75th Founding Day Lecture Meeting on “India@2030” Know More

February 2014

2013-TIOL-1806-CESTAT-MUM Kumar Beheray Rathi, K K Erectors, Kumar Builder, Kumar Builders vs. CCE, Pune-III

By Puloma Dalal, Jayesh Gogri, Mandar Telang, Chartered Accountants
Reading Time 1 mins
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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”.

Facts:
The Appellants were builders/developers of residential flats and various commercial premises and recovered one-time maintenance deposit from each of the customers to whom they sold the flats. The department contended to levy tax on the said amount under the category “Maintenance or Repair Services” along with interest and penalty. The 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, sale, management and transfer) Act, 1963.

Held:
Analysing the agreement, the 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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