2024 (5) TMI 128 - AT - Service Tax

Levy of service tax - Construction of Residential Complex service - payments received where number of units are 12 or less than that - land owner shares - composite contracts or not - HELD THAT - The definition of Construction of Residential Complex does not apply to constructions in the nature of composite contracts which involve both providing services as well as use of goods and materials. The services which involve composite contracts fall under the definition of Works Contract Services which was brought forth from 01.06.2007. Therefore in cases where there is provision of services of composite nature the demand can be raised only under WCS. The demand under Construction of Residential Complex would not apply as this definition deals with service simplicitor. The Tribunal in the case of REAL VALUE PROMOTERS PVT. LTD. CEEBROS PROPERTY DEVELOPMENT PRIME DEVELOPERS VERSUS COMMISSIONER OF GST CENTRAL EXCISE CHENNAI 2018 (9) TMI 1149 - CESTAT CHENNAI had considered this issue and held that the demand under Residential Complex Services / CICS / CCS cannot sustain prior to 01.07.2012 for the reason that these services do not apply to composite construction services. The decision in the case of Real Value Promoters Pvt. Ltd. was followed by the Tribunal in the case of Jain Housing Construction Limited which has been sustained by the Hon ble Apex Court. Further this Tribunal in the case of M/S. SRINIVASA SHIPPING PROPERTY DEVELOPERS LTD. VERSUS THE COMMISSIONER OF GST CENTRAL EXCISE CHENNAI 2023 (12) TMI 1003 - CESTAT CHENNAI on similar set of facts and issue had held that the demand under Residential Complex Services cannot sustain. The demand raised under Construction of Residential Complex Services cannot sustain - the impugned order is set aside - Appeal allowed.

Summary

Issues involved:
The issues involved in this judgment are related to the demand of service tax under Construction of Residential Complex services, specifically focusing on the applicability of the definition of "Residential Complex" and Works Contract Services u/s 65(105)(zzzza).

Details of the judgment:

Issue 1: Demand of Service Tax under Construction of Residential Complex Services
The appellant, engaged in providing construction of residential complex services, was found to have not paid service tax on certain projects. The Department issued a Show Cause Notice demanding service tax on land owner shares. The appellant argued that the demand cannot be sustained under Construction of Residential Complex Services due to the nature of composite contracts involving both services and materials. The Tribunal referred to previous decisions and held that the demand under Construction of Residential Complex Services cannot be sustained for composite contracts prior to 01.06.2007. The Tribunal's decision was supported by the Hon'ble Apex Court in a related case. Therefore, the demand under Construction of Residential Complex Services was deemed unsustainable.

Issue 2: Applicability of Works Contract Services
The Tribunal clarified that the definition of Construction of Residential Complex does not apply to composite contracts involving both services and materials. Such contracts fall under Works Contract Services, effective from 01.06.2007. The Tribunal relied on previous cases to support the view that demands for composite construction services cannot be raised under Construction of Residential Complex Services. The Tribunal set aside the impugned order and allowed the appeal with consequential reliefs, if any, as per law.

This judgment provides clarity on the distinction between Construction of Residential Complex Services and Works Contract Services, emphasizing the importance of understanding the nature of contracts in determining the applicability of service tax.