is no agreement, express or implied, by the aggrieved party receiving the liquidated damages to refrain from or tolerate an act or to do anything for the party paying the liquidated damages, in such cases liquidated damages are mere a flow of money from the party who causes breach of the contract to the party who suffers loss or damage due to such breach. Such payments do not constitute consideration for a supply and are not taxable."

9.5 In view of the above, we do not find any reason to agree with the Commissioner in as much as the amounts received were only a compensation and not a consideration for any service Page 28 of 43 ST/21027/2018 rendered by the appellant, hence, the demand of 24,72,000/- stands set aside.

(e) Non-payment of service tax of Rs.2,06,186/- on income recognized as forfeiture income' on account of cancellation of bookings.

10.1 Section 66E(e) of the Finance Act, 1994, reads as 'agreeing to the obligation to refrain from an act, or to tolerate an act or a situation, or to do an act'. The Revenue claims that any act of agreeing to the obligation to refrain from further development of the residential flat booked by the prospective buyer, collection of the remaining instalments to tolerate a situation of the prospective buyer cancelling the Agreement or not paying the remaining instalments, for a consideration should be held as a 'declared service' under Section 66E(e) of the Finance Act, 1994 and thereby, the appellant is liable to pay service tax of Rs.2,06,186/- on the forfeiture income of Rs.16,68,173/- received on account of cancellation of bookings for the period from April, 2014 to March, 2015.

10.2 Contra, the appellant submits that in terms of the UDS (Undivided Share of Land) Agreement as also the Construction Agreement, any default by prospective buyer was construed as a breach of contract. Such breach gave right to the Appellant to withhold 10% of total consideration payable by such prospective buyer as 'forfeiture money'. Forfeiture money is in the nature of liquidated damages received for breach of contract and hence, as already discussed in the Board's circulars, these amounts are not taxable.

10.3 There is no dispute that the 'Agreement for sale' and 'Construction Agreement' both dated 23rd October, 2008 entered into between M/s. Tata Housing Development Company Limited and the prospective buyers, that in the event of default by the prospective buyer in payment of instalments, as per agreed Payment Schedule or in the event of cancellation / withdrawal of booking / application on his own volition, the buyer forfeits 10% Page 29 of 43 ST/21027/2018 of the total consideration payable by the prospective buyer. One of the agreements for sale placed on record dated 27.09.2008 between the appellant and the prospective buyer clause-5 of the Agreement reads as follows:

"5. Any default by the Purchaser in payment of instalment as per Schedule D thereof on the due dates shall be construed as a breach of contract committed by the Purchaser and in the event of such breach, the Vendor shall, at its option be entitled to

(a) Charge compound interest at quarterly rest on the defaulted instalments at the rate of 18% per annum from the date of default to date of payment; Or

(b) Treat a sum of Rs 243714/- (Rupees Two Lakhs Forty Three Thousand Seven Hundred Fourteen only) equivalent to 10% of the total consideration as forfeited by the Purchaser and adjust it as liquidated damages and deduct any other expenses/costs incurred by the Vendor for carrying out any additional work in the Schedule B Property at the request of the Purchaser, from and out of the moneys paid by the Purchasers and rescind this Agreement and allot the Schedule 'B' Property, to any other person on such terms and conditions as they deem fit The balance money if any, due to the Purchaser shall be paid within 6 (Six) weeks from the date of disposal of the Schedule C Property to any other third party after deducting administration charges if any; Provided that the cancellation of this Agreement will result in the cancellation of the Agreement for the construction of the Schedule B Property";

10.4 Therefore, the amount collected to adjust as liquidated damages in terms of the Board Circular, the relevant para reproduced below, it cannot be considered as receipt of consideration on rendering of any service.

"7.1.5 Examples of such cases are damages resulting from damage to property, negligence, piracy, unauthorized use of trade name, copyright, etc. Other examples that may be covered here are the penalty stipulated in a contract for delayed construction of houses. It is a penalty paid by the builder to the buyers to compensate them for the loss that they suffer due to such delayed construction and not for getting anything in return from the buyers. Similarly, forfeiture of earnest money by a seller in case Page 30 of 43 ST/21027/2018 of breach of 'an agreement to sell' an immovable property by the buyer or by Government or local authority in the event of a successful bidder failing to act after winning the bid, for allotment of natural resources, is a mere flow of money, as the buyer or the successful bidder does not get anything in return for such forfeiture of earnest money. Forfeiture of Earnest money is stipulated in such cases not as a consideration for tolerating the breach of contract but as a compensation for the losses suffered and as a penalty for discouraging the non-serious buyers or bidders. Such payments being merely flow of money are not a consideration for any supply and are not taxable. The key in such cases is to consider whether the impugned payments constitute consideration for another independent contract envisaging tolerating an act or situation or refraining from doing any act or situation or simply doing an act. If the answer is yes, then it constitutes a 'supply' within the meaning of the Act, otherwise it is not a "supply"."

10.5 In view of the above clarification and as already discussed at para 7.3 and 7.4, amounts retained by the appellant in breach of the contract/in terms of the contract for cancellation of the purchase of the flats cannot be considered as service under 66E(e) and hence, not liable to pay service tax. Consequently, service tax demand of Rs.2,06,186/- is set aside.

(f) Short-payment of service tax of Rs.1,27,726/- from M/s. Suying Design Private Limited under 'Interior Design Consultancy Service'.

11. The demand of short-payment of service tax on the on 'interior design consultancy' service is accepted by the appellant and paid along with interest and only penalty is being disputed hence, on merit these amounts are confirmed along with interest. Accordingly, short-payment of Service tax of Rs.1,27,726/- from M/s. Suying Design Private Limited under 'Interior Design Consultancy Service' is upheld along with interest.

(g) Non-reversal of proportionate input service credit attributable to retention charges, in respect of the services received from contractors / sub-contractors (Amount Rs.5,80,728/-) Page 31 of 43 ST/21027/2018 12.1 The admitted facts are that the appellant had received various taxable services from various service providers and availed credit of service tax paid on such services provided by these service providers. The appellant had retained a portion of the gross value of the service provided by the service providers as per the Contracts entered into with them and these retention charges would be paid back only upon satisfactory completion of the residential projects. Since, the appellant had not paid retention charges to the service providers within three months, as envisaged under Rule 4(7) of the CCR,2004, the Revenue demanded reversal of cenvat credit availed on such input services in terms of Rule 4(7) of CCR,2004 along with applicable interest under Rule 14 of the CENVAT Credit Rules, 2004.

12.2 The Learned Counsel submits that the fact that the appellant had retained a sum of Rs.98,45,774/- and had not paid the retention charges within 3 months as required by Rule 4(7) of CCR, 2004 is not under dispute. It is submitted that Rule 4(7) during the relevant period is linked with the invoice/bill/challan of input service and not with payment of invoice, hence, the appellant is entitled to CENVAT credit equal to amount of service tax. It is further claimed that the issue is no longer res integra in as much as the amended Rule 4(7) w.e.f. 1st April 2011 vide Notification No. 13/2011- C.E. (N.T.) dated 31st March, 2011, availment of CENVAT credit was delinked from 'payment of invoice/bill' and was linked to 'date of invoice/bill'. The Board also vide Circular No. 122/03/2010- S.T. dated 30th April 2010 has held in favour of the appellant. The appellant also relied on the decisions in the case of CCE vs. Hindustan Zinc Ltd.: 2019 (4) TMI 480 - CESTAT New Delhi; Anantnath Developers vs. Commr.: 2018 (6) TMI 1082 - CESTAT Mumbai; CCE vs. Thermax Engineering Construction Co. Ltd.: 2017 (12) TMI 1191 - CESTAT Mumbai.

12.3 The Commissioner has confirmed demand of Rs.5,80,728/- being service tax amount to be reversed on the amount of Page 32 of 43 ST/21027/2018 Rs.98,45,774/- retained by the appellant as shown in their Trial Balance as on 31.03.2014, however, there is no evidence to show that these amounts were not paid to the contractors / sub- contractors on completion of the projects. Moreover, there is no dispute that cenvat credit was availed only after payment of the service tax. The Tribunal in the case of CCE Vs. Thermax Engineering Construction Co. Ltd.: 2017 (12) TMI 1191 CESTAT, Mumbai has observed as follows:

"8. As regard appeal filed by the department against dropping of demand on retention money and on Export of Service, we find that though the amount against supply of services by the sub-contractors was retained by the assessee but the amount of service tax was paid in full to the supplier/ vendor. The amount was retained by the assessee in terms of understanding between the assessee and their vendors and not due to non payment. The same was agreed to by both the parties. The Tribunal in similar case of CCE, JAIPUR Vs. HINDUSTAN ZINC - 2014 (34) STR 440 and PATEL AIRFREIGHT Vs. COMMISSIONER - 2014 (35) STR 529 (TRI) has allowed the credit. Even the Board Circular No. 122/3/2010 ST dt. 30.04.2010 permits the credit where the amount of service tax has been paid in full to the provider of service or goods. We thus do not find any reason to take a different view from the adjudicating authority and hold that the credit is available to the assessee in such circumstances".

In view of the above, since there is no dispute that the service tax amounts have been paid based on which the cenvat credit has been taken and considering the above decisions relied upon by the appellant, the demand with regard to reversal of cenvat credit is set aside. Consequently, reversal of proportionate input service tax of Rs.5,80,728/- is set aside.

13.1 Learned Authorised Representative for the Revenue submits that with regard to limitation, Revenue claims that the appellant had suppressed the facts namely transfer of development activities in the guise of 'sale of development rights' and receipt of consideration from M/s. Promont Hilltop Private Limited towards such transfer of development activities; Cancellation of Joint Development Agreement entered into with Page 33 of 43 ST/21027/2018 Smt. Divya Singh, Ms. Beejaksharee Varman and Mr. Tika Sahil Varman and receipt of around two crores rupees from them; Retention of certain amount under forfeiture income towards cancellation of flats and has not paid an amount equal to 6/7% of value of exempted service and non-reversal of cenvat credit taken on input services proportionate to the amount retained by them, to the department. It is stated that despite being registered with the department since 12/09/2008 as a provider of taxable service under various categories of services, the appellant failed to comply with the provisions of the Finance Act, 1994 and rules made thereunder, as they failed to self-assess the service tax due on the services provided by them correctly and to incorporate the same in the periodical statutory returns in respect of the taxable services provided by them within the stipulated time and placed reliance in the case of U.O.I Vs Dharamendra Textile Processors 2008 (231) ELT (SC) and Hon'ble supreme court in the case of UOI vs. Rajasthan Spinning and Weaving Mills 2009 (38) ELT 3 (SC).

13.2 Countering the above, the Learned Counsel submits that non-disclosure does not amount to suppression since they had filed returns regularly and had declared all relevant factors according to them which are liable to tax. Relied on the decisions in the case of M/s. Pushpam Pharmaceuticals Co. Vs. Collector of Customs: 1995 (78) ELT 401 (S.C.) and GD Goenka Pvt. Ltd. Vs. Commissioner: 2023 (8) TMI 995 CESTAT-Delhi. The appellant also contested penalty under Section 78 since the ingredients relevant to invocation of extended period were not established.

13.3 The Tribunal in the case of GD Goenka Pvt. Ltd. Vs. Commissioner (supra) with regard to suppression held as follows:

"11. We have examined these grounds for invoking extended period of limitation.

Page 34 of 43

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12. Section 73 provides for recovery of service tax not levied, not paid, short levied, short paid or erroneously refunded. The provisions of this section apply mutatis mutandis to irregularly availed CENVAT credit recoverable under Rule 14 of CCR. This section permits invoking extended period of limitation to raise a demand on the following grounds:

a) Fraud; or

b) Collusion; or

c) Wilful misstatement; or

d) Suppression of facts; or

e) Violation of the Act or Rules with an intent to evade payment.

13. There is no other ground on which the extended period of limitation can be invoked. Evidently, fraud, collusion, wilful misstatement and violation of Act or Rules with an intent all have the mens rea built into them and without the mens rea, they cannot be invoked. Suppression of facts has also been held through a series of judicial pronouncements to mean not mere omission but an act of suppression with an intent. In other words, without an intent being established, extended period of limitation cannot be invoked. In Pushpam pharmaceuticals company vs Collector of Central Excise Mumbai [1995 (78) E.L.T. 401 (S.C.)], the Supreme Court examined Section 11A of the Central Excise Act, 1944 which was worded similar to Section 73 of the Finance Act, 1994 and held as follows:

" 4. Section 11A empowers the Department to re-open proceedings if the levy has been short-levied or not levied 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 course the context in which it has been used indicates otherwise. A perusal of the proviso indicates that 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 Page 35 of 43 ST/21027/2018 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."

14. In this appeal, the case of the Revenue is that the appellant had wilfully and deliberately suppressed the fact that it had availed ineligible CENVAT credit on input services. The position of the appellant was at the time of self-assessment and, during the adjudication proceedings and is before us that it is entitled to the CENVAT credit. Thus, we find that it is a case of difference of opinion between the appellant and the Revenue. The appellant held a different view about the eligibility of CENVAT credit than the Revenue. Naturally, the appellant self-assessed duty and paid service tax as per its view. Such a self-assessment, cannot, by any stretch of imagination, be termed deliberate and wilful suppression of facts.

15. Another reason given in the SCN for invoking extended period of limitation was that the appellant had deposited the disputed amount of service tax during audit but later disputed it which shows the appellant's intent to wilfully and deliberately suppress the facts. This reasoning of the Revenue cannot be accepted because there is nothing in the law which requires the assessee to accept the views of the audit or of the Revenue. There is nothing in the law by which an inference of intent to evade can be drawn if the assessee does not agree with the audit. It also does not matter if the assessee deposited the disputed amount as service tax during audit and later disputed it. Often, during audit or investigation, the assessee deposits some or all of the disputed amounts and later, on consideration or after seeking legal opinion, disputes the liability and seeks a notice or an adjudication order. This does not prove any intent to evade or deliberate or wilful suppression of facts.

16. Another ground for invoking extended period of limitation given in the impugned order is that the appellant was operating under self- assessment and hence had an obligation to assess service tax correctly and take only eligible CENVAT credit and if it does not do so, it amounts to suppression of facts with an intent to evade and violation of Act or Rules with an intent to evade. We do not find any force in this argument because every assessee operates under self-assessment and is required to self-assess and pay service tax and file returns. If some tax escapes assessment, section 73 provides for a SCN to be issued within the normal Page 36 of 43 ST/21027/2018 period of limitation. This provision will be rendered otiose if alleged incorrect self-assessment itself is held to establish wilful suppression with an intent to evade. To invoke extended period of limitation, one of the five necessary elements must be established and their existence cannot be presumed simply because the assessee is operating under self- assessment.

17. The argument that the appellant had not disclosed in its returns that it was availing and using ineligible CENVAT credit also deserves to be rejected. The appellant cannot be faulted for not disclosing anything which it is not required to disclose. Form ST-3 in which the appellant is required to file the returns does not require details of the invoices or inputs or input services on which it availed CENVAT credit and the appellant is not required to and hence did not provide the details of the CENVAT Credit taken. It also needs to be pointed out that the Returns are filed online and therefore, it is also not possible to provide any details which are not part of the returns. If the format of ST-3 Returns is deficient in design and does not seek the details which the assessing officers may require to scrutinise them, the appellant cannot be faulted because as an assessee, the appellant neither makes the Rules nor designs the format of the Returns. So long as the assessee files the returns in the formats honestly as per its self-assessment, its obligation is discharged.

18. Another ground for invoking extended period of limitation is that the appellant had not sought any clarification from the department. We find that there is neither any provision in the law nor any obligation on the assessee to seek any clarification. It was held by the High Court of Delhi in paragraph 32 of Mahanagar Telephone Nigam Ltd. vs. Union of India & Ors. [2023-TIOL-407-DELHI HIGH COURT ] as follows:

"32. As noted above, the impugned show cause notice discloses that the respondents had faulted MTNL for not approaching the service tax authorities for clarification. The respondents have surmised that this would have been the normal course for any person acting with common prudence. However, it is apparent from the statements of various employees of MTNL that MTNL did not believe that the amount of compensation was chargeable to service tax and therefore, there was no requirement for seeking clarifications. Further, there is no provision in the Act which contemplates any procedure for seeking clarification from Page 37 of 43 ST/21027/2018 jurisdictional service tax authority. Clearly, the reasoning that MTNL ought to have approached the service tax authority for clarification, is fallacious."

Therefore, there is no force in this ground also.

19. It has also been pointed out that but for the audit, the allegedly irregularly availed CENVAT credit would not have come to light. It is incorrect to say that but for the audit, the alleged irregular availment of CENVAT credit would not have come to light. It is undisputed that the appellant has been self-assessing service tax and filing ST-3 Returns. Unlike the officers, the assessee is not an expert in taxation and can only be expected to pay service tax and file returns as per its understanding of the law. The remedy against any potential wrong assessment of service tax by the assessee is the scrutiny of the Return and best judgment assessment by the Central Excise Officer under section 72. This section reads as follows:

"72. Best judgment assessment. If any person, liable to pay service tax,-

(a) fails to furnish the return under section 70;

(b) having made a return, fails to assess the tax in accordance with the provisions of this Chapter or rules made thereunder, the Central Excise Officer, may require the person to produce such accounts, documents or other evidence as he may deem necessary and after taking into account all the relevant material which is available or which he has gathered, shall by an order in writing, after giving the person an opportunity of being heard, make the assessment of the value of taxable service to the best of his judgment and determine the sum payable by the assessee or refundable to the assessee on the basis of such assessment."

20. Thus, 'the central excise officer' has an obligation to make his best judgment if either the assessee fails to furnish the return or, having filed the return, fails to assess tax in accordance with the Act and Rules. To determine if the assessee had failed to correctly assess the service tax, the central excise officer has to scrutinize the returns. Thus, although all assessees self-assess tax, the responsibility of taking action if they do not assess and pay the tax correctly squarely rests on the central excise officer, i.e., the officer with whom the Returns are filed. For this Page 38 of 43 ST/21027/2018 purpose, the officer may require the assessee to produce accounts, documents and other evidence he may deem necessary. Thus, in the scheme of the Finance Act, 1994, the officer has been given wide powers to call for information and has been entrusted the responsibility of making the correct assessment as per his best judgment. If the officer fails to scrutinise the returns and make the best judgment assessment and some tax escapes assessment which is discovered after the normal period of limitation is over, the responsibility for such loss of Revenue rests squarely on the shoulders of the officer. It is incorrect to say that had the audit not been conducted, the allegedly ineligible CENVAT credit would not have come to light. It would have come to light if the central excise officer had discharged his responsibility under section 72.

21. This legal position that the primary responsibility for ensuring that correct amount of service tax is paid rests on the officer even in a regime of self-assessment was clarified by the Central Board of Excise and Customs [CBEC] in its Manual for Scrutiny of Service Tax Returns the relevant portion of which is as follows:

1.2.1A The importance of scrutiny of returns was also highlighted by Dr. Kelkar in his report on Indirect Taxation [Report of the Task Force on Indirect Taxation 2002, Central Board of Excise and Service Tax, Government of India.]. The observation made in the context of Central Excise but also found to be relevant to Service Tax is reproduced below:

It is the view that assessment should be the primary function of the Central Excise Officers. Self-assessment on the part of the taxpayer is only a facility and cannot and must not be treated as a dilution of the statutory responsibility of the Central Excise Officers in ensuring correctness of duty payment. No doubt, audit and anti- evasion have their roles to play, but assessment or confirmation of assessment should remain the primary responsibility of the Central Excise Officers.

(emphasis supplied)

22. Therefore, to say that had the audit not been conducted, the incorrect availment of CENVAT credit would not have come to light is Page 39 of 43 ST/21027/2018 neither legally correct nor is it consistent with the CBEC's own instructions to its officers.

23. For the sake of completeness, it needs to be pointed out that the aforesaid Manual provides for two levels of scrutiny- preliminary scrutiny of all Returns and Detailed Scrutiny of some Returns selected based on some criteria laid down in it. Relevant extracts of the manual are as follows:

1.2A Service Tax administration has had the benefit of building on the experience of Central Excise administration which is an older tax going back to 1870. More recently, in July 2000, under the CIDA-assisted capacity building project, a detailed business process reengineering exercise was initiated. For the first time, key business processes were identified and small working groups set up to examine each business process and suggest qualitative improvements to enhance revenue efficiency and ensure taxpayer satisfaction. The business re-engineering exercise conducted for returns' scrutiny revealed the need to distinguish between preliminary scrutiny and detailed scrutiny in a two-tier scrutiny process.

1.2B It was decided that a preliminary scrutiny would be conducted on all returns. This could even be undertaken online.

Detailed scrutiny, on the other hand, would cover select returns, identified on the basis of risk parameters, drawn from the information furnished by taxpayers in the statutory returns (Service Tax returns or ST-3 in this case). CBEC felt that facilitating preliminary scrutiny online would enhance efficiency and release manpower for detailed manual scrutiny, which could then become the core function of the Range/Group.

2) A detailed scrutiny programme also serves a 'workload development' function by initiating referrals for audit/anti-evasion.

1.2.2 Authority and Ownership 1.2.2A The authority to conduct scrutiny of returns for verifying the assessment done by the assessee is provided in Rule 5A of the Service Tax Rules, 1994. This rule, interalia, authorizes the Commissioner to empower any officer to carry out 'Scrutiny, verification and checks, as may be necessary to safeguard the interest of revenue'. The Rule also allows the officer to call for any Page 40 of 43 ST/21027/2018 record maintained by the assessee for accounting of transactions, the trial balance or its equivalent, and the Income Tax Audit Report maintained under Section 44AB of the Income Tax Act. In other words, the Rule permits the officer to examine financial records for scrutinizing the return to determine the correctness of the assessments made. In pursuance of this, the Board has also issued guidelines vide letter F.No.137/27/2007 CX.4, dated 08.02.2007, which makes it mandatory to scrutinize returns on a regular basis. Details of the Board's guidelines on returns' scrutiny are discussed in Chapter 2 of this Manual.

1.2.2B The guidelines clearly envisaged that returns' scrutiny would become the core function of the Service Tax Group/Range, supervised by the Assistant Commissioner of the Service Tax Unit.

24. Thus, the CBEC took a conscious decision that detailed scrutiny of the Returns should be done only in some cases selected based on some criteria. In those Returns, where detailed scrutiny is not done by the officers some tax may escape assessment which may not be discovered within the normal period of limitation. As a matter of policy, the CBEC, took such risk and the loss of Revenue is a result of the policy.

25. To sum up:

a) The appellant assessee was required to file the ST 3 Returns which it did. Unless the Central Excise officer calls for documents, etc., it is not required to provide them or disclose anything else.

b) It is the responsibility of the Central Excise Officer with whom the Returns are filed to scrutinise them and if necessary, make the best judgment assessment under section 72 and issue an SCN under Section 73 within the time limit. If the officer does not do so, and any tax escapes assessment, the responsibility for it rests on the officer.

c) Although the Central Excise Officer is empowered to scrutinise all the Returns call for records and if necessary, make the best judgment assessment, if, as per the instructions of CBIC, the officer does not conduct a detailed scrutiny of same Returns and as a result is unable to discover any short payment of tax within the period of limitation, neither the assessee nor the officer is responsible for such loss of revenue. Such a loss of Revenue is the risk taken by the Board as a matter of policy.

Page 41 of 43

ST/21027/2018

d) Extended period of limitation cannot be invoked unless there is evidence of fraud or collusion or wilful misstatement or suppression of facts or violation of the provisions of Act or Rules with an intent.

e) Intentional and wilful suppression of facts cannot be presumed because (a) the appellant was operating under self-assessment or (b) because the appellant did not agree with the audit and claimed that CENVAT credit was admissible; or (c) because the appellant did not seek any clarification from the Revenue; or (d) because the officer did not conduct a detailed scrutiny of the Returns and the availment of CENVAT credit which is alleged to be inadmissible and was discovered only during audit.

13.4 The Commissioner in the impugned order except for stating that certain disclosures were not made has not brought in any of the factors that prove misdeclaration or suppression with intent to evade payment of duty. Therefore, going by the decision of the apex court that suppression cannot be presumed needs to be proved with certainty and factual incidents to prove intention to evade payment of duty, we do not find any reason to confirm the demand beyond the normal period.

14. In view of the above discussions, issues and findings are summarised as below:

a. Demand of reversal of Cenvat credit of Rs.63,07,843/- during the period from August 2012 to September 2015 is set aside but upheld the reversal of proportionate credit and remanded for limited purpose for re-quantification of proportionate credit.

b. "Non-payment of service tax of Rs.3,19,777/- on consideration received towards construction / development of parking area in 'The Promont' Project, during the period from March, 2012 to September, 2012" is upheld along with interest, since accepted and not contested by the appellant.

c. Non-payment of service tax of on the consideration received towards development costs from M/s. Promont Hilltop Private Limited by wrongly claiming it as 'Sale of Development Rights', in respect of 'The Promont' Project, Page 42 of 43 ST/21027/2018 during the period from October, 2012 to June, 2015 is upheld; however, remanded for limited purpose for re-quantification of service tax demand for normal period only.

d. Non-payment of service tax of Rs. 24,72,000/- on compensation received towards cancellation/termination of Joint Development Agreement and Power of Attorney under the declared service category listed in Section 66E(e) of the Finance Act, 1994 is set aside.

e. Non-payment of service tax of Rs.2,06,186/- on income recognized as forfeiture income' on account of cancellation of bookings made by the customers under the declared service during the period from April, 2014 to March, 2015 is set aside.

f. Short payment of service tax of Rs. 1,27,726/-on the services received from M/s Suying Design Private Limited, Singapore on account of retention of a part-value of 'interior design consultancy' service, is upheld along with interest, since accepted and not contested by the appellant, which is also appropriated in the impugned order.

g. Demand of Service Tax of Rs.5,80,728/- for non-reversal of proportionate input service credit attributable to retention charges, in respect of the services received from contractors / sub-contractors is set aside.

h. All the penalties imposed under Section 77 and 78 are set aside.

Appeal is partially allowed on above terms.

(Order pronounced in Open Court on 09.05.2025.) (D.M. MISRA) MEMBER (JUDICIAL) (R. BHAGYA DEVI) MEMBER (TECHNICAL Page 43 of 43

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