CESTAT | Less than 12 residential units to be covered under exemption clause, refund allowed; Tribunal considers the Architect certificate, floor plan

Customs, Excise and Services Tax Appellate Tribunal (CESTAT): Suvendu Kumar Pati (Judicial Member) allowed an appeal filed against the rejection of refund claim on Service Tax paid for the construction of residential complex before 30-06-2012 on the ground that appellant had failed to establish that it comprised of less than 12 residential units so as to be covered under exemption clause.

Appellant had sought for refund of Rs 45,13,475 for the period between October, 2011 and March, 2012 for the service category of “construction of complex service – residential complex” classifiable under Section 65 (91a) of the Finance Act, 1994 but was issued with deficiency memo and show-cause notice on several grounds that were ultimately adjudicated by the Assistant Commissioner of Service Tax resulting in rejection of its refund claim. It was confirmed in the appeal before the Commissioner (Appeals). Thus, the instant appeal was filed.

The counsel for the appellant, Mr Mahesh Raichandani submitted that sufficient documents had been placed on record before the Commissioner (Appeals), which had been acknowledged in his order which would establish that the residential complex consisted of 9 residential units only. He further submitted that the BMC approval plan concerning description of parking area wherein it has been clearly mentioned that total number of units were 9.

The Tribunal framed three main issues first being non-establishment of number of units by the appellant that was cited as the main ground in the Order-in-Appeal in which they opined that meeting the requirement of law, which was the paramount consideration for establishment of tax liability, need not necessarily be made a ground in the show-cause notice since everyone is presumed to know the law/rules governing the affair of the State. In the second issue which mentioned that Commissioner (Appeals) had not dealt with the issue of unjust enrichment, the Tribunal stated that it had been adequately dealt by Commissioner (Appeals) who after going through the case record, had noted that customers were not charged Service Tax for Bandra unit. In order to decide the establishment of construction of less than 12 units by the appellant in the disputed complex, the Tribunal reproduced a relevant portion of the order passed by the Commissioner (Appeals),

            “The appellants have produced voluminous documents in this regard viz. agreement copy of customer, title certificate, Commencement certificate, Occupation certificate, copy of letter towards submission under protest and paid challan copy, Service Tax returns, Architect certificate and BMC approved plan. However, from all these documents, there is no way of knowing whether the complex consists of only 9 residential units. The approved plan shows that there are 13 floors with two refuge floors. It has not specified the number of flats in each floor or whether there is any other wing in the same complex. In absence of such information, it is not feasible to arrive at a conclusive finding that the complex indeed had less than 12 residential units and that the appellants have rightly claimed refund.”

The Tribunal while allowing the appeal held that because of availability of 13 floors, Commissioner (Appeals) had failed to reach a conclusion that the complex had less than 12 residential units to admit refund as the said was not taxable, however going by the Architect certificate, floor plan referred to and the full occupation certificate issued by the Executive Engineer (building proposal) of the Municipal Corporation clearly indicates that the complex comprised of 9 residential units, taking each duplex to be counted as one unit and the appellant was entitled to refund. [Man Infraprojects Ltd. v. Commr. of CGST, 2020 SCC OnLine CESTAT 372, decided on 09-12-2020]


Suchita Shukla, Editorial Assistant has put this story together

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