2017 (5) TMI 1389 - AT - Service Tax

Liability of tax - construction activities mainly non commercial structures - Held that - in respect of all the residential units constructed for Ghaziabad authority for the Ministry of Defense and under JNNURM none of the constructed blocks have got 12 or more units attracting levy of service tax under Section 65(105) (zzzh) - the whole SCN is unsustainable and the demand as raised is bad and against the provisions of law - appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Whether service tax was rightly demanded from the appellant-assessee for construction activities.
2. Whether the demand raised in the impugned order is sustainable.
3. Whether the appellant-assessee is liable to discharge service tax liability.

Analysis:

Issue 1:
The appellant, engaged in construction activities, contested the demand of service tax amounting to ?3,37,11,817/- along with penalties under various sections. The appellant believed that services provided to government departments were not subject to service tax. However, investigations revealed liabilities, leading to the demand raised in the impugned order.

Issue 2:
The breakup of the disputed demand included construction projects like multistoried residential units and houses under various schemes. The appellant argued that certain constructions did not meet the criteria for taxation under relevant sections. For instance, constructions with less than 12 units in a block were deemed non-taxable under Section 65(105) (zzzh).

Issue 3:
The appellant emphasized that all transactions were recorded, and there was no deliberate default or suppression of facts. The appellant challenged the demand for the extended period, asserting that the demand was unsustainable. The Tribunal, after considering the contentions and facts, held that the show cause notice and the demand were unsustainable and against the provisions of the law. Consequently, the impugned order was set aside, granting the appellant consequential benefits.

In conclusion, the Tribunal ruled in favor of the appellant, finding that the demand for service tax on the constructions in question was not valid under the relevant provisions. The appellant was deemed entitled to consequential benefits as per the law.