ST -'One-time' maintenance charges collected from flat buyers by builder not taxable : HC
By TIOL News Service
MUMBAI, SEPT 28, 2018: THE CESTAT had in its order dated 15.09.2015 reported as - 2015-TIOL-2558-CESTAT-MUM held thus –
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ST - Till the flats are handed over to the individual flat owners and the cooperative society is formed by the flat owners, appellants (builders) collected an amount from the flat owners which is titled as towards Management, Maintenance or Repair of the premises - It is the case of the revenue that the amount so collected by the appellant would be taxable under the category of Management, Maintenance or Repair services.
Held: Appellants cannot be held as provider of maintenance or repair service as they are only paying on behalf of various buyers of flats to various authorities (Municipal Corporation, Revenue authorities etc.) and various service providers (such as security agency, cleaning service providers etc.) and they are not charging anything on their own - issue is now settled in the case of Kumar Beheray Rathi - 2013-TIOL-1806-CESTAT-MUM and Goel Nitron Constructions - 2015-TIOL-1787-CESTAT-MUM therefore, demand unsustainable - Appeals allowed in this regard: CESTAT [para 11]
ST - GTA - Service Tax payable along with interest - entire demand paid before issuance of SCN - calculation discrepancy to be verified by lower authorities - as issue was being agitated before the higher judicial forum there is no need to visit the appellant with the penalty - exercising the provisions of s.80 of FA, 1994, penalties waived: CESTAT [para 9]
Appeals partly allowed
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Revenue is in Appeal before the Bombay High Court and urges the following questions of law -
(a) Whether on the facts and circumstances of the case and in law was the Tribunal right in holding that the assessee was not providing Management, Maintenance or Repair Service by collecting amount from prospective flat buyers, for maintaining the building, in the guise of deposits which is not returnable?
(b) Whether on the facts and in the circumstances of the case and in law was the Tribunal right in setting aside penalty, despite the assessee admitting their liability and paid service tax on Goods and Transport Agency Service, merely for the reason that amount was negligible?
(c) Whether on the facts and in the circumstances of the case and in law was the Tribunal correct in placing reliance upon its decision in Kumar Beheray Rathi - 2014-TIOL-838-HC-KERALA-ST which misconstrued Circular No.89/7/2006–ST dt. 18.12.2006 while Hon'ble High Court of Kerala had construed the said circular in a different way in the case law of Kothamangalam Municipality - 2014-TIOL-838-HC-KERALA-ST?
The High Court observed that the impugned order allowing the Appeal of the present Respondent was passed by the CESTAT by following the decision of its coordinate Bench in Kumar Beheray Rathi (supra).
The Counsel for the Revenue also very fairly stated that the decision of the Tribunal in the case of Kumar Beheray Rathi (supra) was appealed to the High Court being CEXA No. 74 of 2017 (CST Vs. Kumar Beheray Rathi) along with other Appeals raising identical issue and was decided on 25 January 2018 - 2018-TIOL-288-HC-MUM-ST in favour of the Respondent–Assessee i.e. Kumar Beheray Rathi (supra).
Noting that no distinction in facts and/or law in the present facts vis-à-vis the cited decision dated 25 January 2018 was pointed out, the High Court held that the questions proposed did not give rise to any substantial question of law as the issue raised stood concluded by its earlier decision.
The Revenue appeal was dismissed.
(See 2018-TIOL-2028-HC-MUM-ST)
