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Service Tax - Commercial or Industrial Construction Services - Revenue appeal against dropping the demand with respect to construction service as rendered by the appellant with respect to the work undertaken for Awas Vikas Sansthan Limited of Government of Rajasthan, under which they have constructed hospitals, Ambedkar Peeth, etc., as being non-commercial in nature and allowing abatement under Notification No. 1/2006-ST –

HELD – Perusal of definition of Commercial or Industrial Construction Services makes it clear that the services rendered by the appellant will fall under sub-clause C thereof. Since the material is also provided by the service provider, the case of the appellant as far as completion and finishing services as detailed above are concerned, it stands clearly covered under Item No. 5 of the Table given in N/No. 1/2006-ST dated 01.03.2006 - the Comm. (Appeals) has rightly extended the benefit of this notification. Further, since the Contracts were inclusive of material, the total value of one contract which amounts to transfer of property was to be excluded - The other construction services which are residential in nature, the phraseology itself takes the contract out of the definition of Commercial and Industrial Construction.

Hence, levying the demand for the said construction under the head of it being commercial is not sustainable – since the law requires assessee itself to determine the classification of service and to pay tax on self assessment basis. Since the assessee-respondent has failed to act accordingly, the penalty under Section 76 and 78 have rightly been confirmed – demand is set aside and penalty under Section 76 & 78 of Central Excise Act is upheld – revenue appeal is dismissed

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HC allows refund claim of assessee, engaged in execution of works-contract, of excess credit which was inadvertently reflected as ‘carry forward’ in next tax period return instead of ‘refund’ for subsequent period under Delhi Value Tax Act (Act);

States that, despite this Court’s order on a previous occasion to refund the amount in a time bound manner, Revenue’s action of issuing order to deny claims on ground of inadequate/unsatisfactory material is untenable;

Referring to ruling in Shaila Enterprises, accepts assessee’s plea that the default assessment became final since period of limitation for making assessment on merits expired, and hence there exists “no scope to legally scrutinize the refund claim”;

Remarks, “The pattern and structure of the DVAT Act is such that if an assessment order is not passed, the returns acquire the status of a default assessment; if any unadjusted credit exists, the assessse’s right to refund crystallizes” while finding Revenue’s argument that refund is impermissible because the period for revising returns has passed as “utterly frivolous and baseless”;

Holds that, fact that excess credit amount was wrongly shown does not preclude assessee's basic refund claim, on which it maintained a consistent stand, while elucidating further that, "revenue cannot hold on to the monies which do not bear the character of a valid levy; they have to be refunded” .

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Service Tax - Construction of Residential Complex Service – assessee entered into agreement for construction of building intended for making available residential accommodation for the managerial staff of M/s. ITC Ltd – Whether the Tribunal erred in coming to the conclusion that the “Residential Complex” constructed by the assessee falls within the meaning of “personal use” under Section 65(91a) of the Finance Act, 1994 and therefore not liable to pay service tax.


HELD - When the sub-Contractor has duly discharged the obligations to pay the Service tax in the present Contract, we are at a loss to understand how the Revenue could again demand the Service Tax from the Respondent-Principal Contractor or the Developer, who did not undertake any construction activity – further, the learned Tribunal was perfectly justified and correct in applying the Circular dated 24/05/2010 and holding that if the Government of India Department could be treated as using the ‘Residential Complex’ constructed by NBCC for its ‘personal use’, how another Corporate body could be denied the benefit of that type of user of ‘Residential Complex’ to be occupied by its Managerial Staff.


The law does not envisage any such distinction among the Private Sector Corporate Entities and the Departments of Government or Government Companies or Undertakings - The case of Revenue have emanated on a misconceived Audit objection raised by the internal Auditors of the Department - the Respondent was not liable to pay any Service Tax on the ‘Residential Complex’ constructed through the sub-contractor and such finding of facts recorded by the Tribunal does not give rise to any substantial question of law – Revenue appeal is dismissed

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Consideration received from landowners in the form of development rights thereon for construction of ‘villas’ under Joint Development Agreement (JDA) not liable to service tax separately where cost of acquisition of land included in gross amount charged by assessee-builder; Observes that assessee discharged service tax on the transaction entered with prospective customers from whom it received consideration in cash for the sale of villas and "It would not be a rocket science to understand that the value....would include the consideration paid or payable for acquisition of land"; Rejecting Revenue’s contention that transactions between builder & landowner and builder & prospective buyers have to be understood as two separate transactions, CESTAT remarks that, “merely because the consideration received from land owners is invested in construction of villas to other buyers on which service tax is paid, it cannot be concluded that service tax paid on consideration received from land owners has to be evaluated differently”; Referring to Chartered Accountant’s certificate evidencing discharge of service tax on gross consideration received, as well as CBEC Circular dated February 16, 2006, CESTAT holds that as assessee discharged service tax liability on the construction undertaken on joint development basis, “demand of service tax on the same amount again would amount to double taxation”; Moreover, finds demand to be hit by limitation absent any mala fide intention to evade tax inasmuch as assessee had declared the value received from prospective customers in the returns and discharged service tax thereon : Hyderabad CESTAT

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Karnataka VAT Act – works contract – Books of Account - denial of deduction of labour and like charges - Prescribed Authority concluded the reassessment allowing the deduction of 30% of the works contract in terms of Rule 3(2)(m) rejecting the claim of the petitioner of the deduction of labour and like charges under Section 3(2)(l) of the KVAT Rules 2005 - whether respondent is justified in concluding the reassessment proceedings rejecting the claim of the petitioner to deduct the labour and other like charges under Section 3(2)(l) of the KVAT Rules –

HELD - the assessee has maintained proper books of accounts and it is only due to the copious size of the books of accounts, it would be practically difficult to produce the entire books of accounts, had requested the Prescribed Authority to examine the books of accounts at the business premises of the petitioner or else to insist for the specific expenses incurred, relating to which the books of accounts can be produced. A cartload of books of accounts requires to be examined by the Prescribed Authority to ascertain the genuineness of the claim made by the petitioner - It is the contention of the petitioner that notwithstanding the voluminous size of the books of accounts maintained by the petitioner, they are willing to place the same before Prescribed Authority -

In the circumstances, it cannot be held that the petitioner has not maintained the books of accounts or not willing to produce the books of accounts - for the limited purpose of providing an opportunity to the petitioner to produce the books of accounts before the Prescribed Authority to avail the deduction under Section-3(2)(l) of the KVAT Rules as claimed, the Court deems it proper to set-aside the order impugned herein and remit the matter to the Prescribed Authority to examine the books of accounts and arrive at a decision - the impugned orders are set-aside. The matter is remanded to the respondent to reconsider the matter afresh after providing an opportunity to the petitioner to produce the books of accounts – answered in favour of assessee

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Service Tax - appellant had entered into an agreement with Korea Plant Service & Engineering Company Limited for operation and maintenance of power plant - Denial of refund of service tax paid on the operation portion of the contract entered into by appellant for operation and maintenance – revenue contention that doctrine of unjust enrichment is not satisfied –

HELD – it is the case of Revenue that the doctrine of unjust enrichment is not satisfied as the power purchase agreement entered with APSEB indicates only one price towards the purchase of power from GMR Energy Vemagiri Power Generation Limited, in all probabilities the service tax element for which refund has been claimed is included while arriving at the unit price of electricity sold to APSEB - the appellant had produced detailed Chartered Accountant certificate, which indicates the bifurcation of the amounts towards maintenance charges and operation charges and has specifically certified that appellant has not passed on the service tax liability on the operations part to any one and has borne the burden of the service tax - the said certificate clearly indicates the details on the basis of which the Chartered Accountant has come to a conclusion the amount for which refund claim is preferred, is borne by appellant-assessee – appeals filed by assessee is needs to be accepted and the impugned orders is set aside and the appeals filed by Revenue are rejected

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Service Tax - Assessee acquired the Development Rights for the piece of land and subsequently, sold such Development Rights to other parties for a profit – transaction of purchase and the sale of Developmental Rights - Demand under services of Real Estate Agent service –

HELD - There is no evidence that the appellant provided any service of any development in respect of property - the appellant has always acted as purchaser and seller of Development Rights and immovable property - the activities as undertaken by the respondent would not fall under the category of ‘real estate agent’ services or ‘real estate consultant’ services  - the consideration received by the respondent is towards sale of Developmental Rights to the land and cannot be considered as commission for real estate agents services - the appeal filed by the Revenue is dismissed

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Service Tax - construction of residential apartments and complexes – petition challenging assessment by computation of service tax as per the Profit and Loss account prepared on the basis of the AS 7 – demand of differential tax - Relevance of the P&L accounts of the petitioner in the determination of point of rendition of service and the method of quantification of receipts in respect thereof - application of Rule 3 of the Point of Taxation Rules, 2011 –

HELD - AS 7 provides for a detailed methodology for the reporting and determination of the percentage of income from the contract over the term of the project and sets out the mode of computation for arriving at the same. The basis of such recognition and reporting is the apportionment of the income earned and expenditure incurred over the tenure of the project. This is entirely different and distinct from the scope, object and application of the Point of Taxation Rules that seeks to set out a methodology for determination of when the service was rendered and consequently when the receipt of income from such rendition be taxed - Rules 3(a) and (b) provide for the point of taxation to be either the point of raising of invoice or in a case where the service provider has received the payment even prior to the time stipulated in the invoice, upon receipt of such payment - Instead of such determination by application of the provisions of Rule 3, the department relies upon the P&L accounts to conclude that the amounts reflected therein have not been offered for service tax.

The reporting of income in the P & L being irrelevant for the purposes of determination of service tax payable, the basis of the impugned assessment is erroneous - The petitioner is recognizing revenue under the 'Project Completion Method' in terms of AS-7 issued by ICAI. We need not concern ourselves with the method followed for the preparation of financials as the same has no impact upon the Point of Taxation Rules. Suffice it to state that the AS provides a certain methodology for the computation of income from projects that is at variance with the method set out under Rule 3 - Insofar as Rule 3 sets out a specific modus operandi in this regard, it assumes priority and is the only relevant factor to be taken into account in the determination of point of rendition and accrual of services for the purpose of imposition of service tax - the impugned order of assessment is set aside and the matter remitted to the Respondent to be re-done de novo strictly in accordance with the provisions of Rule 3 of the Rules - The Writ Petition is allowed

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Tamil Nadu General Sales Tax Act, 1959 - appellants is a works contractor who had undertaken the working of laying and polishing of Mosaic tiles – revenue view that entire amount received by the assessees on the execution of works contract on mosaic is taxable - Revenue aggrieved by Tribunal holding that the sand used for the execution of works contract alone would be taxable and the value of other items is exempt under Section 3B(2)(c) of the Act - Whether the assessee is entitled to the claim of exemption under Section 3(B) 2(b) and also other deductions as per account –

HELD – the Appellate Authority and Tribunal are the final fact finding authorities and when the books of accounts were produced, the Appellate Authority has analysed the same and found that the dealers were having separate accounts for the materials that had been purchased and utilised in the course of works contract and that they have also maintained separate figures for various charges that had been incurred during the course of works contract - the entire raw materials utilized for the execution of works contract have been purchased from within state and suffered tax and the items used for the execution of works contract were tax suffered goods except sand.

Therefore, the sand used for the execution of works contract alone is taxable and the value of other items used should be given exemption under Section 3(B)(2)(c) of the TNGST Act, 1959 – the impugned order is sustained and Revenue petitions are dismissed


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