M/S. Omega Associates vs Commissioner Of Service Tax, Mumbai
- CitationAPPEAL NO. ST/86/12-MUM
Ratio decidendi
The rule this decision rests on
Where a builder collects maintenance charges from flat owners under a statutory obligation imposed by the Maharashtra Ownership Flat (Regulation of the Promotion of Construction, Sale, Management and Transfer) Act, 1963, to maintain the building until it is handed over to the society, and merely reimburses the payments made to service providers engaged for that purpose, the builder does not provide a taxable Management, Maintenance or Repair service, and no service tax is leviable on those collections. Where the service tax and interest on a taxable service have been paid before the issue of a show cause notice, section 73(3) of the Finance Act, 1994 bars the issue of a show cause notice in respect of that amount, and penalty under section 78 is not imposable on the amount so paid. Where the assessee has promptly paid the service tax and interest on its own initiative and the circumstances show reasonable cause, penalty under section 80 of the Finance Act, 1994 is not leviable.
Written by Miss Lucy from the judgment below, not taken from a headnote.
Judgment
As delivered
[Arising out of Order-in- Original No. 418/33/V/2011/ COMMR/ KS/ST dtd. 29/11/2011 passed by the Commissioner of Service Tax, Mumbai]
For approval and signature:
Honble Mr. P.S. Pruthi, Member(Technical) Honble Mr Ramesh Nair, Member(Judicial)
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1. Whether Press Reporters may be allowed to see : No the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?
2. Whether it should be released under Rule 27 of the : CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?
3. Whether Their Lordships wish to see the fair copy : seen of the Order?
4. Whether Order is to be circulated to the Departmental: Yes authorities? =======================================================
M/s. Omega Associates : Appellants
VS
Commissioner of Service Tax, Mumbai : Respondent
Appearance
Shri. S.S. Gupta, C.A. alongwith Shri. Archit Agarwal, C.A. for the Appellants Shri. Sanjeev R Nair, Examiner(A.R.) for the Respondent
CORAM:
Honble Mr. P.S. Pruthi, Member (Technical) Honble Mr. Ramesh Nair, Member (Judicial)
Date of hearing: 24/11/2015 Date of decision /2015
ORDER NO.
Per : Ramesh Nair
This appeal is directed against Order-in-Original No. 418/33/V/2011/ COMMR/KS/ST dated 29/11/2011 passed by the Commissioner of Service tax, Mumbai-V, wherein Ld. Commissioner has confirmed the service tax demand of Rs. 9,886/- under the category of Transport of Goods by Roads Service, service tax amount of Rs. 58,66,991/- under the category of Management, Maintenance or Repair service, demanded interest, imposed penalty of Rs. 58,76,877/- and appropriate the amount of 28,305/- and Rs. 6,974/-(interest) which was already paid by the appellant before issuance of show cause notice.
2. The fact of the case is that department received an intelligence indicating evasion of service tax by Hiranandani Group of Companies. Anti evasion Section, Service tax commissionarate, Mumbai investigated the case and it was found that appellant have not discharged service tax on GTA service and on Management, Maintenance or Repair service collected from Flat owners. Accordingly, show cause notice issued proposing recovery of service tax on both above services. Meanwhile before issuance of show cause notice, appellant deposited Rs. 28,305/- and Rs. 6,974/- against entire service tax demanded on GTA service and interest.
3. Shri. SS Gupta, Ld. C.A. alongwith Shri. Archit. Agrawal, Ld. C.A. appearing on behalf of the appellant submit that as regard the service tax demand on GTA, the appellant is not contesting. The appellant has already paid an amount of Rs. 28,305/- alongwith interest which is much higher than the demand confirmed in the order. As regard service tax on Management, Maintenance or Repair service, he submits that this maintenance was carried out under the statutory obligations as provided under Maharashtra Ownership Flat(Regulations of the promotion of construction, sell management and transfer) Act, 1963 (MOFA). As per statutory provisions under the said Act, builder is under obligation to maintain the building and the appellant only taken re-imbursement of various services which was provided by various service provider. Therefore the appellant has neither provided the service nor retained the amount of maintenance with them. Therefore no service is involved and appellant is not liable for any service tax on so called Management, Maintenance or Repair service of the building. He submits that this issue has been settled in case of Kumar Beheray Rathi Vs. C. Ex. Pune-3 [2014(34) STR 139(Tri.)]. In view of this judgment, the demand confirmed by the impugned order is not sustainable. As regard the penalty imposed under section 78, he submits that the service tax on GTA escaped only due to inadvertence. The data of service charges of GTA was retrieved from the appellants books of account only which shows that there is no intention of evasion of service tax. Moreover, the appellant has discharged the service tax along with interest on GTA service before issuance of show cause notice, for this reason also penalty under section 78 is not imposable invoking Section 73(3) as well as Section 80 of the Finance Act, 1994.
4. On the other hand, Shri. Sanjeev Nair, Ld. Examiner (A.R.) appearing on behalf of the Revenue reiterates the findings of the impugned order.
5. We have carefully considered the submissions made by both sides and perused the records.
6. We find that as regard demand of service tax on GTA service there is no dispute about the taxability of service. Hence the demand of Service tax on GTA service confirmed in the impugned order is upheld. As regard the service tax on Management, Maintenance or Repair service of building collected from Flat owner, we find that the collection of such maintenance charges is under the statutory provision of MOFA, 1963. According to which it is mandatory on the part of the builder that before handing over the building to the society the builder has to maintain the building for which the builder engaged various service provider and payment made to such service provider was taken as re-imbursement from the flat owner. In this fact the appellant is not liable for service tax as held in the case of Kumar Beheray Rathi (supra) therefore service tax demand on Management, Maintenance or Repair service is clearly unsustainable and therefore same is set aside. As regard penalty under Section 78 commensurate to the service tax on GTA service. We find that firstly the appellant after knowing about non payment of service tax on GTA, they promptly paid the service tax alongwith interest which is much before the issuance of show cause notice. In this fact we are of the view that penalty is not imposable in terms of section 73(3) of Finance Act, 1994, according to which if the amount of service tax alongwith interest is paid then no show cause notice should have been issued. Taking into consideration overall facts and circumstances of the case, we find that the appellant have also made out a case of reasonable cause accordingly they are also not liable for penalty under Section 80. We therefore waive the penalty related to service tax on GTA. In result:
(a) The service tax and interest on GTA service is upheld.
(b) The demand of service tax on Management, Maintenance or Repair service and penalty and interest related thereof are set aside.
7. The appeal is partly allowed in the above terms.
(Order pronounced in court on __________)
P.S. Pruthi Member (Technical) Ramesh Nair Member (Judicial)
sk
5 ST/86/12-MUM
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