The Kolkata Bench of Customs Excise & Service Tax Appellate Tribunal ( CESTAT ) ruled that no service tax under Section 66E(B) of the Finance Act could be imposed if partial completion and occupancy certificates were received on a flat project.
MCK PGE Projects LLP, the appellant was involved in the construction of a residential project called “Astitva” located in Kolkata. They received a Partial Completion Certificate and an Occupancy Certificate on 24.06.2016.
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The Revenue demanded Service Tax amounting to Rs. 38,11,194 on the sale of the flats, citing Section 66E(b) of the Finance Act, 1994, and Notification No. 09/2013-S.T. dated 08.05.2013.
On appeal, the Commissioner (Appeals) had confirmed the demand for Service Tax of Rs.38,11,194, along with interest, and imposed an equivalent amount of tax as a penalty. Aggrieved by the Commissioner (Appeals)’s order, the appellant appealed before the Kolkata Bench of CESTAT.
The appellant’s counsel argued that the appellant had received the Partial Completion Certificate and Occupancy Certificate on 24.05.2016 and the appellant did not avail CENVAT credit for the flats sold. Thus, the appellant was not liable to pay any Service Tax.
On the contrary, the department’s counsel relied on the finding of the authority and the order of the Commissioner (Appeals).
The two-member bench comprising Ashok Jindal (Judicial Member) and K. Anpazhakan (Technical Member) observed that the appellant had received both the Partial Completion Certificate and the Occupancy Certificate on 24.05.2016, coinciding with the sale of the flats.
The Tribunal emphasized that under Section 66E(b) of the Finance Act, 1994, and Notification No. 09/2013-S.T., the appellant was not liable to pay Service Tax if the project had reached a stage that allowed occupancy and sale.
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In addition, the tribunal noted that no CENVAT credit was availed by the appellant for the sale of flats, strengthening their case. Therefore, the tribunal set aside the demand for Service Tax of Rs. 38,11,194 along with associated interest and penalties. The appellant’s appeal was allowed with consequential relief, if any.
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