2024 (1) TMI 678 - AT - Service Tax

Refund claim - appellant had not deposited service tax - Housing Board had deposited 50% of service tax payable by them on such construction - reserve charge mechanism as per N/N. 20.06.2012 and the same was deducted by them from bills issued by the appellant - exemption as per Serial No. 14 (b) of the Notification No. 25/ 2012-ST dated 20.06.2012 - HELD THAT - The Tribunal, ultimately in the decision dated 27.02.2023 2023 (3) TMI 1273 - CESTAT NEW DELHI , held that The contention of the appellant is that independent residential houses were built, each having a separate entry with separate electricity and water connection and a single building did not have more than twelve residential units. It is for this reason that the appellant contends that the houses constructed by it for the Rajasthan Housing Board will not be covered by the definition of a residential complex and, therefore, would not be taxable as the contract executed with the Housing Board was not in relation to construction of a complex. Impugned order set aside - appeal allowed.

Summary

Issues involved:
The judgment involves issues related to the refund of service tax on construction of individual and independent residential houses and multi-story buildings, exemption under Notification No. 25/2012-ST, unjust enrichment, and interpretation of the definition of a "residential complex."

Refund of service tax on individual residential houses:
The appellant constructed individual residential houses based on a work order from the Housing Board, who had deposited 50% of the service tax. The appellant claimed a refund under Notification No. 25/2012-ST, asserting that the construction was exempted. The impugned order denied the refund due to multiple houses in the same area and inclusion of service tax in the work orders. However, the Tribunal allowed similar appeals, rejecting the unjust enrichment argument and granting the refund.

Refund of excess service tax on multi-story building:
Regarding the refund of excess service tax on a multi-story building, the appellant had deposited the full tax amount instead of 50%, seeking a refund of the excess. The Commissioner (Appeals) initially denied the refund, citing similar reasons as in another case. However, the Tribunal overturned this decision, directing the refund and rejecting the unjust enrichment argument.

Interpretation of "residential complex" definition:
The Tribunal accepted the appellant's argument that the individual houses constructed did not constitute a "residential complex" as each had separate amenities and less than twelve units in a single building. Citing a Division Bench judgment, the Tribunal allowed the refund based on this interpretation.

Conclusion:
In conclusion, the judgment set aside the Commissioner (Appeals) order and allowed the appeal for both refund issues, emphasizing the absence of unjust enrichment and the non-applicability of service tax due to the nature of the construction.