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2024 (1) TMI 680 - AT - Service TaxLevy of Service Tax - construction of residential/commercial complex service in a case of composite contract which includes services as well as the material prior to 01.06.2007 - HELD THAT - This issue is no more res integra and has been settled by the Honble Apex Court in the case of COMMISSIONER, CENTRAL EXCISE CUSTOMS VERSUS M/S LARSEN TOUBRO LTD. AND OTHERS 2015 (8) TMI 749 - SUPREME COURT . Reference made to the decision of the Real Value Promotors Pvt Ltd 2018 (9) TMI 1149 - CESTAT CHENNAI wherein coordinate Bench of the Tribunal has discussed all the provisions regarding construction of complex service residential/complex and Works Contract service which was introduced w.e.f. 01.06.2007 and has held that only those contracts which were service simpliciter (not involving supply of goods) would be subject to levy of service tax under CICS/CCS/RCS prior to 1.6.2007 and after. The impugned orders are not sustainable in law and thereafter, the same is set aside - appeal allowed.
Issues Involved:
1. Whether the service tax can be demanded under the category of construction of residential/commercial complex service in a case of composite contract which includes services as well as the material prior to 01.06.2007. 2. Whether the service tax can be demanded under the category of construction of residential/commercial complex service after 01.06.2007 for composite contracts. Issue-wise Summary: 1. Pre-01.06.2007 Service Tax Demand: The core issue is whether service tax can be levied on composite contracts involving both service and material components under the category of construction of residential/commercial complex service prior to 01.06.2007. The Tribunal referred to the decision of the Hon'ble Apex Court in Commissioner of C.Ex. & Cus., Kerala Vs. Larsen & Toubro Ltd. (2015 (39) S.T.R. 913 (S.C.)), which held that composite works contracts cannot be taxed under service categories like construction services before 01.06.2007. The Tribunal also cited multiple decisions, including Real Value Promotors Pvt Ltd and Skyway Infra Projects Pvt. Ltd., which confirmed that service tax on composite contracts prior to 01.06.2007 is invalid as the Finance Act did not provide a mechanism for taxing such contracts. 2. Post-01.06.2007 Service Tax Demand: For the period after 01.06.2007, the Tribunal examined whether composite contracts could be taxed under the construction of residential/commercial complex service. The Tribunal reiterated that such contracts should be classified under the "Works Contract Service" as defined under Section 65(105)(zzzza) of the Finance Act, 1994. The Tribunal noted that even after 01.06.2007, composite contracts cannot be taxed under construction service categories but should fall under the works contract service. This was supported by decisions such as URC Construction (P) Ltd. and India Guniting Corporation, which emphasized that composite contracts involving both service and material components should be taxed under the works contract service category. Conclusion: The Tribunal concluded that the impugned orders demanding service tax under the construction of residential/commercial complex service for composite contracts, both for the period prior to and after 01.06.2007, are not sustainable. The demands were set aside, and the appeals were allowed with consequential relief as per law.
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