By TIOL News Service

ALLAHABAD, DEC 13, 2016: THE appellant is registered for providing services under category "Man Power Supply", Works Contract & Maintenance & Repair Services.

During audit it was detected that the appellant had entered into a work contract with J.P. Greens & Jai Prakash Enterprises for the construction of residential complex & parts thereof & paying service tax on the entire amount except the amount received against the construction of park & road, swimming pool, treating them as part of common area of residential complex.

The appellant took a stand that the activities undertaken by them in respect of construction of roads, parks etc., were for the general public & are not part of the residential complex; therefore, not chargeable to service tax.

Unwilling to buy this argument, SCN was issued for recovery of service tax of Rs.30,62,770/-on the gross value of Rs. 2,66,85,478/-, collected during the period of June 2006 to March, 2011. The contention of the department was that the so-called public facilities were within M/s Jaypee Greens & were to be maintained by the M/s JaypeeGreens or the designated agency; that M/s Jaypee Greens had included the cost of the wall boundaries & other facilities in the cost of flat on proportionate basis and, therefore, the claim of the appellant that such facilities were for the public at large, is not acceptable.

The demand of service tax was confirmed and the Commissioner(A) upheld the same.

While confirming the demand, the adjudicating authority had inter alia based his conclusion on the following -

+ Circular F. No. B-1/6/2005-TRU dated 27.07.2005.

+ Jaypee Greens project is enclosed by boundary wall with several gates.

+ Statement of Ashish Singh that he is not aware whether the roads and the park are for use by the general public or not and that he was verbally informed by Jaypee Greens that the roads and the park are for use by the general public.

+ The work order reference No.WO/JEL/08/09/ASC/185 dated 01.11.2008 indicates that the service tax is nil or as applicable shall be reimbursed on submission of challans for the amount of service tax paid under the work order.

+ Ashish Singh produced certain copies of invoices which indicated levy of service tax which was not reimbursed by M/s Jaiprakash Enterprises Ltd.

+ Mr. Shaym Sunder Chaudhary in his statement mentioned that the sources of the fund for the projects of Jaypee Greens are collected from their customers and sometimes provided by their corporate office. It was also stated by him that the cost of common areas like wall, boundaries and other facilities are included in the cost of flats on proportionate basis.

+ M/s Jaiprakash Enterprises Ltd. have the ownership of the roads and the park.

So, the appellant is before the CESTAT and pleads that the appeal be allowed.

It is submitted that based on the above narrated facts, it cannot be concluded that the roads and the park are a part of the residential complex. Inasmuch as in order to be a part of the residential complex it was required to be determined that Jaypee Greens project is a residential complex project in terms of the provisions of the FA, 1994 and which categorical finding was missing.

The AR reiterated the stand of the department.

The Bench observed -

"5. …, we find that the issues involved in this appeal is whether the roads and park are a part of a residential complex or not. This issue is settled by the various decisions of the Tribunal, High Court as also by the Apex Court. Accordingly, considering the subsequent rulings of the Hon'ble Supreme Court, particularly in the case of L & T and others Vs. CCE - 2015-TIOL-187-SC-ST we set aside the impugned order and remand the matter to the adjudicating authority for de novo adjudication, the appellant is also directed to appear before the adjudicating authority within 45 days of receipt of this order and seek opportunity of hearing."

The appeal was allowed by way of remand.

(See 2016-TIOL-3218-CESTAT-ALL)