2019 (5) TMI 1878 - AT - Service Tax

Determination of service tax liability - Construction of Residential Complex Service - Preferential Location and Development of Complex Services - issue sub-judiced before Apex Court - HELD THAT - Since, the issue of legislative competence for levy for service tax on land and building is sub-judiced before the Hon ble Apex Court, the present appeals cannot be disposed of on merits at this juncture. Thus, the matter arising out of the appeals should be remanded back to the original authority for a decision on merits, subject to ascertaining the outcome of the judgment to be delivered by the nine-judge bench of the Hon ble Apex Court. The appeals filed by the appellant are allowed by way of remand to the original authority for deciding the issue of levy of service tax on the impugned service, based on the judgment to be pronounced by the Hon ble Apex Court in the aforementioned civil appeals - Appeal allowed by way of remand.

Summary

Issues involved: Determination of service tax liability on 'Construction of Residential Complex Service' and 'Preferential Location and Development of Complex Services'; Constitutional validity of levy of service tax on sale of premises; Legislative competence for levy of service tax on land and building.

Analysis:

1. Determination of service tax liability on 'Construction of Residential Complex Service' and 'Preferential Location and Development of Complex Services': The appeals revolved around the confirmation of service tax demand, interest, and penalties by the adjudicating authority for non-payment of service tax on these services. The Tribunal noted the constitutional validity of the levy of service tax on such services as upheld by the Hon'ble Bombay High Court and the subsequent appeal before the Hon'ble Supreme Court. However, due to the issue of legislative competence for the levy of service tax on land and building being sub-judiced before the Hon'ble Apex Court, the Tribunal decided to remand the matter back to the original authority for a decision on merits, contingent upon the outcome of the judgment to be delivered by the nine-judge bench of the Hon'ble Apex Court.

2. Constitutional validity of levy of service tax on sale of premises: The Hon'ble Bombay High Court had previously ruled on the constitutional validity of the explanation clause added to relevant sections of the Finance Act, 1994, levying service tax on the construction of commercial, industrial, or residential complexes intended for sale. The High Court also upheld the service tax levy on preferential location and development charges for such constructions. The matter was further appealed before the Hon'ble Supreme Court, which decided to await the decision of a nine-judge bench in another case before ruling on the constitutional validity of the impugned taxable service. The Tribunal, acknowledging the ongoing legal proceedings, allowed the appeals by way of remand to the original authority for a fresh decision based on the awaited judgment of the Hon'ble Apex Court.

3. Legislative competence for levy of service tax on land and building: The Tribunal recognized the significance of the pending issue of legislative competence for the levy of service tax on land and building before the Hon'ble Apex Court. Consequently, the Tribunal decided that the appeals could not be disposed of on merits at the current stage and opted to remand the matter back to the original authority for a decision once the judgment by the nine-judge bench of the Hon'ble Apex Court was delivered. The Tribunal emphasized that any other grounds raised by the appellant should also be addressed by the original authority during the fresh consideration, ensuring the appellant's right to a personal hearing in the process.

In conclusion, the Tribunal allowed the appeals by way of remand, awaiting the judgment of the Hon'ble Apex Court in related civil appeals before making a final decision on the levy of service tax on the impugned services.