2017 (3) TMI 1371 - AT - Service Tax

Levy of tax - Construction services - The pradhikaran under Rajiv Awas Yojna and Jawaharlal Nehru Urban Renewal Mission had provided the small units to the juggi dwellers without any cost or highly subsidised cost - the M.P Government has constructed the accommodation for the gandi basti people under the Central sponsored scheme which is attempted to clean India as per Prima Minister s mission - Held that - N/N. 28/2010-ST dated 22nd June, 2010, clarified that the services is provided to Jawaharlal Nehru National Urban Renewal Mission and Rajiv Awaas Yojana are exempted from the clutches of service tax - Further, vide F. No. 137/26/206-CX-4 dated 5th July, 2006, it was clarified that service tax would not be leviable on construction of complexes under question if their lay out does not require approval by an authority under any law for the time being in force - From the letter dated 30.1.2004 issued by the M.P. Urban Development department, it appears that the said construction was made under Rajiv Gandhi basti Vikas karyakram which was the Central sponsored scheme and the same is exempted from service tax as per Circular No.125/2010-ST dated 30th July 2010 - tax not levied - appeal allowed - decided in favor of appellant.

Summary

Issues:
Service tax liability on construction services provided under government schemes exempted from service tax.

Analysis:
The appellant was engaged in providing construction services for a government scheme aimed at providing small units to dwellers. The Department contended that the appellant's activity fell under taxable service of construction of complex as per the Finance Act, 1994. However, the appellant neither took credit nor paid service tax on the services during the relevant period. The Department's argument was based on the definition of "complex" under Section 65(91)(a) of the Finance Act, which includes buildings with more than 12 residential units with a common area. The explanation clarified that "personal use" includes permitting the complex for residence by another person on rent or without consideration. The appellant's case involved allottees paying nominal rent or no consideration.

The Tribunal noted that certain notifications and circulars exempted services provided under specific government schemes from service tax. Notification No. 28/2010-ST clarified the exemption for services provided under certain urban renewal missions. Additionally, a letter from the M.P. Urban Development department indicated that the construction was carried out under a Central sponsored scheme exempted from service tax as per Circular No. 125/2010-ST. The Tribunal observed that the construction was part of a scheme aimed at improving living conditions for underprivileged individuals, aligning with the Prime Minister's mission to clean India.

Considering the above factors, the Tribunal concluded that no service tax was leviable in the appellant's case. Therefore, the impugned order demanding service tax was set aside, and the appellant was granted relief. The appeal filed by the appellant was allowed, providing a favorable outcome in light of the exemption under the government schemes and relevant notifications.