The Customs, Excise and Service Tax Appellate Tribunal (CESTAT), New Delhi Bench ruled that there can be no demand for service tax when the completion certificate has been issued before July 01 2010.
M/s. H.C. Buildcon Pvt Ltd, the appellant has filed the appeal to challenge the order passed by the Commissioner (Appeals) by which the order passed by the Additional Commissioner has been upheld and the appeal has been dismissed.
The appellant is in the business of developing lands by construction of shopping malls and then selling the units in the shopping malls or leasing them out. For this purpose, the appellant acquired a plot of land from Rajasthan Industrial Investment Corporation (RIICO) for an amount of Rs.6 crores and an allotment letter were issued by RIICO.
The issue that arises for consideration in this appeal is as to whether the completion certificate for the mall had been issued before July 01, 2010 because in that case no service tax would be leviable. The appellant had received the amount of Rs. 11 crores after the issue of the completion certificate.
Section 65(25) of the Finance Act, 1994 defines commercial or industrial construction and section 65 (105) (zzq) that came into effect from July 01, 2010 of the Finance Act provides that any service provided or to be provided by any person to any other person, in relation to commercial or industrial construction shall be subjected to service tax.
Ashish Sharma, Chartered Accountant appearing for the appellant laid emphasis on the certificate dated August 12, 2009 issued by the Architect certifying that the building had been completed as per the approved plans as also upon the certificate issued by the Regional Manager of RIICO.
The government had issued the Service Tax (Removal of Difficulty) Order 2010 and it states that for the purpose of section 65(105)(zzq), the expression “authority competent” would include an Architect registered that the Council of Architecture constituted under the Architect Act, 1972. Since it is a Removal of Difficulty Order, the Commissioner (Appeals) was not justified in holding that it would be prospective in nature. The benefit of the certificate date August 19, 2009 issued by the Architect would come to the aid of the appellant.
The Two-Member Bench of Justice Dilip Gupta, President and Hemambika R Priya, Technical Member observed that “The completion certificate has been issued to the appellant before July 01, 2010. The payments were received by the appellant after the completion certificate was issued to the appellant. They could, therefore, not be subjected to levy of service tax.”
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