Goods and Services Tax

Shri D. Prabhu, Smt. P. Jayanthi Versus Commissioner of GST & Central Excise Coimbatore

2019 (2) TMI 495 – CESTAT CHENNAI – TMI – Demand of service tax from the erstwhile partner of the firm – allegation that appellants/partner have collected amount from a purchaser of the flat – allegation is that the firm received ₹ 1.50 lakhs as service tax on 25.7.2011 in regard to the amount of ₹ 6.60 lakhs which was the balance to be paid by Shri Gangadharan who purchased the flat – Held that:- Merely because the appellant D. Prabhu had written a letter dated 13.7.2010 requesting the purchase to pay up the balance amount, the demand has been raised against the appellants herein – there is no logic of the department to issue such a notice against the appellants herein merely basing upon the letter written by the appellant when they were partners of the firm. The records show that the balance amount was paid by the purchaser of the flat by way of demand draft in favour of Shri Thiyagarajan, who continued to be the partner of the firm. The same evidences the payment made b

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of the flat to pay an amount of ₹ 6 lakhs along with service tax due of ₹ 1.50 lakhs. Thereafter, the appellants exited from the partnership firm on 25.7.2010. The said Shri Gangadharan paid up the amount in regard to the flat purchased by him. Show cause notice was issued to the appellants herein alleging that they have collected the amount and are liable to pay the service tax along with interest. After due process of law, the original authority confirmed the demand of ₹ 1.50 lakhs along with interest however he dropped the proposal for imposing penalty. In appeal, Commissioner (Appeals) upheld the same. Hence these appeals. 3. On behalf of the appellants, Shri S. Ramachandran, Consultant submitted that merely because the appellant Shri D. Prabhu has written a letter to the purchaser of the flat Shri Gangadharan, the present demand is raised against the appellants. In fact, the said purchaser had not paid the amount to the appellants and instead had paid the amount

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ased the flat. Merely because the appellat D. Prabhu had written a letter dated 13.7.2010 requesting the purchase to pay up the balance amount, the demand has been raised against the appellants herein. I do not find the logic of the department to issue such a notice against the appellants herein merely basing upon the letter written by the appellant when they were partners of the firm. The records show that the balance amount was paid by the purchaser of the flat by way of demand draft in favour of Shri Thiyagarajan, who continued to be the partner of the firm. The same evidences the payment made by the purchaser to the firm / Thiyagarajan. Therefore, the demand of service tax made against the appellant is without any factual or legal basis. The demand therefore cannot sustain and requires to be set side, which I hereby do. 7. For the reasons discussed, the impugned order is set aside and the appeals are allowed with consequential relief, if any. (Dictated and pronounced in open court)

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