2018 (2) TMI 833 - AT - Service Tax

Construction of complex service - whether or not the appellants have undertaken the taxable activities of construction of complex service. We have perused the impugned orders? - Held that - the appellants constructed individual houses of less than 12 nos. and also G 3 buildings, having multiple units, in large numbers. They have constructed housing units in such different multi-story buildings numbering 96, 48, etc. It is apparent that such complexes would be having common facilities. However, this requires categorical finding upon perusal of the approved layout by the competent authority as well as the blue print of the layout - matter requires re-examination. Tax liability - construction of road as well as construction of drainage system, water supply - Held that - if these activities are independent of any residential complex or constructed in already existed residential complex, the same will not be categorized under construction of complex service . These aspects require factual finding by the Original Authority. Time limitation - penalties - Held that - Admittedly, in the case of construction activities, there has been a substantial litigation on the applicability of the various tax entries - the case against the appellant has to be restricted to the normal period and there can be no penalty for such tax liability. The matter is remanded back to the Original Authority for a fresh decision - appeal allowed by way of remand.

Summary

Issues:
1. Whether the appellants are liable for service tax under the category of "construction of complex service"?
2. Whether the demands are barred by limitation and if penalties imposed are sustainable?

Analysis:
Issue 1: The judgment involves two appeals challenging orders passed by the Commissioner of Central Excise regarding service tax liability under the category of "construction of complex service." The appellants argued that the constructions were not taxable under this category as they were either for individual houses or for rehabilitation purposes, not sharing common facilities. They also contended that the demands were hit by limitation and that they were not liable for service tax prior to a certain date. The respondent argued that the constructions did have common facilities and fell under the tax entry correctly. The Tribunal found that a categorical finding was required on whether the constructions had common facilities, and the Original Authority needed to examine the approved layout and blueprints for a conclusive decision. The matter was remanded for a fresh decision based on specific factual details and legal precedents.

Issue 2: The judgment also addressed the issue of limitation and penalties imposed. The appellants argued that due to substantial litigation on tax liability for construction activities and the clarification provided by a Supreme Court decision, the demands should be restricted to the normal period without any penalties. The Tribunal agreed with the appellants, noting that the case should be limited to the normal period without penalties due to the circumstances and legal developments. Consequently, the impugned orders were set aside, and the matter was remanded back to the Original Authority for a fresh decision in line with the observations made by the Tribunal. The appeals were allowed by way of remand.