The Chennai bench of the Customs, Excise and Service Tax Appellate Tribunal ( CESTAT ) has held that the liability under Works Contract Service would be taxable only from 1.7.2010 and set aside the demand of Commercial Complex Service ( CCS ).
M/s. Real Value Promoters Pvt Ltd, the appellant challenged the Order-in-Original passed by the Commissioner of Service Tax, Chennai. During the internal audit of accounts of the assessee, they appeared to have noticed the non-payment of Service tax on commercial rental income under immovable property service (RIPS) for the period from September 2008 to September 2009, and non-payment of Service tax under Construction Service (CS) and Commercial Complex Service ( CCS ) for the period from April 2009 to September 2009.
A Show Cause Notices were issued proposing to demand service tax as above, apart from interest under Section 75 of the Finance Tax Act, 1994 and penalty under Sections 76 and 77 ibid. The assessee filed a detailed reply to the above Show Cause Notices, thereby denying liability to service tax, but chose to pay the service tax in so far as RIPS was concerned. The Original Authority having considered the reply of the appellant, in adjudication, proceeded to pass the impugned Orders-in-Original, thereby confirming the proposed demand in the Show Cause Notices.
G. Natarajan appeared for the appellant and contended that since a common issue is involved in all the appeals, all the appeals may be considered for common disposal; he would also submit that insofar as the disputed demand under RIPS is concerned, the appellant is only aggrieved by the penalty imposed. The scope of appeals concerning CS/CCS is against the demand of service tax confirmed under residential complex service, for the period involved is April 2009 to September 2009.
Further submitted that in respect of construction activity undertaken by the appellant, the same was as per the composite contracts/works contracts entered into between the appellant and its customer, which involved both transfer of materials/goods required for construction as well as providing the construction services, which are indivisible and, hence, the same was appropriately classifiable under Works Contract Service. It was stated that the Apex Court in Larsen and Toubro held that, the liability under Works Contract Service would be taxable only from 1.7.2010. M Ambe, Deputy Commissioner, relied on the findings of the Original Authority.
Insofar as the penalty under RIPS is concerned, the two-member bench of P Dinesha, Member (Judicial) and M. Ajit Kumar, Member (Technical) held that the issue involved interpretation in as much as, the High Court of Delhi held that there was no liability to service tax insofar as the renting of immovable property was concerned and therefore, an amendment was brought in, to overcome the above judgement.
The CESTAT held that the penalties imposed on the appellant also cannot sustain and set aside the impugned orders, insofar as the penalty is concerned and allow the appeals to this extent also.
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