2017 (6) TMI 1190 - AT - Service Tax

Works contract services - construction of Commercial / industrial building as well as residential complex - Revenue held a view that the individual houses are part of residential complex having common facilities and as such, the appellants are liable to tax - Held that - A perusal of the impugned order indicates that the original authority examined the general scope of the terms Residential Complex and inferred that generally housing colonies built by State Housing Boards will have large common area, common approach, water supply, park, community centre and any other common facilities. The factual details relevant to the present case has not been brought out with supporting evidence. Without inferring the fact regarding applicability of the tax entry in the present case, it is necessary to examine as to whether the residential complex, having individual houses, is in fact, having common areas as mentioned in the statutory definition. This can be verified from the approved layout and other supporting documents. Appeal allowed by way of remand.

Summary

Issues:
1. Tax liability of the appellant for construction of residential complex.
2. Interpretation of statutory definition of "Residential Complex" in relation to common facilities.
3. Applicability of service tax under "works contract services" post-01.06.2007.

Analysis:
1. The judgment pertains to an appeal against an order of the Commissioner of Central Excise regarding the tax liability of the appellant for constructing a residential complex for the Rajasthan Housing Board. The dispute revolves around whether the individual houses constructed by the appellant are part of a residential complex with common facilities, making them liable to tax under Section 65 (105) (zzzh) of the Finance Act, 1994. The Revenue imposed a service tax liability of ?2,40,24,509 along with penalties under Sections 78 and 76 of the Finance Act, 1994. The Tribunal noted that the contracts were composite in nature, involving both material supply and services, and that the tax liability should be determined based on the presence of common facilities within the residential complex.

2. The Tribunal observed that the original authority confirmed the service tax liability based on the presence of common areas and facilities in the residential units constructed by the appellant as per the agreement with the Rajasthan Housing Board. However, the Tribunal highlighted the need for specific evidence regarding the presence of common facilities within the approved layout of the residential complex to ascertain the applicability of the tax entry. The Tribunal emphasized that without a clear finding on the existence of common areas as per the statutory definition, it would be premature to conclude on the tax liability of the appellant. Therefore, the matter was remanded back to the original authority for a fresh decision, considering the legal principles established by the Supreme Court and factual details regarding the construction of the residential complex.

3. In light of the discussion and analysis, the Tribunal found the impugned order regarding the tax liability of the appellant for constructing the residential complex to be unsustainable. Consequently, the Tribunal set aside the finding and remanded the matter to the original authority for a fresh decision. The original authority was directed to consider the legal precedents set by the Supreme Court and examine the factual details, specifically focusing on the presence of common facilities within the approved layout of the residential complex. The appellant was granted the opportunity to present their case before a fresh decision is made by the original authority, thereby allowing the appeal to the extent of remand for further consideration.