The Division Bench of Delhi High Court has quashed the service Tax proceedings against Emaar MGF land limited.
The respondent S Emaar MGF Land Ltd. which was engaged in undertaking construction activities for development of residential complexes and flats in southern India had entered into two separate agreements with the purchaser of each flat ‘Construction Agreement’ and second in respect of an undivided share in the land proportionate to the size of the flat.
The respondent claimed that the said activity fell within the scope of the taxable service under Section 65(105)(a) of the Act, ‘Works Contract’ Service, which was taxable under the Act from 01.06.2007.Accordingly, the respondent recovered service tax from flat buyers for the period of July 2008 to January 2009. The respondent deposited a sum and discharged the balance liability by utilising the Cenvat Credit.
According to the Revenue, the services rendered fell in the ‘Construction of Complex’ as defined under Section 65(105)(h) of the Act, which was chargeable to tax with effect from 01.07.2010 as introduced by the Finance Act, 2010.
Thus, according to the Revenue, the services rendered by the respondent were not taxable at the material time, and it could not claim any Cenvat Credit in respect of input services for discharging its liability. Consequently, the respondent was required to refund the same along with interest
Satish Kumar appeared on behalf of the revenue and V. Lakshmi Kumaran appeared on behalf of the respondent.
The Division Bench of Justice Vibhu Bakhru and Justice Amit Mahajan dismissed petition and upheld the decision of the tribunal observing that,
“In the given facts, the provision to Section 73(1) of the Act could not be applied. The respondent had filed its return of service tax on the basis that its services were taxable as ‘Works Contract’ Services. It had availed the Cenvat Credit to the extent of ₹2,44,48,095/- and had paid the balance amount in cash in discharge of the liability, which was computed on the aforesaid basis. There is no allegation that the respondent had concealed that it was carrying on the activity of construction and selling residential flats.”
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