2020 (8) TMI 3 - AT - Service Tax

Reverse Charge Mechanism - levy of service tax on Construction of Residential Complex Service for the period upto 30.06.2012 and same service after 01.07.2012 - Circular No.332/35/2006-TRU dated 01.08.2006 and No.19/7/2007-ST dated 23.08.2007 - HELD THAT - There is no evidence on record to establish that the appellant had constructed a residential complex before 30.06.2012 or the appellant had constructed a complex with more than 2 residential units together after 01.07.2012. The appellant did not provide residential complex service prior to 01.07.2012 and appellant was eligible for exemption under Notification No.25/2012-ST dated 20.06.2012 at Serial No.14 for activity of construction undertaken by him for the period subsequent to 01.07.2012. Further, appellant was not liable to pay Service Tax under Reverse Charge Mechanism. Appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Whether the appellant was liable to pay service tax for 'Construction of Residential Complex Service'?
2. Whether the appellant was liable to pay service tax under Reverse Charge Mechanism after 01/07/2012?

Analysis:

Issue 1: Liability for 'Construction of Residential Complex Service'
The case involved a dispute regarding the liability of the appellant to pay service tax for 'Construction of Residential Complex Service.' The revenue initiated investigations based on the activities of the appellant and issued a show cause notice demanding service tax. The appellant contended that their activities did not fall under the category for which service tax was leviable. They argued that the transactions were essentially sale and purchase of immovable property and not constructional activities subject to service tax. The appellant also cited circulars from CBEC to support their position. The Original Adjudicating Authority upheld the demand for service tax, penalties, and interest. However, the Tribunal noted that there was no evidence to establish that the appellant had constructed a residential complex before a certain date or with more than a specified number of residential units. Consequently, the Tribunal held that the appellant was not liable for the service tax prior to a specific date and was eligible for exemption under the relevant notification for the period thereafter.

Issue 2: Liability under Reverse Charge Mechanism
The appellant was also contesting the liability for service tax under the Reverse Charge Mechanism post a particular date. They argued that the demand under this mechanism lacked merit and failed to consider the legal provisions and requirements of the Charging Notification. The Tribunal, after considering the submissions and perusing the records, found that the demand under the Reverse Charge Mechanism was not justified. The Tribunal set aside the impugned order, allowing the appeal and granting the appellant consequential relief as per the law.

In conclusion, the Tribunal ruled in favor of the appellant on both issues, holding that they were not liable to pay service tax for 'Construction of Residential Complex Service' and under the Reverse Charge Mechanism. The judgment provided a detailed analysis of the contentions raised by both parties and the legal provisions applicable to the case, ultimately resulting in a favorable outcome for the appellant.