2017 (9) TMI 270 - AT - Service Tax

Construction of complex services - whether the construction activity undertaken by the respondent is leviable to service tax under the category of construction of complex services? - Held that - each of these clusters of houses will form a residential complex comprising of several individual residential houses with common area and various facilities. Consequently, these will be covered within the definition of construction of complex and liable to service tax. The adjudicating authority s interpretation that more than 12 residential units should be part of one building situated in one plot of land is without any basis - In terms of the decision of Hon ble Supreme Court in the case of Larsen & Toubro 2015 (8) TMI 749 - SUPREME COURT such composite construction are liable to service tax only w.e.f. 01.06.2007 under the category of works contract services - matter is remanded to the original authority for a fresh decision, keeping in view the law laid down by the Hon ble Apex Court in the case of Larsen & Toubro case. Construction of complex services - internal development works constructed by the respondent including roads and other infrastructure development such as construction of building, water supply and other facilities - Held that - the construction of various infrastructure facilities have been provided by the respondent along with construction of residential complex. These covered by a separate contract and from the nature of activities carried out, we are of the view that these are in the nature of civic amenities being provided by the authority constituted under law on above commercial activities of GNIDA. Such welfare activities cannot be covered by the construction of complex services and the adjudicating authority has rightly dropped the demand for service tax. Construction of boys hostel for Gautam Budh University - Held that - As is well known, a hostel cannot be considered as a residential unit and hence cannot be covered within the construction of complex services. In any case, such construction activity has been done for the use of Gautam Budh University which is an institution established solely for educational purpose - no service tax will be payable on construction of boys hostel. Appeal allowed - decided partly in favor of appellant.

Summary

Issues:
1. Whether the construction activities undertaken by the respondent are liable to service tax under the category of construction of complex services.

Analysis:
1. The appeals were filed by the Revenue against the orders passed by the Commissioner Service Tax, New Delhi, regarding the demand for service tax on the construction works carried out by the respondent for Greater Noida Industrial Development Authority and Gautam Budh University.
2. The adjudicating authority had dropped the demand for service tax on various grounds, including the interpretation that the construction of single-story houses and internal development works did not fall under the definition of residential complex services.
3. The Revenue challenged the dropping of service tax demand, arguing that the construction activities indeed fell within the scope of service tax liability.
4. The Tribunal analyzed the definition of "construction of complex" under the Finance Act, 1994, emphasizing the requirement of more than 12 residential units with common facilities to constitute a residential complex.
5. After reviewing the layout plans and construction details submitted, the Tribunal found that the respondent's construction of individual residential houses formed residential complexes with common areas and facilities, thus attracting service tax liability.
6. The Tribunal also addressed the issue of internal development works, concluding that such infrastructure projects were civic amenities provided by the authority and not subject to service tax under construction of complex services.
7. Regarding the construction of a boys hostel for the university, the Tribunal upheld the decision that it did not qualify as a residential unit under construction of complex services, especially since it was intended for educational purposes.
8. The Tribunal partially allowed the appeals, setting aside the demand for service tax on individual residential houses for further examination and modifying the impugned orders accordingly.

This detailed analysis of the judgment provides a comprehensive understanding of the issues involved and the Tribunal's decision on each aspect of the service tax liability concerning the construction activities undertaken by the respondent.