The Delhi Bench of Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has held that the service tax exemption is available for services valued upto Rs. 10 Lakh annually.
The bench of Justice Dilip Gupta (President) and P. V. Subba Rao (Technical Member) has observed that the only reason assigned by the Commissioner for confirming the demand of service tax on these two amounts is that the appellant could not explain under which head the amount was received. The amount was picked up for levy of service tax because it was shown as income under section 194(J) of the Income Tax Act.
The bench stated that all incomes may not be leviable to service tax, unless they are subject to levy of service tax under the Finance Act. This apart, even if it is assumed that the said amount was leviable to service tax, then too the amount was within the yearly threshold limit of Rs. 10 lakhs provided for in the Notification dated 20.06.2012. The two amounts would, therefore, not be leviable to service tax.
The appellant has challenged the demand raised in the show cause notice relates to a consideration of Rs. 34,45,00,000 to have been received by the appellant under the two agreements and an amount of Rs. 2,19,099 + 91,177 i.e. Rs. 3,10,276/- said to have been received by the appellant as income shown under section 194(J) of the Income Tax Act, 1961.
The appellant filed a reply to the show cause notice and denied the allegations made therein. Apart from contesting the demand proposed in the show cause notice on merits for the reason that there is no liability to pay service tax on transfer of development rights as it was actually a case of transfer of immovable property and that the appellant was also not liable to pay service tax on income received on which TDS was deducted under section 194(J) of the Income Tax Act as the amount was within the threshold limit of Rs. 10 lakhs, the appellant also contended that the demand was barred by time under the provisions of section 73(1) of the Finance Act and in any case the extended period of limitation under the proviso to section 73(1) of the Finance Act could not have been invoked in the facts and circumstances of the case.
The Commissioner, however, did not accept the contentions raised on behalf of the appellant, both on merits and on the demand being barred by time and confirmed the demand.
The tribunal while setting aside the order allowed the appeal.
Case Details
Case Title: M/s. Baakir Real Estate Private Limited Versus Commissioner of CGST, Delhi South Commissionerate
Case No.: Service Tax Appeal No. 50233 Of 2024
Date: 19.05.2025
Counsel For Appellant: Shaubhik Gupta
Counsel For Respondent: Anand Narayan