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2023 (2) TMI 779 - AT - Service TaxLevy of Service tax - Construction of Residential Complex Service - Works Contract Service - appellant were engaged by Gujarat State Police Housing Corporation Ltd. (GSPHCL) - HELD THAT - The definition of residential complex in Works Contract Service and Construction of Residential Complex Service excludes from the levy of Service Tax complex which is constructed by a person directly engaging any other person for designing or planning of the lay out and the construction of such complex is intended for personal use as residence by such persons. This expression has been interpreted by Tribunal in the case of M/S. SIMA ENGINEERING CONSTRUCTIONS, S. RAJANGAM, T.M. SARAVANAN, M/S. MARIMUTHU GOUNDER SONS VERSUS CCE, TRICHY 2018 (5) TMI 405 - CESTAT CHENNAI where it was held that similar issue decided in the case of Nitesh Estates Vs. Commissioner of Central Excise 2015 (11) TMI 219 - CESTAT BANGALORE , where it was held that If the land owner enters into a contract with a promoter/builder/developer who himself provided service of design, planning and construction and if the property is used for personal use then such activity would not be subject to service tax. The use of the residential complex by (GSPHCL) is excluded from the definition of residential Complex as intended for personal use as residence by such persons - Appeal allowed.
Issues Involved:
1. Demand of service tax under "Construction of Residential Complex Service." 2. Demand of service tax under "Works Contract Service." Issue-Wise Detailed Analysis: 1. Demand of Service Tax under "Construction of Residential Complex Service": The appellant, M/s. R N Dobairya, contested the demand of service tax on the grounds that their construction activities for Gujarat State Police Housing Corporation Ltd. (GSPHCL) do not fall under the definition of "Construction of Residential Complex Service." The Tribunal examined the statutory definition of a "residential complex," which excludes complexes constructed for personal use, including use as a residence by another person on rent or without consideration. The Tribunal referenced prior decisions, such as Sima Engineering and Nithesh Estates, which clarified that residential complexes built for personal use, including for employees of an organization, are excluded from service tax. The Tribunal concluded that the residential complex constructed by the appellant for GSPHCL, intended for use by police personnel, falls under this exclusion, thereby negating the service tax liability. 2. Demand of Service Tax under "Works Contract Service": The appellant also argued that their activities do not constitute a "Works Contract Service" as defined under section 65(105)(zzzza) of the Finance Act, 1994. The Tribunal noted that a works contract involves transfer of property in goods and is for purposes such as erection, commissioning, installation, or construction activities. The Tribunal referenced the case of Lanco Tanjore Power Co. Ltd., where it was held that construction of residential units for personal use of employees does not attract service tax under "Works Contract Service." Similarly, in the present case, the Tribunal found that the construction activity for GSPHCL was intended for personal use by police personnel, thus falling outside the purview of taxable works contract services. Conclusion: The Tribunal relied on multiple precedents, including Sima Engineering, Nithesh Estates, Lanco Tanjore Power Co. Ltd., and Khurana Engineering, to determine that the construction activities undertaken by the appellant were for the personal use of GSPHCL's employees. Consequently, these activities are excluded from the definitions of both "Construction of Residential Complex Service" and "Works Contract Service." Therefore, the Tribunal set aside the impugned order demanding service tax and allowed the appeal in favor of the appellant. Final Order: The Tribunal concluded that the use of the residential complex by GSPHCL is excluded from the definition of a residential complex as it is intended for personal use as a residence by such persons. The appeal was allowed, and the impugned order was set aside.
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