(i) Cenvat Credit of Rs. 18,55,671/- (Rupees Eighteen lakh Fifty

Five Thousand Six Hundred Seventy One only) is hereby

disallowed and ordered for recovery from M/s. K. K. Associates

Builders & Developers, Plot No. 5 & 6, 6 Floor, Landmark Wardha

Road, Ramdaspeth, Nagpur, under Rule 14 of the Cenvat Credit

Rules 2004 read with section 174 of the CGST Act 2017.

(i) Appropriate interest at the applicable rate shall also be paid

on the amount demanded at Sl. No. (1) above in terms of Rule

14 of the Cenvat Credit Rules, 2004 read with Section 11AA of

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2

the Central Excise Act, 1994; and section 174 of the CGST Act,

2017.

(ii) A penalty of Rs. 18,55,671/- (Rupees Eighteen lakh Fifty Five

Thousand Six Hundred Seventy One only) is hereby imposed on

M/s. K. K. Associates Builders & Developers, Plot No. 5 & of the

finance Act 6, 6 Floor, Landmark, Wardha Road, Ramdaspeth,

Nagpur, under Rule 15(2) of Cenvat Credit Rules, 2004 read with

section 78 of the Finance Act, 1994 & section 174 of the CGST

Act, 2017. However, the said penalty is liable to be reduced to

Rs. 4,63,918/- (25% of the amount payable) in case the amount

of demand as determined in (1) above is paid along with interest

and reduced penalty amount within 30 days from the date of

communication of this order.

The Show Cause Notice C.No. III(20)A-37/SCN/NGP-1/Cir-

11/09/2017/1876 dated 11.03.2019 is accordingly disposed off.”

2.1

Appellant is engaged in providing services of construction

of residential complex and construction service other than

residential complex including commercial/industrial buildings or

civil structures and paying service tax under Section 68(1) of the

Finance Act, 1994.

2.2

During the course of audit, it was observed that the

appellant was availing Cenvat credit in respect of common input

services used for providing taxable and exempted services i.e.

units where entire consideration is received after issuance of

completion certificate by the competent authority and the unsold

units for which completion certificate is issued by the competent

authority. Appellant had constructed 224 units of residential

flats/buildings/row houses and 10 shops on 5 blocks of Lifestyle

Township. 91 residential flats/buildings/row houses along with 2

shops were sold before obtaining completion certificate and the

appellant had paid service tax on the same. Completion

certificate was issued to the appellant on 15.01.2016.

2.3

Section 66E(b) of the Finance Act, 1994 prescribes the

following as declared services:-

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3

(b) Construction of a complex, building, civil structure or a part

thereof, including a complex or building intended for sale to a

buyer, wholly or partly, except where the entire consideration is

received after issuance of completion certificate by the

competent authority.

2.4

Accordingly the activity of construction of residential

building or civil structure where entire consideration is received

after issuance of completion certificate does not amount to a

service and no service tax is leviable on such units.

2.5

After issuance of completion certificate on 15.01.2016

appellant had sold 93 residential flats without payment of service

tax. In addition, 40 residential flats and 8 commercial shops are

with the appellant and not sold. Making the details of sold and

unsold units after issuance of completion certificate is as

follows:-

BLOCK

DETAILS

BOOKING DATE

NO. OF

UNITS

TOTAL COST

PAYMENT OF

AN AMOUNT

EQUAL TO

SEVEN PER

CENT

DAFFODIL

AFTER

COMPLETION

7

3,57,05,967

24,99,418

IRIS

AFTER

COMPLETION

18

6,43,49,208

45,04,445

LILY

AFTER

COMPLETION

15

6,07,61,533

42,53,307

ORCHID

AFTER

COMPLETION

31

10,93,81,952

76,56,737

TULIP

AFTER

COMPLETION

22

10,18,10,564

71,26,739

TOTAL

93

37,20,09,224

2,60,40,646

UNIT

PARTICULAR

STATUS

NO. OF

UNITS

APPROX.

UNIT COST

APPROX.

TOTAL COST

PAYMENT

OF AN

AMOUNT

EQUAL TO

SEVEN PER

CENT

RESIDENTIAL

UNSOLD

40

35,00,000

14,00,00,000

98,00,000

COMMERCIAL/

SHOPS

UNSOLD

8

25,00,000

2,00,00,000

14,00,000

TOTAL

48

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