2011 (6) TMI 289 - HC - Service Tax

Co.-Op. Housing Society had availed of the services of Contractor for constructing the residential units for use of the members - Initially, the Society had paid service tax. Subsequently, however, the society carried a belief that it was not liable to pay service tax - filed refund claim - being chargeable to tax under section 65(105)(zzzh) of the Act is that the person concerned should render service to another person in relation to construction of complex and in the facts of the present case, there is nothing to indicate that the respondent has been hired as a contractor by the society so as to bring the activities of the respondent within the ambit of taxable services as contemplated under section 65(105)(zzzh) - Counsel for the revenue, however, drew our attention to explanation to sub-clause (zzzh) added by virtue of Finance Act, 2010 - In absence of any indication in the amendment to make it either retrospective or explanation, such statutory change cannot be made applicable - Tax Appeal, is therefore, dismissed.

Issues:
1. Maintainability of a common single appeal against the judgment of the Tribunal disposing of multiple appeals.
2. Whether a Co-operative Housing Society and its members constitute different legal entities.
3. Taxability of construction activity undertaken by the Society for its members.
4. Interpretation of a Board's Circular distinguishing a co-operative housing society from a developer/promoter.

Issue 1:
The High Court addressed the maintainability of a common single appeal against the judgment of the Tribunal disposing of multiple appeals. The Court noted that the appellant challenged the decision of the Tribunal in four appeals but clarified that a common single appeal against all four appeals was not maintainable. The Court allowed the appellant to file separate appeals for the other three cases if desired.

Issue 2:
The Court considered whether a Co-operative Housing Society and its members are distinct legal entities. The Society had availed the services of a contractor for constructing residential units for its members and initially paid service tax. However, the Society later believed it was not liable to pay service tax. The Tribunal, based on Board's Circulars and Clarifications, opined that if the activity is undertaken by the Society for and on behalf of the members, it cannot be considered that the Society provided services to its members.

Issue 3:
The Court analyzed the taxability of the construction activity performed by the Society for its members. The respondent argued that the contractor, not the Society, should be liable to pay service tax for constructing residential units for the members. The Court referred to a Division Bench judgment that emphasized the necessity of a service provider and a service receiver for tax liability under the relevant provision. It concluded that in the absence of a clear service provider and recipient relationship, the transaction could not be considered taxable.

Issue 4:
The Court examined the interpretation of a Board's Circular distinguishing a co-operative housing society from a developer/promoter. The respondent contended that the Society did not provide services to its members, unlike the contractor undertaking construction work. The Court noted the explanation added to the relevant provision by the Finance Act, 2010, but declined to discuss its impact on the present case due to the timing of the statutory change. The Court dismissed the Tax Appeal, stating that no question of law arose in the matter.

In summary, the High Court addressed the maintainability of a common single appeal, the legal entity distinction between a Co-operative Housing Society and its members, the taxability of construction activities undertaken by the Society, and the interpretation of a Board's Circular. The Court emphasized the need for a clear service provider and recipient relationship for tax liability and dismissed the Tax Appeal as no question of law was found to arise.

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