2011 (9) TMI 832 - AT - Service Tax

Demand of service tax, interest and penalty - Tamil Nadu Government undertaking have constructed quarters for the Tamil Nadu police officials - appellants states that as per the definition of the expression residential complex under Section 65(91a) of the Finance Act, 1994, it does not include a complex which is constructed by a person directly engaging any other person for designing or planning of the layout, and the construction of such complex is intended for personal use as residence by such person. She also refers to the explanation below the said definition which states that Personal use includes permitting the complex for use as residence by another person on rent or without consideration. appeal allowed by way of remand

Summary

Issues:
1. Waiver of predeposit of service tax, interest, and penalties under Sections 77 & 78 of the Finance Act, 1994.
2. Interpretation of the definition of "residential complex" under Section 65(91a) of the Finance Act, 1994 for service tax applicability.
3. Applicability of service tax on construction of quarters for Tamil Nadu Police officials by the appellants.
4. Judicial precedent and remand for fresh decision by the original authority.

Analysis:

The judgment by the Appellate Tribunal CESTAT, Chennai, involved the issue of waiving predeposit of service tax, interest, and penalties under Sections 77 & 78 of the Finance Act, 1994. The Tribunal decided to proceed with hearing the appeal without predeposit, citing an earlier order covering the disputed issue. The appellants had constructed quarters for Tamil Nadu Police officials under a contract with the Tamil Nadu Police Housing Corporation Limited (TNPHCL), a government undertaking. The appellants argued that the construction did not attract service tax as it fell outside the definition of "residential complex" under Section 65(91a) of the Finance Act, 1994. They contended that the quarters were not intended for personal use as residence by the appellants, as per the definition and explanation provided.

In a similar case previously adjudicated by the Tribunal, the impugned orders demanding service tax, interest, and penalty were set aside, and the cases were remanded to the original authority for a fresh decision. Following the precedent, the Tribunal in this case also set aside the impugned order and remitted the case for a fresh decision to the original authority. The Tribunal directed the original authority to pass fresh orders after providing a reasonable opportunity of hearing to the appellants. Ultimately, the appeal was allowed by way of remand, emphasizing the importance of a fresh decision by the original authority after considering the arguments presented.

In conclusion, the judgment highlights the Tribunal's approach to waiving predeposit in service tax cases, the interpretation of relevant legal definitions for tax applicability, and the significance of judicial precedents in deciding similar disputes. The decision underscores the need for a thorough reconsideration by the original authority in light of the legal arguments presented, ensuring a fair and just outcome in matters of tax liability and construction projects involving government entities.