Case Details: Elite Buildcon Pvt. Ltd. Versus Commissioner (Appeals), Central Excise & CGST, Jaipur (2025) 33 Centax 39 (Tri.-Del)
Judiciary and Counsel Details
- Ms. Binu Tamta, Member (J) and Shri Sanjiv Srivastava, Member (T)
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Ms. Neha Somani, Chartered Accountant, for the Appellant.
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Shri Anand Narayan, Authorised Representative, for the Respondent.
Facts of the Case
The Appellant, a real estate developer, was engaged in the construction of residential complexes and, in the course of such activity, collected Interest Free Maintenance Security (IFMS) from flat owners at the time of handing over possession. The amount so collected was recorded as a liability in the Appellant’s books and was subsequently transferred to the Flat Owners’ Co-operative Society upon its formation. The jurisdictional officer under CGST initiated proceedings contending that the IFMS constituted consideration for services falling under the taxable category of ‘Management, Maintenance or Repair Service’ as defined under Section 65(64) of the Finance Act, 1994. In response, the Appellant submitted that it was not engaged in the business of providing maintenance or repair services, was not charging any service fee from the flat owners, and that the IFMS was merely a refundable deposit held in fiduciary capacity. The Department invoked Section 67 of the Finance Act, 1994 for valuation of the purported taxable service and issued show cause notices under Section 73 of CGST and Delhi GST Act. The matter was accordingly placed before the CESTAT New Delhi.
CESTAT Held
The CESTAT held that the Appellant could not be classified as a service provider under the category of ‘Management, Maintenance or Repair Service’ merely for collecting IFMS from flat owners. The Tribunal observed that the Appellant was exclusively engaged in construction activity and had not undertaken any maintenance or repair work nor levied any service charges in this regard. It was noted that the IFMS amount was treated as a liability in the books and not as income, and was eventually transferred to the respective Co-operative Societies formed by the flat owners. Therefore, there was neither rendition of taxable service nor any consideration received for the purpose of taxation under Section 67 of the Finance Act, 1994. The Tribunal concluded that no service tax liability arises on IFMS collections in such circumstances.
List Of Case Cited
- KDP Infrastructure v. Commissioner — 2019 (22) G.S.T.L. 450 (Tri. – All.) — Followed [Paras 4.5, 4.6]
