2023 (10) TMI 228 - AT - Service Tax

Levy of service tax - Construction of Complex Services - developing and constructing Residential Complex at Zirakpur having more than twelve Residential units - applicability of clarification by CBEC vide Circular No. 108/2/2009-ST dt. 29-01-2009 - HELD THAT - This issue is no more res-integra and has been considered by various benches of the Tribunal and the Tribunal has consistently held that an activity undertaken by a Real estate builder/developer is liable to tax w.e.f 01-07-2010 only with the insertion of Explanation under Section 65(105) (zzzh) to the Finance Act, 2010. It is pertinent to refer the decision of the Tribunal in the case of C.C.E C.S.T. -BANGALORE SERVICE TAX- I VERSUS KEERTHI ESTATES PVT. LTD. 2018 (10) TMI 840 - CESTAT BANGALORE wherein the Tribunal has considered the identical issue as involved in the present case and has held we are of the considered view that prior to 1-7-2010 builders/developers are not liable to pay service tax for the Construction of Residential Complex Service and in the present case, the period involved is from 16-6-2005 to 31-1-2007. The Master Circular No. 96/7/2007-ST dated 23-08-2007 issued by CBEC also clarified this issue regarding the leviability of service tax on the Builders/Developers. The impugned order is not sustainable in law and therefore, the same is set-aside by allowing the appeal of the appellant - Appeal allowed.

Summary

Issues:
The appeal against the order passed by the Commissioner (Appeals) rejecting the appellant's appeal regarding the demand for service tax, interest, and penalty.

Summary:
The appellant was involved in developing a Residential Complex and was registered under the category of "Construction of Complex Services" but failed to submit returns or pay service tax liability. A show cause notice was issued for recovery of Service Tax. The original authority confirmed the demand but did not impose a penalty. The appellant appealed, which was rejected by the Ld. Commissioner (Appeals), leading to the present appeal.

The appellant argued that the impugned order did not consider relevant facts, laws, and circulars issued by CBEC. Referring to various circulars and decisions, the appellant contended that the activity of construction of residential complexes by builders/developers was taxable only from 01-07-2010. The Tribunal had consistently held that builders were not liable to pay service tax for construction services before this date.

After considering submissions, the Tribunal found that the issue had been settled in various decisions and clarified by CBEC circulars. The Tribunal cited precedents where it was held that service tax was not chargeable on construction of residential complexes before 01-07-2010. Consequently, the impugned order was set aside, the appeal was allowed, and the penalties imposed were dismissed.

In conclusion, the Tribunal found the impugned order unsustainable in law and allowed the appeal of the appellant, providing consequential relief as per law. The decision was based on the settled issue that builders/developers were not liable to pay service tax for the construction of residential complexes before 01-07-2010, as established by previous Tribunal decisions and CBEC circulars.