2019 (5) TMI 659 - AT - Service Tax

Construction of residential complex service - said flats were for use as staff quarters by the said university - whether the definition of residential complex service is fulfilled or not? - grounds raised by Revenue is that the CBEC through clarification dated 24.05.2010 had clarified that if NBCC constructed residential houses for Central Govt. then the same were not taxable, but if NBCC further awards a contract to sub-contractors, then sub-contractors were liable to pay Service Tax - HELD THAT - On careful consideration of the definition of residential complex service we note that flats constructed for personal use are not covered by the definition of residential complex - appeal dismissed - decided against Revenue.

Summary

Issues:
1. Interpretation of the definition of 'residential complex service' for service tax liability on construction of staff quarters.
2. Application of exclusion clause for personal use in determining tax liability.
3. Clarification by Central Board of Excise & Customs regarding taxation on construction for Central Govt.

Analysis:
The case involved a dispute regarding the tax liability on the construction of 32 flats for the staff of a university. The Revenue claimed around &8377; 47.46 Lakhs as tax on the construction, treating it as a service covered by 'construction of residential complex service.' However, the Commissioner (Appeals) considered the purpose of the flats as staff quarters for personal use by the university, which did not align with the definition of 'residential complex service.' Consequently, the Commissioner dropped the proceedings, leading to the Revenue's appeal before the Tribunal.

The Revenue argued that a clarification by the Central Board of Excise & Customs stated that if residential houses were constructed for the Central Government by a specific entity, they were not taxable. However, if the entity awarded contracts to sub-contractors, the sub-contractors were liable to pay Service Tax. Upon reviewing the definition of 'residential complex service,' the Tribunal found that flats constructed for personal use were not covered by this definition. Therefore, the Tribunal concluded that there was no merit in the Revenue's appeal and upheld the Commissioner's decision to reject the tax demand. The Tribunal did not interfere with the Commissioner's order, thereby dismissing the Revenue's appeal.