Wednesday, 16 April 2014

Builders/Developers are not liable to pay service tax on "one-time maintenance charges" collected from buyers under the category of Maintenance or Repair Services".

87 2013 – TIOL – 1806- CESTAT  - MUM Kumar Beheray Rathi, K K Erectors, Kumar builder, Kumar Builders vs. CCE,  pune –III



Facts:
The Appellants were builders/developers of residential flats and various commercial premises and recovered one-time maintenance deposit from each othe customers to whom they sold the flatsThe department contended to levy tax on the said amount under the category "Maintenance or Repair Services" along with interest and penaltyThe Appellants contended that they were only working as an agent/trustee of the funds of the flat owners and was statutory obligation under Maharashtra Ownership Flats (Regulation of the Promotion of construction, salemanagement and transfer) Act, 1963.

Held:
Analysing the agreementthe Hon. Tribunal held that the Appellants were not providing any maintenance or repair service to the buyers of the flats and thus allowed the appeal.
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