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2016 (10) TMI 188 - AT - Service TaxRecovery of service tax - Works Contract Service - Construction of Residential Complex - period involved is from January, 2009 to March, 2009 - appellants had paid VAT under the category of works contract on the value of materials used for such services - Held that - the appellants were rendering construction of complex service as they were designing, planning, developing and clearing site on their own land for construction activities for buyers/clients and were not doing any execution of works contract and elements of definition of works contract , therefore, are not found present. It is made clear that the activities of the appellants fall under the category of construction of residential complex service and such services for the period of January, 2009 to March, 2009 were not liable to service tax which is clear by virtue of the paragraph 3 of C.B.E. & C. Circular No. 108/2/2009-S.T., dated 29-1-2009. It is however, made clear that such services become taxable only after 1-7-2010 when the Explanation was added by the Finance Act, 2010 dated 8-5-2010 in definition of construction of complex service to the provisions of Section 65(105)(zzzh) of the Finance Act, 1994. - Decided in favour of appellant
Issues:
Recovery of service tax on 'Works Contract Service' for the period from January, 2009 to March, 2009. Analysis: The appellants, M/s. Vinayaka Homes, contested the demand of service tax on 'works contract service' by arguing that they were actually providing 'Construction of Residential Complex' services under Section 65(105)(zzzh) of the Finance Act, 1994 during the relevant period. They maintained that no service tax was applicable on 'construction of residential complex service' at that time as they had paid VAT under the 'works contract' category for the materials used in their services. The Revenue, represented by the learned AR, contended that the services provided by the appellants fell under 'works contract' and were thus liable for service tax recovery for the period in question. Upon careful consideration of the facts and submissions, the Tribunal found that the appellants were indeed offering 'construction of complex service' by designing, planning, developing, and preparing sites on their land for construction activities for clients. It was noted that the activities did not align with the elements of a 'works contract'. The Tribunal clarified that the appellants' services were correctly categorized as 'construction of residential complex service' and were not subject to service tax for the period from January, 2009 to March, 2009. The Tribunal referenced Circular No. 108/2/2009-S.T., dated 29-1-2009, which highlighted that services related to 'construction of residential complex' were excluded from service tax. The circular emphasized that until the completion of construction and full payment, services provided by the seller (promoter/builder/developer) were considered 'self-service' and did not attract service tax. Only services provided by contractors, designers, or similar service providers were taxable. It was further clarified that the services became taxable only after 1-7-2010 when an Explanation was added to the definition of 'construction of complex service' under Section 65(105)(zzzh) of the Finance Act, 1994 by the Finance Act, 2010 dated 8-5-2010. In conclusion, the impugned order was set aside, and the appeal was allowed with any consequential relief deemed necessary.
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