2008 (9) TMI 189 - AT - Service Tax

Construction of residential complex - case of the appellants is that they have merely developed the property and built the flats for themselves and the land owner as a joint venture project - sale of the flats to others has taken place only subsequently and therefore no service has been rendered for the ultimate flat owners appellant s contention that decision of SC in K. Raheja Development Corpn. is not applicable to their case was not dealt by the lower authority case remanded

Summary

Issues: Refund of Service Tax paid under wrong impression; Applicability of Supreme Court decision on building activity; Validity of Lower Appellate Authority's order

In this case, the appellant had paid Service Tax under a mistaken belief of liability and subsequently applied for a refund, which was rejected by the authorities below. The appellant argued that they did not undertake any building activity for others but developed the property jointly, and therefore, no service was rendered to the ultimate flat owners. Reference was made to the decision of the Hon'ble Supreme Court and the Allahabad High Court to support this argument. The appellant also cited a circular issued by the Board to clarify that no service tax is payable when a person builds a residential complex using direct labor. On the other hand, the Department supported the impugned order, stating its correctness based on the Supreme Court's decision. The Tribunal found the Lower Appellate Authority's order to be inadequate, as it did not address the contentions raised by the appellants. Consequently, the matter was remanded back to the Lower Appellate Authority for a fresh hearing, emphasizing the need for a speaking order that considers the arguments presented, including the relevant case laws and circulars. The appeal was allowed by way of remand, highlighting the importance of a detailed and comprehensive decision-making process by the appellate authorities.