2019 (4) TMI 590 - AT - Service Tax

Works contract service - Scope of SCN - Demand of service tax under the head Construction of Residential Complex service - benefit of abatement of 67% - Held that - THe matter is indeed covered by the case laws of M/s. Larsen and Toubro Ltd. 2015 (8) TMI 749 - SUPREME COURT and M/s. Real Value Promoters Pvt. Ltd. 2018 (9) TMI 1149 - CESTAT CHENNAI relied upon by her. Thus, when the service performed is Works Contract Service for the entire period covered by the impugned order, the demand of service tax under Construction of Residential Complex instead will only serve to vitiate the proceedings ab initio - the entire demand cannot be sustained and will require to be set aside - decided in favor of assessee.

Summary

Issues:
1. Tax liability for construction of residential complexes under service tax category.
2. Validity of demand under 'Construction of Residential Complex' service.
3. Applicability of Works Contract Service.
4. Appeal against the modified order by the Commissioner (Appeals).
5. Appeal by the Revenue against relief granted to the assessee.
6. Interpretation of relevant case laws - M/s. Larsen and Toubro Ltd. and M/s. Real Value Promoters Pvt. Ltd.
7. Justification of demand and appeal by the Department.

Analysis:
1. The case involved a tax liability dispute regarding the construction of residential complexes under the service tax category. The Original Authority confirmed a tax liability of ?24,14,726 with penalties and interest. The Commissioner (Appeals) modified the order, reducing the demand to ?9,00,524, leading to appeals from both the assessee and the Revenue.

2. The assessee argued that they were engaged in Works Contracts, not just 'Construction of Residential Complexes.' Citing relevant case laws like M/s. Larsen and Toubro Ltd. and M/s. Real Value Promoters Pvt. Ltd., the assessee contended that the demand under the 'Construction of Residential Complex' category was not sustainable.

3. The Tribunal acknowledged the argument presented by the assessee, emphasizing that the service performed was Works Contract Service throughout the period in question. Relying on the precedents of M/s. Larsen and Toubro Ltd. and M/s. Real Value Promoters Pvt. Ltd., the Tribunal concluded that demanding service tax under 'Construction of Residential Complex' would vitiate the proceedings.

4. Consequently, the Tribunal set aside the entire demand, allowing the appeal filed by the assessee (ST/40434/2013) with consequential benefits. The appeal by the Revenue (ST/40538/2013) was rejected, as the demand was found unjustified based on the nature of the services provided by the assessee.

5. In the final disposition, the Tribunal upheld the assessee's argument regarding the nature of services provided, highlighting the inapplicability of the demand under the 'Construction of Residential Complex' service category. The judgment was pronounced in open court, with the appeals being disposed of accordingly.