Introduction: The appeal made by Manan Infra Development Pvt Ltd against the Commissioner of Central Goods And Service Tax was placed under scrutiny by CESTAT Delhi. The case focused on the confirmed service tax demand concerning ‘Construction of Complex’ services.
Analysis: Manan Infra Development Pvt Ltd, the appellant, initially received a show-cause notice, suggesting that they owed a substantial amount as service tax. The primary issue revolved around the payment they received for booking services, which they contended were later returned to the customers upon cancellation of bookings.
Their main argument rested on the fact that there was no suppression or hiding of transaction details since everything was recorded in their books of accounts. They also contended the issuance of a second show-cause notice, saying it was untenable since they were already served a notice previously. The department, however, stood its ground, pointing out that the appellant failed to provide any substantial evidence to prove their claims. Moreover, the absence of ST3 returns during the disputed period worked against the appellant, suggesting potential tax evasion.
Conclusion: Upon meticulous examination of all the contentions and the evidence presented, CESTAT Delhi concluded that the appellant’s claim was unsubstantiated, leading to the upholding of the service tax demand. The decision emphasizes the importance of providing concrete evidence and the dire implications of not adhering to tax liabilities.
FULL TEXT OF THE CESTAT DELHI ORDER
This appeal has been filed by M/s. Manan Infra Development Pvt Ltd (hereinafter referred to as the Appellant) to assail the Order-in-Appeal dated 03.07.2018 passed by the Commissioner (Appeals), Udaipur wherein the demand of
Rs.10,68,657/- along with penalty has been confirmed.
2. The brief facts are that the appellant was engaged in providing ‘Construction of Residential Complex Services’ and was registered under Section 69 of the Finance Act, 1994 for discharging their service tax liability under the category of ‘Construction of Complex’ services.
3. The appellant was issued show cause notice dated 19.04.2016 demanding service tax of Rs. 12,00,743/- (including cesses) under proviso to Section 73(1) of the Finance Act, 1994 along with interest and penalty. It was alleged that the appellant were engaged in providing of services taxable under the category of builders (‘construction of residential complex services”). The Adjudicating Authority vide Order-in-Original dated 30.01.2017 ordered for recovery of service tax of Rs.12,00,743/- with interest under proviso to Section 73(l) ibid read with Section 75 and penalties were also imposed. On appeal, the Commissioner (Appeals), reduced the demand of Service tax to Rs.10,68,657/-along with penalty of 50% of the tax under section 78(ibid). The penalty under section 77 was set aside. Being aggrieved, the appellant has filed the instant appeal.
4. I have heard Shri Vishwa Jeet Saharan, Authorised representative appearing for the Department. The learned Counsel for the appellant vide his letter dated 24.07.2023 has requested to decide the appeal on the basis of grounds contained in the memorandum of appeal.
5. It has been submitted by the appellant that the impugned Order-in-Appeal is erroneous at law both on merits as well as on limitation. It has been contended that the demand confirmed against the amount received against booking is legally not sustainable, as the allottees had stopped the payment and requested for cancellation of bookings and return of advance. Therefore, the tax paid is refundable, which rendered the entire exercise revenue neutral.
6. It has been further submitted that the demand confirmed for the extended period is hit by limitation as the transactions were duly recorded in books of accounts/ balance sheet and audit has pointed out on the basis of records maintained by the appellant. Therefore, such information was not suppressed in any way. The department had also issued one show cause notice dated 27.01.2016 for the period of 01.07.2012 to 31.03.2015 demanding service tax of Rs.25,17,370/-. Therefore, the fact of providing of service by the appellant was well within the knowledge of the revenue. Therefore, the allegation of suppression with intent to evade tax in the subsequent show cause notice is legally not sustainable. The appellant has relied on the Hon’ble Supreme Court’s decision in the case of ECE Industries and Nizam Sugar Factory and which was also followed by the Tribunal in the case of Bhawna Motors. In view of this, demand confirmed for the extended period of time is hit by limitation.
7. Learned Authorised Representative reiterated the findings of Commissioner (Appeals) and submitted that the appellant has willfully suppressed the material facts with intention to evade service tax and therefore extended period is justified.
8. I have heard the authorised representative and gone through the submissions made by the appellant in the appeal memorandum. I find that there is no dispute that the appellant was providing construction of residential complex service which is taxable. There is also no dispute that the appellant had collected advances from his customers towards sale of flats during the period October 2013 to March 2015. There is no doubt that such advances were liable to service tax. It was submitted by the appellant that they had returned the advances as allottees had stopped the payment and requested for cancellation of bookings. I note that no evidence has been provided by the appellant that establishes that these advances were returned. Hence, I am unable to accept the contention of the appellant.
9. It has been strongly contended that the demand for the extended period is hit by limitation as there was no misdeclaration by the appellant. All transactions were duly recorded in the book of accounts and balance sheets and the audit had pointed out this objection based on their appellants on records. It has been strongly contended that the department had already issued one show cause notice dated 27.01.2016, for the period 01.07.2012 to on 31.03.2015, demanding service tax of Rs.25,17,370/-. Therefore, the issue of the second notice invoking the extended period was not tenable. A perusal of impugned order shows that the appellant had taken the same argument before the Commissioner (Appeals), who has noted that the appellant has simply argued that they have refunded the entire amount of advances to the various buyers without producing any evidence which seemed to be an afterthought. It is seen that the appellant has made no effort to provide any documents to evidence the return of the advance amount. In respect of their contention that they had not suppressed any fact, the Commissioner (Appeals) has noted that they had not filed any ST3 returns during the period October 2013 to March 2015, and have suppressed the taxable value from the department. The detection of evasion of tax was a consequence of the audit of the records of the appellant. The contention that an earlier show cause notice was issued and the information was in the knowledge of the department is also not evidenced by the records. In view of the same, I am not inclined to interfere with the findings in the impugned order.
10. Accordingly, the appeal stands dismissed and the impugned order is upheld.
(Pronounced in the open court on 17/08/2023)