Service Tax on Builders prior to 1.7.2010 - Cochin Commissionerate starts fresh investigation
BY now, as they say, it is no more res integra that builders who construct residential flats and sell them to customers were not liable to pay Service Tax prior to 1.7.2010. Please see RF Properties Vs Commissioner of Central Excise -
But the Cochin Central Excise Commissioner wants to start a fresh investigation. In a letter to the President of CREDAI, the Commissioner informs that they have been directed to examine the Service Tax liability of all builders/developers by verifying whether the agreements fall within the ambit of Board's Circular 108/02/2009 dated 29.01.2009 during the period from 1.10.2008 to 30.6.2010. CREDAI was asked to furnish the details of their members and also to direct their members to co-operate with the department by providing the tons of information the department requires - like month wise amount collected from each client …….
CREDAI faithfully communicated the Commissioner's missile to their Members. CREDAI tells its members that the good Commissioner is asking for information based on the recommendation of an empowerment committee consisting of the Chief Commissioners of various states and that the Department had made it clear that if the members co-operate with the enquiry proceedings, the same can be concluded without difficulty.What does this mean? Is it a threat or a promise?
A beleaguered assessee laments, “ The Commissioner earlier had taken a stand that the builders are not liable to tax till 1/7/2010. BUT now the Chief Commissioner is reopening this closed issue. Large number of demands was dropped and amount of tax paid was refunded. The CERA had closed the DAP on the issue, and then the Commissioner issued instructions to the effect that pre 1/7/2010 cases may be closed dropping demands. It is rather unfortunate that as per whims and fancies of top bureaucrats, the assessees are being troubled .”
Will the Board act or advise other Commissioners to follow suit?