2019 (5) TMI 1763 - AT - Service Tax

Levy of Service tax - Construction of Complex service - receipt of certain amounts from the prospective buyers of the shops during the period of construction - period involved is prior to 01.07.2010 - HELD THAT - The issue involved is identical to the issue involved in the case of M/S KRISHNA HOMES VERSUS CCE BHOPAL AND CCE BHOPAL VERSUS M/S RAJ HOMES 2014 (3) TMI 694 - CESTAT AHMEDABAD . In the said decision the Tribunal examined the amendment made to the Finance Act and also the decision of the Hon ble Apex Court in the case of M/S. LARSEN TOUBRO LIMITED ANOTHER VERSUS STATE OF KARNATAKA ANOTHER 2013 (9) TMI 853 - SUPREME COURT where it was held that Such works contracts involving transfer of immovable property were brought within the purview of taxable service by adding explanation to Section 65(105)(zzzh) w.e.f. 1-7-2010 and therefore it has to be held that such contracts were not covered by Section 65(105)(zzzh) during the period prior to 1-7-2010. In the instant case the entire period involved is prior to 01.07.2010 and thus following the ratio laid-down by the Tribunal in the case of Krishan Homes the impugned order is set aside - appeal allowed - decided in favor of appellant.

Summary

Issues:
Confirmation of demand of service tax and imposition of penalty on M/s. Sun Builders for construction of a residential and commercial shopping complex.

Analysis:
The appeal was filed against the confirmation of demand of service tax and penalty imposition on M/s. Sun Builders for constructing a residential and commercial shopping complex. The appellant argued that the amounts obtained from prospective buyers during construction should not be taxed under the Construction of Complex service category as the definition of Commercial and Industrial Construction was amended by the Finance Bill, 2010, effective from 01.07.2010. The appellant relied on the decision in the case of Krishna Homes vs. CCE, Bhopal to support the claim that such transactions cannot be taxed before 01.07.2010. The entire demand in the impugned order pertained to a period before 01.07.2010, and thus, the demand and penalty were requested to be set aside.

The Assistant Commissioner relied on the impugned order, but the Tribunal examined the issue in light of the amendment made to the Finance Act and the decision of the Hon'ble Apex Court in the case of Larsen & Toubro Limited & Ors vs. State of Karnataka & Ors. The Tribunal referred to the conclusion reached in the case of Krishna Homes, stating that works contracts involving the transfer of immovable property were brought under taxable service by adding an explanation to Section 65(105)(zzzh) with effect from 01.07.2010. Therefore, such contracts were not covered by Section 65(105)(zzzh) before 01.07.2010. As the entire period involved in the present case was before 01.07.2010, following the precedent set by the Tribunal in the case of Krishna Homes, the impugned order was set aside, and the appeal was allowed.

In conclusion, the Tribunal set aside the demand of service tax and penalty imposed on M/s. Sun Builders for constructing a residential and commercial shopping complex, as the transactions in question occurred before the amendment to the definition of service under the Finance Act in 2010. The decision was based on the interpretation of relevant legal provisions and previous judicial rulings, particularly the case of Krishna Homes, which established that such transactions were not taxable before 01.07.2010.