The Chennai bench of the Customs, Excise & Service Tax Appellate Tribunal (CESTAT) has held that Charges received for supervising construction work for the allottees by Tamil Nadu(TN) Housing Board falls under Business Auxiliary Services and set aside the demand of Service Tax.
M/s. Tamil Nadu Housing Board, the assessee-appellant challenged the Orders-in-Original passed by the Commissioner of Central Excise, Chennai-I. The appellant is a body duly constituted by an Act of the Tamil Nadu Legislative Assembly, is engaged in the construction of houses / apartments and allotting dwelling units to eligible persons.
It was evident that the assessee had not registered with the Department for the services under the respective categories and had also not paid any Service Tax on such services rendered by them to various clients. A show cause notice was issued to appellant proposing service tax demand on various service.
The appellant requested for dropping of the proceedings. During adjudication, the adjudicating authority appeared to have considered the reply filed by the assessee, who confirmed all the demands proposed in both the Show Cause Notices.
The lower authority has held that the scrutiny charges were collected from the buyers for scrutinizing the documents, apparently, for sale of buildings belonging to the Government, which is a service provided by the appellant to the buyers in connection with the sale. Further viewed that the supervision charges were also received for supervising the construction of Government Quarters and both the above services were classifiable under BAS.
The appellant has received supervision charges and scrutiny charges from its clients by virtue of which the appellant is held to have rendered BAS within the meaning of Section 65(19) of the Finance Act.
The appellant has contended that the tenements to whom the services were rendered, were not its clients at all. The appellant would collect a nominal fee towards scrutinizing charges from the allotees, which is a part of the sale proceeds, which is fixed by the Government itself.
The adjudicating authority observed that in the Annual Report, the receipts from ‘scrutiny charges’ have been shown as income in Schedule-4 and the receipts from ‘supervision charges for deposit works’ have been shown as income in Schedule-3.
It was viewed that the Revenue has not specifically pointed out as to which limb of the above categories covers the scope of the alleged services rendered by the appellant. In the impugned order also, the Commissioner has only referred to Section 65(105)(zzb) which only states – a service to be rendered to a client, by any person, in relation to BAS; and that limb of BAS is not specifically identified by him.
A two-member bench comprising of Mr P Dinesha, Member (Judicial)and Mr Vasa Seshagiri Rao, Member (Technical) held that “unless a specific charge/service is alleged, put across in the Show Cause Notice and the scope of the services alleged to have been rendered by the appellant stands examined in the context of such service, mere allegation alone is not sufficient to fasten with tax liability.”
The CESTAT set aside the demand of BAS in the impugned order.
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