By Puloma Dalal, Jayesh Gogri, Chartered Accountants
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Whether amendment of taxing activity of selling under construction flats retrospective in nature?
Facts:
The appellants engaged in construction of residential complexes sold the same to the prospective buyers. During the period October, 2005 to July, 2006 they did not pay any service tax for advances received during the said period for such activity. A Show Cause Notice was issued in this regard and adjudicated confirming a demand for tax amount of Rs. 14,50,311/- along with interest and penalty as revenue’s view was that service tax was payable on such activity u/s. 65(105)(zzzh) of the Finance Act, 1994 read with section 65(30a) of the Finance Act, 1994 during the stated period. The lower appellate authority set aside the adjudication order on the ground that the appellant had engaged their own labour and constructing buildings on lands owned by themselves and thus there was no service provided by the appellant to the prospective buyers and placed reliance on the clarificatory letter issued by CBEC vide F. No. 332/35/2006-TRU, dated 01-08-2006. The Revenue contending that the Respondent received advances from the prospective buyers for the flats and therefore there was a service rendered in terms of the explanation inserted u/s. 65(105)(zzzh) by the Finance Act, 2010. Revenue relied on the decision of the Punjab & Haryana High Court in the case of G.S. Promoters vs. UOI, 2011 (21) S.T.R. 100 (P&H).
Held:
The explanation added at the Finance Act, 2010 was not effective retrospective and this issue was already decided by the Tribunal vide Final Order No. ST/A/190-197/2012 of 13-03-2012 in Appeal No. S.T./463/2008 (Delhi) and Others in the case of CCE, Chandigarh vs. M/s. Skynet Builders, Developers, Colonizer and others – 2012 (27) STR 388 (T). It was held that the decision of Punjab & Haryana High Court in G S Promoters (supra) did not examine service tax liability for the period prior to the date of the explanation, therefore not applicable in the instant case. Appeal by the department was dismissed accordingly.
