2024 (3) TMI 74 - AT - Service Tax

Non-payment of service tax - Construction of Residential Complex Service (CRCS for short) and Work Contract Service (WCS) - appellant appears to have informed that their customers did not pay service tax and hence, the same was not paid from October 2008 onwards - HELD THAT - Undisputedly the service rendered by the appellant is clearly in the nature of works contract since in respect of all the projects undertaken by it, the agreements itself clearly specify that it was for the developer to use standard materials for construction. Further, the Revenue has not at all disputed that the appellant was only a builder and hence, it is clear that the appellant, as a builder/developer had provided the work contract services and the period involved is prior to 01.07.2010, which is before the introduction of explanation to Section 65 (105) (ZZZH) vide Finance Act, 2010. Benefit derived from the order of principal Bench of CESTAT, New Delhi in the case of M/S KRISHNA HOMES VERSUS CCE, BHOPAL AND CCE, BHOPAL VERSUS M/S RAJ HOMES 2014 (3) TMI 694 - CESTAT AHMEDABAD wherein, the Ld. Bench has examined the effect of introduction of the above explanation to Section 65 (105) (ZZZH) ibid, wherein it has been clarified that no Service Tax could be levied prior to 01.07.2010 under CRCS for which reference has also been made to the clarification issued by CBSE in Circular No.108/2/2009-Service Tax dated 29.01.2009. Further, the question as to whether the above would apply to cases where the services were rendered as WCS was also examined and answered in affirmative in the above case as well, by the Ld. Bench, by following the decision of the Apex Court in the case of M/S. LARSEN TOUBRO LIMITED ANOTHER VERSUS STATE OF KARNATAKA ANOTHER 2013 (9) TMI 853 - SUPREME COURT . The demand raised against the appellant lacks merit and hence, the impugned order cannot sustain - Appeal allowed.

Summary

Issues involved:
The issues involved in the judgment are the liability of the appellant to pay service tax under Construction of Residential Complex Service (CRCS) and Work Contract Service (WCS) for the period from October 2008 to June 2010, and the correctness of the demand of service tax on the appellant.

Liability of the appellant for service tax:
The revenue contended that the appellant did not pay service tax from October 2008 onwards, leading to the issuance of a Show Cause Notice proposing recovery of service tax, interest, and penalties. The appellant denied tax liability, arguing they were only the developer and should not be liable for service tax prior to 01.07.2010. The Adjudicating Authority confirmed the demands, but the appellant appealed, citing settled legal positions and judgments supporting their stance.

Decision on liability for service tax:
The Tribunal analyzed the nature of services provided by the appellant, concluding that they were in the form of works contract services. It was established that the appellant, as a builder/developer, provided work contract services before 01.07.2010, prior to the introduction of relevant provisions. Referring to legal precedents and clarifications, the Tribunal found that no service tax could be levied before 01.07.2010 under CRCS. The Tribunal also noted that the decisions cited by the appellant's advocate aligned with the legal principles established in previous cases. Ultimately, the Tribunal ruled that the demand for service tax against the appellant lacked merit, overturning the impugned order and allowing the appeal.

Separate Judgement:
No separate judgment was delivered by the judges in this case.