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2018 (12) TMI 869 - AT - Service TaxConstruction of Residential Complex Service - non-payment of service tax - periods from May 2008 to September 2009 and from October 2009 to June 2010 - Held that - The issue squarely covered by the decision in the case of REAL VALUE PROMOTERS PVT. LTD., CEEBROS PROPERTY DEVELOPMENT, PRIME DEVELOPERS VERSUS COMMISSIONER OF GST & CENTRAL EXCISE, CHENNAI 2018 (9) TMI 1149 - CESTAT CHENNAI , where it was held that The services provided by the appellant in respect of the projects executed by them for the period prior to 1.6.2007 being in the nature of composite works contract cannot be brought within the fold of commercial or industrial construction service or construction of complex service. For the period after 1.6.2007, service tax liability under category of commercial or industrial construction service‟ under Section 65(105)(zzzh) ibid, Construction of Complex Service‟ under Section 65(105)(zzzq) will continue to be attracted only if the activities are in the nature of services‟ simpliciter. Appeal allowed - decided in favor of appellant.
Issues Involved:
1. Liability of service tax on construction activities undertaken by the appellant. 2. Classification of the construction activities as composite works contracts or service simpliciter. 3. Applicability of service tax prior to and post-1.6.2007 under different service categories. 4. Validity of the Show Cause Notices and Orders-in-Original issued by the Revenue. Detailed Analysis: 1. Liability of Service Tax on Construction Activities: The appellant undertook construction of 246 residential flats and assumed that the activity was not liable to service tax. The Revenue issued Show Cause Notices for the periods from May 2008 to September 2009 and from October 2009 to June 2010, proposing service tax determination due to an amendment effective from 01.07.2010. The Original Authority confirmed these proposals, leading to the present appeals. 2. Classification of Construction Activities: The Tribunal referenced the decision in M/s. Real Value Promoters Pvt. Ltd., where it was ruled that construction activities in the nature of composite works contracts are not liable to service tax prior to 1.6.2007. The Tribunal noted that the appellant's activities involved both material supply and value services, thus qualifying as composite works contracts. The Tribunal highlighted that for composite works contracts, service tax is not applicable under "Commercial or Industrial Construction Service" (CICS) or "Construction of Complex Service" (CCS) but under "Works Contract Service" as defined under Section 65(105)(zzzza). 3. Applicability of Service Tax Prior to and Post-1.6.2007: The Tribunal emphasized that composite works contracts were brought under the service tax ambit only from 1.6.2007, based on the Hon'ble Apex Court judgment in Larsen & Toubro. The Tribunal stated that only service simpliciter contracts (without material supply) would be subject to service tax under CICS/CCS prior to and after 1.6.2007. The Tribunal also referenced the Union Finance Minister’s 2007 budget speech and CBEC’s Circular 128/10/2010, supporting the classification of composite works contracts under "Works Contract Service" post-1.6.2007. 4. Validity of Show Cause Notices and Orders-in-Original: The Tribunal cited several case laws, including Commissioner, Service Tax, New Delhi Vs. Swadeshi Construction Company, Skyway Infra Projects Pvt. Ltd. Vs. Commissioner of Service Tax, and URC Construction (P) Ltd. Vs. Commissioner of Central Excise, which supported the view that composite works contracts cannot be taxed under CICS/CCS. The Tribunal concluded that the Show Cause Notices and Orders-in-Original proposing service tax under CICS/CCS for composite works contracts are not sustainable. Conclusion: The Tribunal ruled that the services provided by the appellant for the period prior to 1.6.2007 cannot be taxed under CICS/CCS. For the period post-1.6.2007, only service simpliciter contracts are liable under CICS/CCS, while composite works contracts fall under "Works Contract Service." The Tribunal set aside the impugned orders and allowed the appeals with consequential reliefs as per law. The miscellaneous applications for change in Cause Title were also allowed.
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