2013 (8) TMI 339 - AT - Service Tax

Construction of Complex Service u/s 65 (105) (zzzh) and Taxable Service u/s 65 (91a) Duty Demand Interest and Penalty - Assesse was engaged in promotion and construction of residential complexes for sale of residential flats - Revenue was of the view that the activities done by them was taxable services Held that - There was a relationship of service provider and service recipient between the applicant and the prospective buyers of the individual residential units as it was evidenced by the contract between the two parties. The contract was not for sale of flats but for providing construction service - The residential complex was not for the residence of the assesse but the individual residence units were constructed for residential use of the persons for whom such units were constructed - The fact that individual residential units were for residential use of the purchaser cannot take the complex outside the definition - Any interpretation to the contrary will make the entry otiose. Limitation of Time-Barred Held that - The contention of the assesse regarding time bar does not appear to be supported by provisions in statute because the demand does not cover any period beyond one year from the date of disclosure - In respect of demands prior to the date of disclosure the time limit of one year may not apply for issue of Show Cause Nature. Waiver of Pre-deposit After considering the financial hardship pleaded by assesse and also in the interest of Revenue 30Lakhs were ordered to be submitted as pre-deposit upon such submission rest of the duty to be waived Decided partly in favor of assesse.

Summary

Issues:
1. Delay in filing the appeal
2. Change in the name of the Respondent
3. Service tax liability on construction activities
4. Interpretation of the exclusion clause in the definition of a residential complex
5. Time bar for issuing show cause notice

Issue 1: Delay in filing the appeal

The appeal faced a delay of 18 days due to the winding up of the applicant's construction business after completing a project. The Tribunal, after considering the reasons provided, condoned the delay in filing the appeal.

Issue 2: Change in the name of the Respondent

A miscellaneous application was filed by Revenue to change the name of the Respondent from Commissioner of Central Excise to Commissioner of Service Tax, as the applicant-appellant was registered with the latter. The Tribunal allowed this change.

Issue 3: Service tax liability on construction activities

The applicant, engaged in construction and sale of residential complexes, did not pay service tax for activities conducted from April 2006 to March 2009. Revenue issued a show cause notice demanding unpaid service tax. The applicant argued that there was no service provider-service recipient relationship during construction, but the Revenue contended otherwise, stating that the construction services provided to buyers of undivided shares were taxable.

Issue 4: Interpretation of the exclusion clause in the definition of a residential complex

The Tribunal analyzed the exclusion clause in the definition of a residential complex to determine if the constructed residential units were for personal use of individual buyers. It was concluded that the exclusion clause did not apply as the units were constructed for the residential use of the buyers, not the applicant.

Issue 5: Time bar for issuing show cause notice

The Revenue argued that the demands were not time-barred, citing the date of disclosure as the starting point for calculating the limitation period. The Tribunal agreed, stating that the demand did not cover any period beyond one year from the date of disclosure, and the time limit for issuing the show cause notice may not apply for demands predating the disclosure date.

This judgment addressed various issues, including the delay in filing the appeal, service tax liability on construction activities, interpretation of legal definitions, and the time bar for issuing show cause notices. The Tribunal considered arguments from both sides, ultimately directing the applicant to make a pre-deposit for admission of the appeal while waiving the balance dues during the appeal's pendency.