2018 (6) TMI 926 - AT - Service Tax

Construction of Residential Complex Service - construction of residential complexes for the police personnel in various places - period involved is from 16.06.2005 to 31.08.2007 - Held that - TNPHCL engaged the appellant for construction of Police Quarters and the ownership of the houses constructed vested with the Govt. of Tamilnadu which is nothing but an extended arm of the Govt. Section 65 (91) (a) of the Finance Act, 1994 defines residential complex - similar issue decided in the case of SIMA Engineering Constructions & 3 Ors. 2018 (5) TMI 405 - CESTAT CHENNAI , where it was held that such activity is not liable to levy of service tax. The definition of residential complex specifically excludes construction undertaken for personal use and such personal use includes permitting the complex for use as residence by another person. The exclusion clause covers the construction activity undertaken by the assessee. Demand set aside - appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Demand of service tax on construction of residential complexes.
2. Applicability of service tax prior to 01.06.2007.
3. Exclusion of liability for service tax on complexes intended for personal use.

Analysis:
1. The appellant was engaged by the Tamilnadu Police Housing Corporation Ltd. for constructing residential complexes. A show cause notice was issued proposing service tax on these activities. After due process, the demand was confirmed by the authorities, leading to an appeal before the Tribunal. The matter was remanded for reconsideration, resulting in an order confirming the demand, interest, and penalties. The appellant appealed again, arguing against the demand.

2. The period involved in the case was from 16.06.2005 to 31.08.2007. The appellant contended that demand prior to 01.06.2007 could not be sustained based on a Supreme Court decision. The Tribunal agreed and set aside the demand for the period before 11.06.2007.

3. Regarding the demand after 01.06.2007, the appellant argued that the complexes constructed were intended for personal use, which falls outside the definition of construction of residential complex liable for service tax. Citing a previous Tribunal order, the appellant sought to set aside the demand. The Tribunal examined the definition of residential complex and concluded that construction for personal use, including permitting residence by another person, is excluded from service tax liability. Relying on this interpretation, the Tribunal set aside the demand after 01.06.2007 as well.

In conclusion, the Tribunal set aside the impugned order, allowing the appeal with any consequential reliefs. The judgment clarified the applicability of service tax, distinguishing between periods before and after 01.06.2007 and highlighting the exclusion of liability for construction intended for personal use.