2013 (11) TMI 1065 - AT - Service Tax

Waiver of pre-deposit - Construction of Residential Complex - more than 12 houses - appellant contended that separate approvals were taken for each of the house from the municipal authorities and commons roads were surrendered to the local panchayat. - Held that - this is very highly contentious issue - the issue can be decided only by going into the details of the facts of this case. Considering that pre-deposit was called for the earlier period in respect of the same project of the assessee, we do not find it proper to grant complete waiver of pre-deposit in this case - Pre-dposite ordered partly.

Summary

Issues:
1. Whether the construction activity of individual residential villas in a gated compound qualifies as a "residential complex" under section 65 (91a) of the Finance Act, 1994.
2. Whether the service rendered by the applicant falls under the definition of "construction of residential complex service."

Analysis:
1. The dispute revolves around whether the construction of individual residential villas in a gated compound constitutes a "residential complex" as defined under section 65 (91a) of the Finance Act, 1994. The Revenue argued that since the compound had more than 12 houses, it should be considered a residential complex, thus subject to service tax. Conversely, the applicant contended that as none of the buildings had more than 12 units, they were not covered by the said entry and hence did not pay service tax. The tribunal examined the definition of a residential complex and the specific requirements outlined in the law. The applicant relied on previous tribunal decisions and Supreme Court rulings to support their argument that unless each building has more than 12 residential units, service tax should not be levied. The tribunal acknowledged the complexity of the issue and directed the applicant to make a partial pre-deposit for the admission of the appeal, considering the contentious nature of the matter.

2. The second issue concerns whether the service provided by the applicant falls within the scope of "construction of residential complex service." The applicant presented evidence to demonstrate that separate approvals were obtained for each house from municipal authorities and common roads were surrendered to the local panchayat. They argued that these actions indicated that the construction was not intended as a common project but rather as individual residential units. The Revenue, on the other hand, highlighted the presence of common facilities such as sewage treatment plant, water treatment plant, swimming pool, and gymnasium in the project, asserting that even if different villas were part of the same compound, exceeding 12 individual houses would trigger the service tax liability. The tribunal considered the specifics of the project and the presence of common facilities in determining the applicability of the construction of residential complex service. Ultimately, a partial pre-deposit was ordered, and the appeal was scheduled for further hearing.

In conclusion, the judgment delves into the intricate definitions and requirements outlined in the Finance Act, 1994, to determine the tax liability concerning the construction of individual residential villas in a gated compound. The tribunal's decision to call for a partial pre-deposit reflects the complexity and contentious nature of the issue at hand, emphasizing the need for a detailed examination of the facts and legal precedents before reaching a final conclusion.