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2018 (7) TMI 1135 - HC - Service TaxLevy of Service Tax - Construction of Residential Complex Service - Sub-contract - personal use or not? - Circular dated 24-05- 2010 issued by CBEC - Extended period of Limitation - Section 73(1) of the Finance Act, 1994 - Held that - There are no substantial question of law arises in the present case requiring consideration. The Residential Complex in question was undertaken to be constructed by the Respondent Assessee M/s. Nithesh Estates Limited for ITC Limited under the Contract dated 01/04/2006. It is equally undisputed before us that the construction activity in question was in its entirety sub-contracted by M/s. Nithesh Estates Limited to M/s.Larsen and Toubro Limited. There is no material on record or evidence to indicate that any part of construction activity in question was undertaken by the Respondent Assessee M/s. Nithesh Estates Limited itself. The Revenue cannot be allowed to argue against the legal position rightly explained by the CBE&C itself which can certainly be invoked and applied by this Court for interpreting the provisions of law on the Principles of interpretation of Contemporenea Expositio and the Central Board of Excise and Customs or the highest Administrative body of the Respondent Department itself has interpreted the provisions that the construction activities of this nature where Bi-parte or Tri-partite Agreements are entered into is clearly indicated in the said Circular, which clearly and rightly hold the sub-contractors liable to pay the Service Tax as it is the Sub-contractor who actually undertakes the construction activity - In view of the undisputed factual matrix of the present case, that the sub-Contractor M/s. Larsen and Toubro Limited has duly discharged the obligations to pay the Service tax in the present Contract, we are at a loss to understand how the Revenue could again demand the Service Tax from the Respondent Assessee M/s. Nithesh Estates Limited, the Principal Contractor or the Developer, who did not undertake any construction activity in the present case. The learned Tribunal was perfectly justified and correct in applying the Circular dated 24/05/2010 also, while holding that if the Government of India Department could be treated as using the Residential Complex in question constructed by NBCC for its personal use , how another Corporate body like M/s.ITC Limited in the present case could be denied the benefit of that type of user of Residential Complex to be occupied by its Managerial Staff - The law does not envisage any such distinction among the Private Sector Corporate Entities and the Departments of Government or Government Companies or Undertakings. No substantial question of law would really arise in the present case including the question of extended period of limitation under Section 73(1) of the Finance Act, 1994 - When the levy of Service Tax on the Respondent Assessee itself is held to be illegal, the question of availability of extended period of limitation for levying such Service Tax does not arise - appeal being devoid of merit, is dismissed.
Issues Involved:
1. Levy of Service Tax on the 'Residential Complex' constructed by the Respondent Assessee. 2. Whether the construction activity falls within the meaning of "personal use" under Section 65(91a) of the Finance Act, 1994. 3. Applicability of the CBEC Circular dated 24-05-2010 regarding Service Tax liability. 4. Validity of the Show Cause Notice dated 08-07-2009 concerning the extended period of limitation under Section 73(1) of the Finance Act, 1994. Issue-wise Detailed Analysis: 1. Levy of Service Tax on the 'Residential Complex': The Revenue contended that the Respondent Assessee, M/s. Nithesh Estates Limited, was liable to pay Service Tax on the construction of a 'Residential Complex' for M/s. ITC Limited. The Tribunal held that the construction activity fell within the Exclusion Clause of the definition of 'Residential Complex' under Section 65(91a) of the Finance Act, 1994, and thus was not liable for Service Tax. The Tribunal's decision was based on the fact that the construction was intended for personal use by ITC Limited, specifically for its employees. 2. Personal Use under Section 65(91a): The Tribunal concluded that the 'Residential Complex' constructed for ITC Limited was for personal use, as ITC intended to provide the accommodation to its employees. The definition of 'personal use' includes permitting the complex for use as residence by another person on rent or without consideration. The Tribunal relied on the CBEC Circular dated 24-05-2010, which clarified that if a residential complex is constructed for personal use, it is not exigible to Service Tax. 3. Applicability of CBEC Circular dated 24-05-2010: The Tribunal and the High Court both referred to the CBEC Circular dated 24-05-2010, which stated that if a government department engages a contractor for constructing a residential complex for its personal use, Service Tax is not leviable. The High Court agreed with the Tribunal's application of this Circular, stating that the same principle should apply to private entities like ITC Limited. The Court noted that the sub-contractor, M/s. Larsen and Toubro Limited, had already paid the Service Tax, and thus, the principal contractor, M/s. Nithesh Estates Limited, was not liable. 4. Validity of Show Cause Notice and Extended Period of Limitation: The Tribunal held that the demands made in the Show Cause Notice dated 08-07-2009 did not fall within the extended period of limitation under Section 73(1) of the Finance Act, 1994. The High Court agreed, noting that the Respondent Assessee had a bona fide belief that it was not liable to pay Service Tax, supported by the CBEC Circular and the fact that the sub-contractor had already paid the tax. Therefore, the extended period of limitation was not applicable. Conclusion: The High Court dismissed the Revenue's appeal, affirming the Tribunal's decision that the Respondent Assessee was not liable to pay Service Tax on the 'Residential Complex' constructed for ITC Limited. The construction was for personal use, and the sub-contractor had already discharged the Service Tax liability. The Court also held that no substantial question of law arose in the case, including the issue of the extended period of limitation.
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