2017 (7) TMI 1468 - AT - Service Tax

Demand of service tax under the construction of complex services - period from 2005-06 to 2008-09 - HELD THAT - The contracts executed by the appellants in relation to construction of residential complex were subjected to service tax under construction of complex service prior to 01.06.2007 and under works contract services after 01.06.2007. Admittedly, these contracts are of composite nature, involving supply of materials as well as provision of service. In terms of decision of the Hon ble Supreme Court in the case of COMMISSIONER, CENTRAL EXCISE CUSTOMS VERSUS M/S LARSEN TOUBRO LTD. AND OTHERS 2015 (8) TMI 749 - SUPREME COURT , such composite contracts are liable to service tax only w.e.f. 01.06.2007, under the category of works contract services . Further, it is also noted that the original authority confirmed the service tax liability under residential complex service / works contract service on the ground that the appellants constructed residential units having common area and facility in the colony, in terms of agreement with Rajasthan Housing Board. This aspect is being contested by appellant. The factual details relevant to the present case has not been brought out with supporting evidence. Without inferring the fact regarding applicability of the tax entry in the present case, it is necessary to examine as to whether the residential complex, having individual houses, is in fact, having common areas as mentioned in the statutory definition. This can be verified from the approved layout and other supporting documents. In the absence of specific finding in this regard, it will not be correct to conclude on a particular tax entry. The impugned order as it stands with reference to tax liability of the appellant for construction of residential complex, is not sustainable. Accordingly, that portion of the finding is set aside and the matter is remanded back to the original authority for a fresh decision - Appeal allowed by way of remand.

Summary

Issues:
- Appeal against the order confirming service tax liability for construction of residential complex services
- Applicability of service tax under "construction of complex service" and "works contract services"
- Interpretation of the term "Residential Complex"
- Need for specific findings and supporting evidence in determining tax liability

Analysis:
The appellant filed an appeal against an order confirming service tax liability for construction of residential complex services, as defined under section 65 (105) (zzzh) of the Finance Act 1994. The original authority had confirmed the demand of service tax for the period from 2005-06 to 2008-09, which was upheld in the impugned order. The contracts executed by the appellant were initially subjected to service tax under "construction of complex service" and later under "works contract services." The Tribunal noted that composite contracts involving supply of materials and provision of services are liable to service tax only from 01.06.2007, as per the decision of the Hon'ble Supreme Court in Larsen & Toubro case. The original authority confirmed the service tax liability based on the construction of residential units with common areas and facilities, as per an agreement with the Rajasthan Housing Board. However, the Tribunal found that the factual details supporting the tax liability were lacking, emphasizing the need to examine whether the residential complex had common areas as per the statutory definition. The Tribunal concluded that without specific findings and supporting evidence, it would be incorrect to determine the tax liability under a particular category.

The Tribunal set aside the portion of the impugned order related to the tax liability for construction of residential complex services, remanding the matter back to the original authority for a fresh decision. The original authority was directed to consider the law laid down by the Hon'ble Supreme Court in the Larsen and Toubro case and to assess the factual details regarding the construction of the residential complex, specifically focusing on the availability of common facilities within the approved layout as per the statutory definition. The appellant was granted the opportunity to present their case before a fresh decision was made by the original authority. The appeal was allowed to this extent, with the order pronounced in the open court on 07.07.2017.