Custom, Excise & Service Tax Tribunal
Proview Construction Ltd vs Ghaziabad on 17 January, 2019
IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE
TRIBUNAL
REGIONAL BENCH : ALLAHABAD
COURT No. I
APPEAL Nos.ST/70563 & 70633/2017-CU[DB]
(Arising out of Order-in-Original No. 03/COMM/ST/GZB/2017-18 dated
05/05/2017 passed by Commissioner of Central Excise & Service Tax,
Ghaziabad)
[In Appeal No.ST/70563/2017]
M/s Proview Construction Ltd., Appellant
Vs.
Commissioner of Central Excise & S.T., Ghaziabad Respondent
[In Appeal No.ST/70633/2017] Commissioner of Central Excise & S.T., Ghaziabad Appellant Vs. M/s Proview Construction Ltd., Respondent Appearance:
Shri Anurag Mishra & Ms Pragya Pandey, Advocates for Service Provider Shri Pawan Kumar Singh, Supdt (AR), for Revenue CORAM:
Hon'ble Smt. Archana Wadhwa, Member (Judicial) Hon'ble Mr. Anil G. Shakkarwar, Member (Technical) Date of Hearing : 09/01/2019 Date of Pronouncement : 17/01/2019 FINAL ORDER NOs-70105-70106 / 2019 Per: Anil G. Shakkarwar The above stated two appeals are arising out of common impugned Order-in-Original No. 03/COMM/ST/GZB/2017- 18 dated 05/05/2017 passed by Commissioner of Central Excise & Service Tax, Ghaziabad. Therefore, they are taken 2 APPEAL Nos.ST/70563 & 70633/2017-CU[DB] together for decision. Appeal No.ST/70563/2017 is filed by service provider and the other appeal is filed by revenue.
2. Brief facts of the case are that service provider was providing service of construction of residential complex. The Departmental Officers visited office premises of the service provider on 18.07.2012 and conducted scrutiny of records and also further carried out investigations and recorded statements. On the basis of investigation, it came to knowledge of revenue that service provider had constructed three residential complexes, one was Sai Sharnam Project at Sirdi in the state of Maharashtra, the second was Laboni Project in Gazhiabad and the third was Technocity Project at Noida. On the basis of said investigation, a show cause notice dated 25.06.2015 was issued. It was stated in the said show cause notice that service provider was required to register with the Service Tax Department on 01.07.2010 and the service provider registered with the department in the month of June, 2012. It was stated that service provider had collected around Rs.19.8 crores up to June, 2010 in respect of Laboni Project, about Rs.28.9 crores in respect of Techno city Project upto June, 2010 and from 01.07.2010 service provider received gross amount up to 31.03.2014 in respect of said three projects including the amounts received before June, 2010 to the tune of Rs.140.15 crores. It was stated in the said show caunse notice that gross amount reflected in ST-3 returns filed by the service provider for the period from 3 APPEAL Nos.ST/70563 & 70633/2017-CU[DB] 01.07.2012 to 31.03.2013 was around Rs.36 crores. The service provider were leveled with the charges that service tax liability in respect of said three projects for the period from 01.07.2010 to 31.03.2014 was around Rs.10.47 crores. Therefore, through the show cause notice service provider called upon to show cause why service tax around Rs.11.72 crores should not be demanded from him under proviso to Sub-section (1) of Section 73 of Finance Act, 1994. Further, there was a proposal to deny Cenvat credit of around Rs.75 lakhs and there were proposals for imposition of penalties. Further, there was a proposal to impose penalty under Section 78 A of the Finance Act, 1994 on Shri Rajeev Arora, Director. On contest, the said show cause notice was adjudicated through the impugned Order-in-Original. The learned Original Authority has dealt with individual issues arising out through the said show cause notice and held as follows:-
a. In respect of Sai Sharnam Project at Sirdi in Maharashtra, he has refused the contention of service provider that the project was completed before 01.07.2010. It was contended before him by service provider that architect had issued a letter dated 31.03.2010 to Gram Panchayat Nimgam, Rohta, Ahmadnagar in Maharashtra and Gram Panchayat issued complication certificate on 15.02.2011.
Therefore, Original Authority has held that the project 4 APPEAL Nos.ST/70563 & 70633/2017-CU[DB] was not completed before 01.07.2010 and therefore, after allowing 75% abatement in the assessable value, he had ordered to confirm the demand in respect of said project.
b. In respect of Laboni Project the contention of service provider was that the architect had issued certificate on 05.05.2010 that the said project was completed and such certificate issued by architect was submitted to Ghaziabad Development Authority. The said certificate was not accepted by the Original Adjudicating Authority and he has concluded that Laboni Project also did not complete before 01.07.2010 and therefore, he has confirmed the demand in respect of the said, after allowing 75% of abatement. Further, he has denied abatement in respect of preferential location charges, fire fighting charges etc. The Original Authority held that the consideration received in respect of parking was included in the total amount charged from the buyers. In respect of Interest payments, security charges and External Development Charges the original authority had held that there is no service involved in the same. In respect of Cenvat credit on service tax paid on the input services to the tune of around Rs.75 lakhs the same was allowed by the Original Authority. c. In respect of proposal on imposition of penalty on Shri Rajeev Arora under Section 78 A of Finance Act, 1994 5 APPEAL Nos.ST/70563 & 70633/2017-CU[DB] the Original Authority has held that the said provision was inserted with effect from 01.05.2013 and show cause notice has not discussed about the specific role played by Shri Rajeev Arora and therefore, he has held that the said proposal was not sustainable.
d. In respect of Techno City Project the Original Authority has allowed 75% abatement and confirmed the demand of service tax of around Rs.1.68 crores.
The total demand confirmed by the Original Authority is around Rs.1.68 crores for Techno City Project around Rs.34 lakhs for Sai Sharnam Project, around Rs.1.88 crores for Laboni Project, around Rs.11 lakhs on miscellaneous income and under reverse charge around Rs.32,000/-. The Original Authority further found that the service provider has filed ST- 3 returns for the period from April, 2010 to March, 2014 and has recorded the date of filing of said returns and due to delay in filing of all the said returns he imposed penalty of Rs.1.39 lakhs under Section 70 of Finance Act, 1994. The learned Original Authority further ordered that the service provider had paid around Rs.4.17 crores and confirmed liability against the service provider was around Rs.4.03 crores and therefore, ordered to refund the balanced amount to the service provider. The Original Authority further appropriated the total interest payable which was already paid by the service provider. The learned Original Authority imposed penalty of Rs.4.03 crores on the appellant. Aggrieved 6 APPEAL Nos.ST/70563 & 70633/2017-CU[DB] by the said order, service provider is before this Tribunal. Aggrieved by the non imposition of penalty under Section 78A, allowing Cenvat credit to the appellant on services received and not levied service tax on parking charges, external development charges and security charges, revenue is before this Tribunal.
3. Heard the learned Counsel Shri Anurag Mishra alongwith Ms Pragya Pandey, Advocates on behalf of service provider and learned A.R. Shri Pawan Kumar Singh, Superintendent on behalf of revenue.
4. Learned Counsel for service provider has dealt with the definition of construction of complex service defined under Clause (zzzh) of Sub-section 105 of Section 65 of the Finance Act, 1994 and submitted that taxable service is a service provided in relation to construction of complex. He has further submitted that w.e.f. 01.07.2010 an explanation was inserted below the said clause and the result of the said explanation was that the builders who were building the residential complex and entering into the agreement with prospective buyers for sale of such flats before completion of the same, such services were included in the said levy. He has submitted that it was held in the case of Commissioner of Central Excise, Chandigarh Vs U.B. Construction Pvt. Ltd. reported at 2013 (32) STR 738 (Tri.-Delhi) relying on the ruling by Hon'ble Bombay High Court in the case of Maharashtra Chamber Of Housing Industry Vs Union of India 7 APPEAL Nos.ST/70563 & 70633/2017-CU[DB] reported at 2012 (25) STR 305 (Bom.) that before 01.07.2010 builders constructing flats form prospective buyers was not subjected to levy of service tax. He has further submitted that the said explanation inserted w.e.f. 01.07.2010 also indicated that if the construction is completed before 01.07.2010 then the said activity did not qualify for levy of service tax. He has further submitted that Central Board of Excise and Customs through the Circular No.334/3/2010-TRU dated 01.07.2010 clarified that completion certificate issued by an architect as well as by a Chartered Engineer or License Supervisor can be taken as a valid certificate for determining the service tax liability. He submitted that Shri Sai Sharnam Project was started in 2007 and was completed on 15.07.2009 and it was certified by architect on 31.03.2010 that the project was completed and that said submission of the service provider was not accepted by the Original Authority and therefore, he confirmed the demand of around Rs.34.79 lakhs. He further submitted that architect through certificate dated 05.05.2010 certified that Laboni Project was completed and also marked a copy of said certificate to Ghaziabad Development Authority and on the basis of said certificate Ghaziabad Development Authority issued completion certificate on 13.07.2011. He has submitted that the said certificate was also not accepted by the Original Authority for confirmation of demand of around Rs.1.88 crores in respect of Laboni Project. He has further submitted even if Original Authority has not accepted the said 8 APPEAL Nos.ST/70563 & 70633/2017-CU[DB] two certificate, during investigation revenue did not bring any positive evidence to establish that there was any construction activity going in either Sai Sharnam Project or in Laboni Project as on 01.07.2010 to discharge its burden of proof for demand of service tax in respect of said two projects. He also submitted a copy of said certificate dated 05.05.2010 in the court. In respect of Technocity Project, the learned Counsel has submitted that they have accepted the service tax liability of around Rs.1.68 crores and submitted that said project was started in the year 2012 and completed in the year 2017. He further submitted that the Original Authority in para 6.15 of impugned order, has stated that for the period from April, 2010 to March, 2014 service provider had filed all the ST-3 returns. Further, para-20.1 of the show cause notice has stated that from 01.07.2012 to 31.03.2013 service provider had declared gross amount in ST-3 returns as around Rs.36 crores. He has further submitted that learned Original Authority has held in the order that before issuance of show cause notice the service provider had paid around Rs.4.17 crores with around Rs.62 lakhs as interest. He has further submitted that the confirmed liability by the appellant is around Rs.1.68 crores in respect of Technocity Project. He has argued that the liability in respect of service tax on Sai Sharnam Project and Laboni Project is not sustainable since they were completed before introduction of levy as on 01.07.2010. He further argued that more amount of service 9 APPEAL Nos.ST/70563 & 70633/2017-CU[DB] tax was paid before the issuance of show cause notice than the liability and all returns were also filed and therefore, the penalty under Section 78 is not imposable on the service provider. He has further submitted that the service provider had caused delay in filing ST-3 returns. Therefore, they accepted the penalty imposed of around Rs.1.39 lakhs under Section 70 of Finance Act, 1994. In respect of departmental appeal, he has submitted that learned Commissioner has relied on definition under Section 65 (105) (zzzzu) of Finance Act prior to 01.07.2012 while rejecting the demand of service tax on parking charges. Therefore, the appeal filed by revenue is not sustainable.
5. Heard the learned A.R. for revenue, he has submitted that the parking charges should have been included in the assessable value and also that the security charges and external development charges should have been included. He has further submitted that penalty under Section 78A on Shri Rajeev Arora should have been imposed.
6. Having considered the submissions from both the sides and on perusal of record we note that the issue to be decided in the present appeal is whether service tax was leviable in respect of Sai Sharnam Project and Laboni Project. Further, we note that in respect of Sai Sharnam Project the original authority has refused to accept date of completion as 31.03.2010 in the absence of mention of name of the said project in the certificate issued by architect. However, we note 10 APPEAL Nos.ST/70563 & 70633/2017-CU[DB] that during the proceedings it was not establish through positive evidences by revenue that any activity of construction in respect of Sai Sharnam Project was continued after 01.07.2010. We, therefore, hold that the levy of service tax introduced w.e.f. 01.07.2010 is not applicable to Sai Sharnam Project. In respect of Laboni Project the Original Authority has stated that though service provider has referred to certificate issued by architect on 05.05.2010 he will go by the certificate issued by Ghaziabad Development Authority on 13.07.2011. The learned Counsel for service provider has submitted a copy of certificate dated 05.05.2010 issued by architect in respect of Laboni Project stating that the project was complete in all respect. We note that Central Board of Excise & Customs through Circular dated 01.07.2010 had clarified that certificate issued by architect serves the purpose to establish that the project is complete. We, therefore, hold that Laboni Project was also completed before 01.07.2010. We, therefore, hold that service tax was not liable to be paid in respect of Laboni Project. We, therefore, set aside the demand of Rs.34,79,175/- in respect of Sai Sharnam Project and demand of Rs.1,88,94,825/- in respect of Laboni Project since revenue could not bring out any positive evidence to establish that any activity of construction in respect of said two projects took place after 01.07.2010. We do not interfere in confirmation of demand of Rs.1,68,37,388/- in respect of Technocity Project and imposition of penalty of Rs.1,39,200/- 11 APPEAL Nos.ST/70563 & 70633/2017-CU[DB] under Section 70 of Finance Act, 1994 for late filing of ST-3 returns. We, further note that the Original Authority has recorded that appellant had filed ST-3 returns for the period from 01.04.2010 to 31.03.2014. The show cause notice is also stated in para-20.1 that the value declared by service provider in his ST-3 return was around Rs.36 crores. We also note that Original Authority has held that appellant had paid Rs.4,17,72,535/- before issuance of show cause notice towards service tax and Rs.62,57,935/- towards interest. We also note that the show cause notice was issued on 25.06.2015. We, therefore, find that in respect of Technocity Project which was started in the year 2012 the service tax of around Rs.1.68 crores already stands paid, interest also paid and late fee also stands paid before issuance of show cause notice. We, therefore, hold as follows:-
In partial modification of the impugned order, we confirmed the demand of service tax of Rs.1,68,37,388/-, we confirmed appropriation of interest of Rs.62,57,935/- and confirm the penalty of Rs.1,39,200/- under Section 70 of Finance Act, 1994 and set aside the remaining part of the impugned order. We find that the Original Authority had allowed refund of amount excess paid by the appellant. The said refund now needs to be worked out taken into consideration the service tax of around Rs.4.17 crores paid and Rs.1.68 crores service tax confirmed and Rs.1.39 lakhs 12 APPEAL Nos.ST/70563 & 70633/2017-CU[DB] penalty imposed. In above terms, we dispose Appeal No.ST/70563/2017 filed by Service Provider.
7. In respect of Appeal No.ST/70633/2017 filed by revenue, we note that revenue has raised issues of non imposition of penalty under Section 78A on Shri Rajeev Arora and non inclusion of Parking Charges, Security Charges and External Development Charges in the assessable value by the learned Original Authority. We find through the impugned Order-in-Original that Original Authority has given reasoned findings in respect of said issues and we do not find any ground raised by revenue to establish that the said findings were not tenable in law. We, therefore, do not find any merit in the said appeal filed by revenue.
8. In above terms both the appeals are disposed of.
(Pronounced in Court on-17/01/2019) Anil G. Shakkarwar (Archana Wadhwa) Member (Technical) Member (Judicial) akp