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2024 (5) TMI 199 - AT - Service TaxLevy of service tax - Construction of Residential Complex Services - construction of residential complex for Army personnel - Ministry of Finance letter F. No. 137/26/2006-CX.4 dated 05.07.2006 - period 16.06.2005 to 31.05.2007 - HELD THAT - It is found that from period prior to 01.06.2007 service tax is not leviable and in view of the judgment of the Hon ble Supreme Court in the matter of COMMISSIONER, CENTRAL EXCISE CUSTOMS VERSUS M/S LARSEN TOUBRO LTD. AND OTHERS 2015 (8) TMI 749 - SUPREME COURT , and in the case of Total Environment Building Systems Pvt., Ltd., 2022 (8) TMI 168 - SUPREME COURT , wherein it is held that 'Works contract were not chargeable to service tax prior to 1.6.2007'. As regards the period from 01.06.2007 to 31.05.2010, it is covered by the decisions of Tribunal in the case of M/S. SUGANDHA CONSTRUCTION PVT. LTD. VERSUS CCE, BHOPAL 2017 (12) TMI 446 - CESTAT NEW DELHI where it was held that ' Having found that the Service Tax was not at all leviable on service element of a works contract, Parliament felt the need for the amendment and was so incorporated by the Finance Act, 2007.'. The impugned order is set aside - appeal allowed.
Issues:
The judgment involves the liability of service tax on 'Renting of Immovable Property Service' and 'Works Contract Service' u/s 68, 77, and 78 of the Finance Act, 1994. Liability for Service Tax - Period Prior to 01.06.2007: The appellant, engaged in construction, argued that prior to 01.06.2007, there was no charging section for service tax on 'Works contract service'. They relied on the judgment of the Hon'ble Supreme Court in CC Vs. Larsen & Toubro Ltd (2015 (39) STR 913 (SC)) to support their claim that demand for the period from 2005-2007 is unsustainable. The Tribunal noted that tax liability for residential units built for the Ministry of Defence personnel was clarified by the jurisdictional Commissionerate, stating that if the layout does not require approval by any authority, it is excluded from tax entry. Consequently, the construction activity for the Ministry of Defence personnel was found not liable for service tax for the period prior to 01.06.2007. Liability for Service Tax - Period from 01.06.2007 to 31.05.2010: Regarding the liability for service tax for the period from 01.06.2007 to 31.05.2010, the appellant argued that service tax is not applicable to construction of residential complexes for the Ministry of Defence, as layouts for Defence Services do not require approvals as clarified by the Ministry of Finance. They cited relevant judgments and circulars to support their position. The Tribunal, considering the submissions and precedents, concluded that the appellant is not liable for service tax for construction of residential units for the army personnel during this period. Conclusion: The Tribunal held that the appellant is not liable for service tax for the construction of residential units for the Ministry of Defence personnel, both for the period prior to 01.06.2007 and from 01.06.2007 to 31.05.2010. The judgment was based on the interpretations of relevant laws, circulars, and judicial precedents, including the decisions of the Hon'ble Supreme Court and other Tribunals. As a result, the impugned order was set aside, and the appeal was allowed with consequential relief, if any, in accordance with the law.
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