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2019 (2) TMI 84 - AT - Service TaxWorks Contract service - construction of flats - composite contract involving supply and transfer of property in goods during the execution of contract - demand of service tax with interest and penalties - Held that - The issue is decided by the Bench in the case of M/s. Real Value Promoters Pvt. Ltd. 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. The demand is not sustainable - appeal dismissed - decided against Revenue.
Issues Involved:
1. Taxable value determination for landowner's portion. 2. Classification of services under composite works contract. 3. Applicability of service tax prior to and post 1.6.2007. 4. Appropriateness of demand under "Construction of Residential Complex Service." Issue-wise Detailed Analysis: 1. Taxable Value Determination for Landowner's Portion: The Revenue contended that the Commissioner (Appeals) failed to account for the true value of the services provided to the landowner, arguing that the assessment was inconsistent with Section 67 of the Finance Act, 1994 and the Service Tax (Determination of Value) Rules, 2006. The appellant argued that the amount was calculated without deducting the UDS portion for each project. The Tribunal found that the issue was already settled in a previous case (M/s. Real Value Promoters Pvt. Ltd.) where it was ruled that the construction activities were composite works contracts, thus not liable for service tax prior to 1.6.2007 and only under "Works Contract Service" post 1.6.2007. 2. Classification of Services Under Composite Works Contract: The Tribunal reiterated that the construction activities involved both material supply and value services, classifying them as composite works contracts. Referring to the Supreme Court judgment in Larsen & Toubro, it was established that such contracts could not be classified under "Commercial or Industrial Construction Service" or "Construction of Complex Service" unless they were services simpliciter. The Tribunal emphasized that composite works contracts should be taxed under "Works Contract Service" as defined in Section 65(105)(zzzza). 3. Applicability of Service Tax Prior to and Post 1.6.2007: The Tribunal confirmed that prior to 1.6.2007, composite works contracts were not liable for service tax. Post 1.6.2007, these contracts could only be taxed under "Works Contract Service." The Tribunal supported this with references to the Union Finance Minister’s budget speech in 2007 and the Supreme Court judgment in Larsen & Toubro, which clarified that composite contracts were brought under service tax ambit only from 1.6.2007. 4. Appropriateness of Demand Under "Construction of Residential Complex Service": The Tribunal reviewed the lower authorities' findings and the appellant's arguments, concluding that the demand under "Construction of Residential Complex Service" was not sustainable. The Tribunal relied on multiple precedents, including decisions in cases like Commissioner, Service Tax, New Delhi Vs. Swadeshi Construction Company and Skyway Infra Projects Pvt. Ltd. Vs. Commissioner of Service Tax, Mumbai, which consistently held that composite works contracts could not be taxed under categories meant for services simpliciter. Conclusion: The Tribunal set aside the demand, ruling that the services provided by the appellant were composite works contracts and could not be taxed under "Commercial or Industrial Construction Service" or "Construction of Complex Service." The Tribunal dismissed the Department's appeal and allowed the assessee’s appeal, stating that the demand was not sustainable. Result: (i) Department Appeal (ST/250/2012) dismissed. (ii) Assessee’s appeal (ST/274/2012) allowed.
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