2014 (10) TMI 63 - AT - Service Tax

Construction of complex service - construction of National Games village - Held that - If services are provided to the individuals, it may not amount to residential complex service prior to 01.07.2010 as observed in the case of Krishna Homes 2014 (3) TMI 694 - CESTAT AHMEDABAD of this Tribunal. What is constructed and handed over to individual is an apartment and not a complex. This was the clarification issued by the Board. - appellant has been able to make out a prima facie case to show that the demand for the period prior to 01.07.2010 in respect of construction of complex service, National Games Village is prima facie sustainable - stay granted.

Summary

Issues Involved:
1. Demand for service tax on construction of National Games Village.
2. Demand for service tax on sewerage project in Allahabad.
3. Demand for service tax on Pranahitha Lift Irrigation Scheme.
4. Demand for service tax on erection, commissioning, and installation for Mumbai Municipal Corporation.
5. Short-payment of tax during April 2010 to September 2011.

Issue-Wise Detailed Analysis:

1. Demand for Service Tax on Construction of National Games Village:
The primary issue revolves around the service tax demand of Rs. 25,19,35,364/- for the construction of the National Games Village in Hyderabad. The appellants were involved in constructing semi-finished flats, which were later completed and sold to buyers under two separate agreements. The first agreement covered the sale of semi-built flats, and the second agreement was for finishing the flats. The revenue authorities demanded service tax on the entire amount recovered from the buyers, amounting to more than Rs. 6.67 crores. The appellants relied on the decision in M/s Krishna Homes Vs CCE Bhopal, arguing that the service provided did not amount to a residential complex service prior to 01.07.2010. The Tribunal observed that the construction of individual apartments does not qualify as a residential complex service if handed over to individuals, as per the precedent set by Krishna Homes. Therefore, the demand for service tax prior to 01.07.2010 was deemed unsustainable.

2. Demand for Service Tax on Sewerage Project in Allahabad:
The second issue pertains to the service tax demand on the sewerage project in Allahabad, classified as site formation service by the revenue authorities. The appellants had already paid the entire tax amount with interest but contested the penalty, claiming a bona fide belief that such municipal projects were exempt from service tax. The Tribunal noted that the appellants had a prima facie case regarding the penalty and accepted their submissions at this stage.

3. Demand for Service Tax on Pranahitha Lift Irrigation Scheme:
The third issue involved the Pranahitha Lift Irrigation Scheme, where the revenue authorities argued that the project involved pipeline work, thus attracting service tax under EPC Projects as per the decision in Ramky Infrastructure Ltd. Vs CST Hyderabad. The appellants contended that the canal work was part of the lift irrigation scheme and exempted under Notification No. 41/2009. They had paid the entire tax and interest. The Tribunal found that the appellants made a prima facie case against the demand, relying on the decision in a joint venture of IVRCL.

4. Demand for Service Tax on Erection, Commissioning, and Installation for Mumbai Municipal Corporation:
The fourth issue concerned a demand of over Rs. 40,00,000/- for services provided to the Mumbai Municipal Corporation. The appellants argued that such services were not liable to service tax, citing the decision in Megha Engineering. The Tribunal observed that the appellants had a prima facie case against this demand as well.

5. Short-Payment of Tax During April 2010 to September 2011:
The fifth issue involved a short-payment of tax amounting to more than Rs. 39,00,000/-, which the appellants had already paid with interest. The Tribunal considered all these issues collectively and concluded that the appellants had made a sufficient prima facie case to waive the requirement of pre-deposit for the balance dues. Consequently, a stay against recovery was granted for 180 days from the date of the order.

Conclusion:
The Tribunal found that the appellants had made out a prima facie case against the major demands, particularly regarding the construction of the National Games Village and other municipal projects. The requirement for pre-deposit of the balance dues was waived, and a stay against recovery was granted for a period of 180 days.