Goyal and Co Construction Pvt Ltd Vs C.S.T. Service Tax (CESTAT Ahmedabad)
Facts- The appellant is engaged in providing Construction of Residential Complex & Construction of Commercial Complex Service and Real Estate Service. On the basis of information, an enquiry was initiated. Accordingly, revenue directed the appellant to produce documents/ details and information related to the financial statements and documents regarding disclose of income before the income tax authority under the Income Tax Disclosure Scheme (IDS) 2016. The Revenue approached the Deputy Director (Cost) to work out the gross receipts in respect of the cash amount of Rs. 32.50 Crores deposited in the bank/declared under IDS. The Deputy Director (Cost) after considering the various financial aspect, furnished report dated 22.10.2019 wherein the gross receipts/ revenue was worked out and estimated as Rs. 86,87,78,400/- The said investigation was culminated into show cause notice where the amount of Rs. 32,50,10,000/-considered as profit and gross receipts worked out at Rs. 86,87,78,400/- in respect of the said profit.
Demand of service tax of Rs. 3,90,95,028/- along with interest under Section 75 and penalty under Section 77 and 78 of the Finance Act, 1994 was proposed on gross receipt considered as taxable value towards rendering taxable service. The said notice was adjudicated by the Principal Commissioner, Ahmedabad vide impugned order. He confirmed the impugned demand along with interest and penalty and in addition, Penalty of Rs. 1 Lakh was also imposed on Shri Mukesh R Agarwal, Director of Appellant Company.
Conclusion- The activity of land sale is exempted from payment of service tax. We also observed that Construction of a complex, building, civil structure or a part thereof, including a complex or building intended for sale to a buyer, wholly or partly, where the entire consideration is received after issuance of certificate of completion by a competent authority also exempted from the service tax. In the present matter Appellant also produced the details of payment received after obtaining Business use (BU) i.e. sales of flats, shop etc. after receipt of the completion certificate. Therefore, it cannot be said that the income declared by the Appellant under IDS Scheme is attributable to the taxable service provided by them to their clients. In this case, evidence gathered by the Department is not sufficient to establish even the preponderance of probability. Therefore, the demand on the ground that the income declared under IDS scheme is earned from the taxable service is not sustainable.
FULL TEXT OF THE CESTAT AHMEDABAD ORDER
The present appeals have been filed by Appellants against the Order-in-Original No. AHM-EXCUS-001-COM-003-21-22 dated 17.05.2021.
1.1 Briefly stated the facts of the case are that the appellant are engaged in providing Construction of Residential Complex & Construction of Commercial Complex Service and Real Estate Service. On the basis of information that assessee has sold many properties in cash after the demonetization of old currency note and deposited the said cash in the bank account an enquiry was initiated. Revenue directed the appellant to produce documents/ details and information related to the financial statements and documents regarding disclose of income before the income tax authority under the Income Tax Disclosure Scheme (IDS) 2016. The Revenue approached the Deputy Director (Cost) to work out the gross receipts /revenue in respect of the cash amount of Rs. 32.50 Crores deposited in the bank/declared under IDS. The Deputy Director (Cost) after considering the various financial aspect, furnished report dated 22.10.2019 wherein the gross receipts/ revenue was worked out and estimated as Rs. 86,87,78,400/- The said investigation was culminated into show cause notice where the amount of Rs. 32,50,10,000/-considered as profit and gross receipts worked out at Rs. 86,87,78,400/- in respect of the said profit. Demand of service tax of Rs. 3,90,95,028/- along with interest under Section 75 and penalty under Section 77 and 78 of the Finance Act, 1994 was proposed on gross receipt considered as taxable value towards rendering taxable service.The said notice was adjudicated by the Principal Commissioner, Ahmedabad vide impugned order. He confirmed the impugned demand along with interest and penalty and in addition, Penalty of Rs. 1 Lakh was also imposed on Shri Mukesh R Agarwal, Director of Appellant Company. Aggrieved by the impugned order the present Appeals have been filed.
02. Shri Hardik Modh, Learned Counsel appearing on behalf of the appellant submits that Shri Girish Patel retracted his statement vide affidavit dated 06.10.2020 wherein he clarified that he was forced to mention that the said cash amount was generated out of construction activity. Even Shri Mukesh Agarwal, Director vide letter dated 24.10.2019 drew attention of the authority that he agreed with the statement of Shri Girish Patel except where he mentioned that the income disclose in IDS pertained to construction income. Since Shri Girish Patel and Shri Mukesh Agarwal specifically denied that the income was not generated out of taxable activity, burden lies upon the revenue to show with corroborative evidences that said amount was generated out of taxable activity. The Commissioner erred in not considering that the show cause notice has not mentioned aspect as (i) who is the service provider (ii) who is the service receiver (iii) Nature of transactions (iv) who paid the consideration (v) point of taxation (vi) value of alleged service. He contended that income declared under “IDS” does not mean that the said amount was generated from taxable service. Section 192 of the Finance Act, 2016 provides that the declaration made before the authority cannot be considered as evidence even under the Income tax Act. The Central Board of Direct Tax vide Circular No. 27/2016 clarified that declaration made under the income tax would not be disclosed to any authority including Enforcement Agency. In the following decision Hon‟ble Tribunal taken consistent view that income declared before the Income Tax Authority would not be considered as an evidence unless the department proves that said amount has been received from taxable service.
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