Service Tax Appeal No.10276 of 2013
(Arising out of OIA-112-2012-BVR–SKS-COMMR-A—AHD dated 12/11/2012 passed by
Commissioner of Central Excise and Service Tax-RAJKOT)
Sumeru Builders
VERSUS
C.C.E. & S.T.-Rajkot
APPEARANCE:
Shri B.R. Bopat, Chartered Accountant for the Appellant
Shri Prakash Kumar Singh, Superintendent (AR) for the Respondent
CORAM: HON’BLE MEMBER (JUDICIAL), MR. RAMESH NAIR
HON’BLE MEMBER (TECHNICAL), MR. RAJU
Final Order No. A/ 10027 /2023
DATE OF HEARING: 28.11.2022
DATE OF DECISION: 10.01.2023
RAJU
This appeal has been filed by M/s. Sumeru Builders against
confirmation of demand of service tax and imposition of penalty.
- Learned Chartered Accountant appearing for the appellant argued that
the appellant had no intention to evade any service tax. The appellants were
at the material time engaged in building of residential complex and in terms
of clarification issued by CBEC 108/02/2009-ST-F.No. 137/12/2006-CX.4
dated 29.01.2009 they were exempted from the payment of service tax in
the capacity of “Builders”. He pointed out that the Finance Act was amended
in 2010 and with effect from 01.07.2010 the liability to pay service tax arose
on builders. He pointed out that they took registration on 06.08.2010. He
pointed out that they had certain doubts regarding liability of builder to pay
service tax and therefore, they did not immediately start paying service tax.
He pointed out that the summons were issued to the appellant in the month
of April, 2011 and issue regarding payment of service tax on the advance
received by the appellant was raised in the said proceedings. The appellant
voluntarily discharged service tax amounting to Rs.13,71,476/- along with
interest of Rs.47,925/-, late fee of Rs.2,000/- on 18.04.2011 and
20.04.2011 through various challans. He argued that they had also filed ST-
3 returns on 20.4.2011.
2.1 He argued that they are not challenging the liability of service tax. He
argued that the benefit of Section 73(3) has been denied and a show cause
notice was issued to them. Although, they had paid the entire tax liability
along with interest before issuance of show cause notice and communicated
their acceptance of the liability vide letter dated 25.04.2011. He argued that
in view of the above fact that they had accepted the liability, benefit of
Section 73(3) should have been allowed.
2.2 He pointed out that the benefit of Section 73(3) has been denied
mainly on the ground that the appellant had discharged the service tax
liability on cum tax basis in terms of Section 67(2) of the Finance Act, 1994.
The show cause notice issued by the revenue in January, 2012 does not
grant them the benefit of cum tax calculation of tax liability in terms of
Section 67(2) of the Finance Act, 1994 hence the impugned order denies
benefit of Section 73(3) of the Finance Act, 1994.
- Learned AR relies on the impugned order. He pointed out that the
appellant had not discharged their service tax liability therefore, the benefit
of Section 73(3) of the Finance Act cannot be extended to the appellant.
- We have carefully considered the rival submissions. We find that the
appellants had discharged the liability to service tax soon after the same was
pointed out by revenue. It has been argued by the appellant that there was
some doubt regarding their liability to service tax in terms of CBEC Circular
No. 108/02/2009-ST-F.No. 137/12/2006-CX.4 dated 29.01.2009 therefore,
there was some confusion in their mind. He argued that they did not have
any intention to evade payment of tax as they had taken registration
immediately after the amendment clause (zzq) and (zzzh) of sub-section 105
of Section 65 of the Finance Act, 1994.
4.1 We find that Section 67(2) clearly provided for treating the amount
charged by the service provider as inclusive of service tax payable unless it
is specifically mentioned in the documents. In the instant case no evidence
has been produced by the revenue to hold that the amount collected by the
appellant is exclusive of service tax or it has been separately collected by the
appellant. In view of the above, we do not find any merit in the department’s
stand that benefit of Section 67(2) could not be extended. If we consider the
facts in this background, we find that the appellant discharged the entire
service tax along with interest soon after the same was pointed out and in
this circumstances the benefit of Section 73(3) should not have been denied.
- The appeal is allowed to the extent that the penalty imposed on the
appellant are set aside. Appeal is disposed of in the above terms.
(Pronounced in the open court on 10.01.2023 )
(RAMESH NAIR)
MEMBER (JUDICIAL)
(RAJU)
MEMBER (TECHNICAL)
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