As per the facts on record, the appellant is engaged in providing “Construction of Residential Complex Services” and was duly discharging Service Tax on the same. However while discharging their Service Tax liability, they were not including the amount charged from their customers in respect of parking space.
2. Revenue entertained a view that the consideration for the parking space is an integral part of the residential complex constructed by the appellant and the value of the same has to be included in the value of the services. Accordingly, proceedings were initiated against them by way of issuance of a show cause notice dated 24/07/20 14, raising demand of duty for the period June, 2010 to June, 2012. The notice stands culminated into impugned order passed by the Lower Authorities confirming demand to the extent of Rs.7,86,972/-(Seven lakhs Eighty Six Thousands Nine Hundred Seventy Two), along with confirmation of interest and imposition of penalty of identical amount.
3. Hence the present appeal.
4. Learned advocate Shri Rajesh Chhibber appearing for the appellant submits that the parking charges are not a part of the construction activities and as such confirmation of demand in respect of the same under the category of construction of “Residential Complex Service“was not justified. He submits that subsequently in 2010 a new category “Preferential Location or External or Internal Development of Complex” was inserted to tax the amount received by the builder on account of other allied services. As per the definition of the said services, the parking place was excluded. It shows that parking place was a part of the taxable service under newly introduced category and as per the settled law the same cannot be held to be a part of the earlier category of service falling under “Residential Complex Service“. As such, he submits that demand of duty in respect of parking space is not justified.
Learned advocate has also assailed impugned demand on time bar by submitting that there is no evidence produced by Revenue to reflect upon the appellant“s mala fide, so as to justifiably invoke longer period of limitation. He draws our attention to the Board Circular No.334/1/2010 dated 26/02/2010 wherein it was clarified that number of services are provided by the builder and the same would not be a part of the taxable value for charging tax on the construction activities. He also relies upon the Tribunal order in the case of Mahesh Sunny Enterprises Pvt. Ltd. vs. CST 2014 (34) S.T.R. 21 (Del.). In support of his plea that parking space was not held to be a part of the Airport Service and by adopting the same analogy the parking space cannot be held to be a part of “Residential Complex Construction Services”.
5. Shri Sandeep Kumar Singh Deputy Commissioner and Shri Pawan Kumar Singh Superintendent appearing for the Revenue draw our attention to the reasoning adopted by the Lower Authorities. As per the definition of the “Residential Complex Construction Services“, parking space stands specifically included in the definition, thus leading to the inevitable conclusion that parking space is a part of the construction of “Residential Complex Service“and a separate consideration received by the appellant towards such parking charge would form part of the excisable value of the taxable services.
6. After considering the submission made by both sides, we find that Service Tax on construction of “Residential Complex Service“was introduced with effect from 16/06/2005 vide Notification No.15/2005-ST dated 07/06/2005. As per Section 59(91 a) of the Finance Act, 1994 “Residential Complex” means any complex compromising of:
(i) A building or buildings, having more than twelve residential units;
(ii) A common area; and
(iii) Any one or more of facilities or services such as park, lift, parking space
7. As seen from the above definition of “Residential Complex Service“, parking space specifically stands included in Serial No. (iii) of the definition. If that be so, it has to be held that parking space is a part and parcel of the services falling under the category of “Residential Complex Services“. As regards the contention of the learned advocate that a new category of services were introduced with effect from 01/07/20 12 as “Preferential Location Services & Development of Complexes”, which has been defined as under:-
“Taxable service” means any service provided or to be provided to a buyer, by a builder of a residential complex, or a commercial complex, or any other person authorized by such builder, for providing preferential location or development of such complex but does not include services covered under Sub-clauses (zzg), (zzq), (zzzh) and in relation to parking place. Explanation – For the purposes of this sub-clause, “Preferential Location” means any location having extra advantage which attracts extra payments over and above the basic sale price.”
And inasmuch as parking place stands excluded, it has to be held that parking place falls under the said category, do not find any merit in the above contention of the learned advocate. As already observed parking space having been specifically included in the definition of “Residential Complex Service“, the same would get covered by the definition of the said services. In fact the new definition of “Preferential Location Services” specifically excludes the parking place which means that parking services do not get covered by the new definition. As such, we hold that consideration received by the appellant from their buyer on account of sale of parking space is a part and parcel of the services falling under the category of “Residential Complex Construction Services“ and its value has to be added in the value of above services.
8. However, we find that demand stands raised and confirmed by invoking longer period of limitation inasmuch as a show cause notice was issued on 24/07/2014 for the period July, 2010 to June, 2012. Apart from the fact that the Lower Authorities have alleged that the appellant did not file the returns and pay the Service Tax, there is otherwise no positive evidence adduced by the Revenue so as to justifiably invoke the longer period of limitation. The Service Tax law, during the relevant period, was still at the nascent stage and was not clear. The Board Circular referred by the learned advocate is to the effect that all peripheral activities provided by the builders would not be taxable under the category of “Residential Complex Construction Services“. Inasmuch as admittedly the parking area is a separate area from flats sold by the appellant, there can be bona fide belief on the part of the assessee that such parking charges are not includible in the value of the services falling under “Residential Complex Construction Services“. There is also no positive evidence indicating any mala fide on part of the appellant. Accordingly, we set aside the order on limitation and allow the appeal on the said ground.
(Pronounced in Court on 17/07/2018)