Allows adjustment from gross taxable value towards amounts refunded w.r.t. cancelled flat bookings: CESTAT

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Fact: M/s. Krishna Developers (“the appellant”) is engaged in providing construction of residential complex services constructed multi storied residential complex named “Gulmarg Valley” and had received booking deposits, instalments and final payments against allocation of flats under construction. Revenue (DGCEI) while conducting a search at the office of the appellant and certain documents was recovered vide panchanama. Further, the officer found that the appellant had not taken into consideration the quantum of sundry debtors for assessment of service tax in the respective ST-3 Returns.

Further, revenue found that the book adjustment of certain payments against sale of flat by the appellant was not taken into consideration for calculation of Service Tax. The revenue stated with reference to amended Notification No.02/2013-ST dated March 01, 2013 is that the appellant was eligible for abatement of 70% instead of 75%.

Held: The Hon’ble CESTAT of New Delhi vide its Final Order No. 50045/2019 dated January 14, 2019 stated by referring to Rule 6(3) of Service Tax Rules, 1994 which allows adjustment from gross taxable value in respect of credit of service tax in terms of Rules 6(3) of Service Tax Rules, 1994 under “Construction of Residential Complex” service where few customers cancelled flat booking after giving advance amount with request to refund the same. Rejects Revenue’s plea that amount of credit to be taken was supposed to be shown separately in return form instead of adjusting the same with gross amount of taxable service and assessee failed to furnish supporting documents to establish that amount of advance booking was refunded.

Therefore, perusal of appellant’s documents as well as department’s SCN, it clearly indicates that the alleged difference between consolidated gross amount and taxable receipts declared in ST-3 returns was on account of refunds directly deducted from gross value. Further, its holds that documents on record prove that these is no revenue loss and alleged act is nothing more than the procedural lapse, while concluding that there is enough evidence on record to prove compliance of Rule 6(3).

Citation: [ TS-48-CESTAT-2019-ST ]

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