Commissioner Of Central Goods & Service Tax, Delhi South Commissionerate
Versus
M/S Haamid Real Estate Pvt Ltd
Service Tax Appeal No. 52273 Of 2018 With Service Tax Cross No. 51100 Of 2018
M/s Haamid Real Estate (the Respondent) is a registered service provider engaged in the construction of residential complexes, Filed returns and paid service tax during 2012-13, 2013-14, and 2014-15. However, the department conducted an audit and found that the respondent had not paid tax on the sale of development rights, assuming these to be non-taxable. The Show Cause Notice (SCN) was issued by the department dated November 15, 2016 proposed a demand of ₹7,11,91,036 for unpaid service tax on the transfer of development rights, on the department's interpretation that post-1st July 2012, such transactions became taxable services under Section 65B (44) of the Finance Act.
The Commissioner, in its order dated March 28, 2018 dropped the demand, holding that the service tax could not be levied for the period prior to July 01, 2012 and found no grounds to invoke the extended period of limitation.
Now the issue arises that, whether the transfer of development rights could be considered a taxable service under the provisions of the Finance Act, 1994, after the introduction of the negative list of services on 1st July 2012? Whether the extended period of limitation could be invoked for the recovery of service tax, considering the department’s claim of suppression of facts by the assessee regarding non-payment?
Noted that, Respondent’s non-payment of service tax was not due to deliberate concealment of facts but due to a difference of opinion on the taxability of the transaction, the extended period of limitation could not be invoked as Section 73 of the Finance Act, 1994, which governs the recovery of service tax, allows for the extended period of limitation in cases involving fraud, misrepresentation, or suppression of facts.
Also Noted that, the date of agreement could not be considered the date of rendering of the service. The proper date for determining the tax liability should have been based on the date of the actual provision of the service, which would be the date of the invoice or receipt of payment, not merely the date of agreement.
Rejected the Revenue's assertion that the non-disclosure of the transaction in the ST-3 Returns amounted to suppression of facts, the ST-3 return does not require transaction-wise disclosures. The appellant was only required to provide aggregate values for taxable services and therefore, there was no obligation to disclose individual transactions.
Held that, that the department failed to prove any intent to evade payment of service tax, given that there was no fraudulent intent or deliberate non-disclosure, the extended period of limitation could not be applied, and the demand for service tax was barred by the normal limitation period.
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