S. Kumar Builders Vs Commissioner of Central Goods & Service Tax & Central Excise (CESTAT Delhi)
CESTAT Delhi held that services relating to construction of school building or hospital building to a charitable institutions/ trust registered u/s. 12AA of the Income Tax Act is exempt under service tax vide clause 2(k) of notification no. 25/2012-ST.
Facts- The appellant is a provider of service under the head “Works Contract Service” and is registered with the Department. Pursuant to show cause notice dated 6.11.2019, service tax has been demanded as short paid/not paid, based on the Income Tax records like Form 26 AS, Income Tax Return, Profit & Loss Account, etc. for the financial year 2014-2015. The proposed demand of Rs.11,67,226/- was confirmed with equal amount of penalty u/s. 78. Further, late fee of Rs.21,000/- has been imposed under Rule 7C read with Section 70. Further, penalty of Rs.10,000/- has been imposed u/s. 77(2) for not showing correct gross receipt of services in ST-3 Returns.
Being aggrieved, the appellant preferred appeal before the Commissioner (Appeals), who vide impugned order-in-appeal set aside the demand of Rs.12,047/- (on Euro Bond) in respect of debt settlement and upheld the balance demand of Rs.11,55,179/- along with equal amount of penalty and also upheld both the penalties u/s. 70 and 70(2). Being aggrieved, the appellant is before this Tribunal.
Conclusion- Held that in the facts of the case, it is admitted that the service tax has been provided for civil construction of school building or hospital building to a charitable institutions or Trust registered under Section 12 AA of the Income Tax Act and the said activities are covered under the definition of ‘Charitable Purpose’ under the Income Tax Act. Further, the exemption notification in clause 13 (C) only states that, services provided by way of construction, erection, alterations, etc. is exempted, if the building is owned by an entity registered under 12 AA of the Income Tax Act and meant predominantly for religious use by public. Thus, education and medical services are also in the nature of religious services. The said activities are exempt under clause 2(k) of Notification No.25/2012-ST.
I find that no service tax is payable on the sale-purchase of property. Admittedly, in the facts of the present case, there is no contract for construction of a house property alongwith material. Rather, admittedly, appellant have sold fully constructed and furnished house property. Hence, I hold that no service tax is payable on the same.
FULL TEXT OF THE CESTAT DELHI ORDER
The issue in this appeal is whether the service tax has been rightly demanded as short paid or not paid.
2. The appellant is a provider of service under the head “Works Contract Service” and is registered with the Department. The appellant filed their returns regularly and also deposited the admitted tax. Pursuant to show cause notice dated 6.11.2019, service tax has been demanded as short paid/not paid, based on the Income Tax records like Form 26 AS, Income Tax Return, Profit & Loss Account, etc. for the financial year 2014-2015. The proposed demand of Rs.11,67,226/- was confirmed with equal amount of penalty under Section 78. Further, late fee of Rs.21,000/- has been imposed under Rule 7C read with Section 70. Further, penalty of Rs.10,000/- has been imposed under Section 77(2) for not showing correct gross receipt of services in ST-3 Returns.
3. Being aggrieved, the appellant preferred appeal before the Commissioner (Appeals), who vide impugned order-in-appeal set aside the demand of Rs.12,047/- (on Euro Bond) in respect of debt settlement and upheld the balance demand of Rs.11,55,179/- along with equal amount of penalty and also upheld both the penalties under Section 70 and 70 (2).
4. Being aggrieved, the appellant is before this Tribunal.
5. Details of demand in dispute is as follows:-
M/s S K Builders FY 2014-15
GROSS RECEIPTS AS PER PROFIT & LOSS ACCOUNT FOR 2014-15
