CESTAT quashes Service Tax liability on Miscellaneous Income treated as Receipts towards Construction Services [Read Order]

The Chennai Bench of the Customs, Excise and Service Tax Appellate Tribunal ( CESTAT ), quashed service tax liability on miscellaneous income which was treated as receipts towards construction services.

The appellant, M/s. Jain Housing & Construction Limited is a developer engaged in the development of residential projects and during the course of its business, it enters into composite contracts with buyers. The Revenue issued three Show Cause Notices thereby proposing to levy Service Tax with respect to various projects executed by the appellant under Construction of Residential Complex Service and Works Contract Service.

The Commissioner, however, not satisfied with the reply, proceeded to confirm the demands, as proposed in the Show Cause Notices against which the present appeals have been filed before the forum. Radhika Chandrasekhar, Advocate appeared for the appellant and Sridevi Taritla, Additional Commissioner appeared for the Revenue.

The issue involved is the levy of Service Tax on the miscellaneous income which was treated as receipts towards construction services. The Advocate for the appellant would submit that the appellant had made certain payments towards the purchase of land to M/s. Norne Homes Pvt. Ltd. and hence, the same was not a consideration received for providing any service.

In this context, the Counsel relied on the orders of the Bangalore Bench and the Ahmedabad Bench of the CESTAT respectively: - (i) M/s. Synergy Audio Visual Workshop P. Ltd. v. Commr. of S.T., Bangalore (ii) M/s. Reynolds Petro Chem Ltd. v. Commissioner of C.Ex. & S.T., Surat-I, to buttress the arguments that the Revenue cannot simply rely on TDS/26AS Statement under the Income Tax Act 1961 to fasten Service Tax liability.

The Bench comprising P Dinesha, Judicial Member and M Ajit Kumar, Technical Member noted that we are of the clear view that the issue of Service Tax liability on the miscellaneous income is not justified as the same is answered by the rulings of the CESTAT Benches.

To Read the full text of the Order CLICK HERE

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