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2024 (5) TMI 1197 - AT - Service TaxLiability of promoter / builder / developer to pay service tax - construction of residential complexes - period January 2009 to September 2009 and October 2009 to September 2010 - benefit of abatement. Liability of promoter / builder / developer to pay service tax - construction of residential complexes - period January 2009 to September 2009 and October 2009 to September 2010 - HELD THAT - The appellant is a builder / promoter. The issue as to whether builder / promoter is liable to pay service tax prior to 1.7.2010 was considered by the Tribunal in the case of Krishna Homes 2014 (3) TMI 694 - CESTAT AHMEDABAD . The Tribunal referred Board s Circular No.108/02/2009-ST dt. 21.09.2009 and also considered the Explanation added to Section 65 (105) (zzzh) which was introduced with effect from 1.7.2010 and held that promoter / builder / developer is not liable to pay service tax under construction of Residential Complex for the period prior to 1.7.2010. Benefit of abatement - HELD THAT - The works executed are composite in nature which involves use of materials as well as rendition of services. The Tribunal in the case of Jain Housing Construction Ltd. 2023 (2) TMI 1044 - CESTAT CHENNAI had followed the decision in the case of Real Value Promoters Pvt. Ltd. Vs CGST CE, Coimbatore 2018 (9) TMI 1149 - CESTAT CHENNAI and held that contracts of composite nature cannot be subjected to levy of service tax under RCS prior to 1.7.2010. The decision in the case of Jain Housing Construction Ltd. was maintained by the Apex Court in 2023 (9) TMI 816 - SC ORDER - the demand for the period upto 1.7.2010 cannot sustain and requires to be set aside. Thus, the demand has been confirmed only for the construction activities undertaken by appellant for the period prior to 1.7.2010. Therefore, the demand for the period prior to 1.7.2010 cannot sustain - the order of appropriation of Rs.67,77,193/- paid for the period after 1.7.2010 need not interference. The appellant does not contest this. The demand of service tax, interest and penalties for the period upto 1.7.2010 set aside - appeal allowed.
Issues Involved:
1. Liability to pay service tax for the construction of residential complexes for the period January 2009 to September 2009 and October 2009 to September 2010. 2. Applicability of Board's Circular No.108/02/2009-ST dated 29.01.2009. 3. Classification of services under "Construction of Residential Complex Services" versus "Works Contract Services". 4. Appropriation of service tax paid for the period July 2010 to September 2010. Issue-wise Detailed Analysis: 1. Liability to Pay Service Tax for the Construction of Residential Complexes: The appellant, a partnership firm engaged in providing construction services, was audited by the Service Tax Commissionerate, Chennai. It was noted that they had paid service tax for 166 units constructed up to December 2008 but did not pay for the remaining period. The appellant contended that they were not liable to pay service tax for the 6 flats sold after obtaining the completion certificate. The Tribunal referred to the case of Krishna Homes Vs CCE Bhopal - 2015 (34) STR 881 (Tri.-Del.), which held that builders/promoters/developers are not liable to pay service tax for the period prior to 1.7.2010. The Tribunal concluded that the demand for the period prior to 1.7.2010 cannot sustain and requires to be set aside. 2. Applicability of Board's Circular No.108/02/2009-ST dated 29.01.2009: The appellant relied on the Board's Circular No.108/02/2009-ST dated 29.01.2009, which clarified that a builder/promoter/developer is not required to pay service tax up to 1.7.2010. The Tribunal acknowledged this circular and noted that the adjudicating authority had considered it. The Tribunal affirmed that the circular supports the appellant's position that no service tax is payable for the period before 1.7.2010. 3. Classification of Services under "Construction of Residential Complex Services" versus "Works Contract Services": The appellant argued that the construction services were composite in nature, involving both materials and services, and thus should be classified under "Works Contract Services" rather than "Construction of Residential Complex Services". The Tribunal referred to the decision in Jain Housing & Construction Ltd. Vs CST - 2023 (10) Centax 170 (Tri.-Mad), which was upheld by the Supreme Court, confirming that composite contracts cannot be subjected to service tax under "Construction of Residential Complex Services" prior to 1.7.2010. The Tribunal agreed with this classification and set aside the demand for the period up to 1.7.2010. 4. Appropriation of Service Tax Paid for the Period July 2010 to September 2010: The appellant had paid Rs.67,77,193/- as service tax for the period from July 2010 to September 2010, which was appropriated by the adjudicating authority. The appellant did not contest this amount. The Tribunal noted that the demand in the SCN was for the balance amount after considering the paid amount. The Tribunal did not interfere with the order of appropriation of the paid amount and acknowledged that the appellant is liable for the service tax for the period after 1.7.2010. Conclusion: The Tribunal set aside the demand of service tax, interest, and penalties for the period up to 1.7.2010, based on the applicability of the Board's Circular and the classification of services. The appropriation of the service tax paid for the period from July 2010 to September 2010 was upheld. The appeal was allowed with consequential relief, if any.
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