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2024 (7) TMI 552 - AT - Service TaxContinuation of show cause notice dated 19.04.2010 - demand for the earlier period from 16.06.2005 to May 2009 in the previous show cause notice on very same issue - levy of service tax on construction of commercial and residential complexes - HELD THAT - The Tribunal after considering the facts had set aside the demand on the basis of the Board s Circular No.108/02/2009-ST dated 29.01.2009. As per the said Circular Board has clarified that a promoter/developer/builder is not liable to pay service tax prior to 01.07.2010. So also the decision 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 was followed to hold that the promoter developer builder is not liable to pay service tax for the period prior to 01.07.2010. Moreover the works executed being composite in nature 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 held that the demand of service tax for composite contracts can be made only under Works Contract Services. For this reason also the demand requires to be set aside. The period involved being prior to 01.07.2010 the decision of the Tribunal in the appellant s own case for the previous period would be squarely applicable for this period also. There are no grounds to take a different view for this subsequent show cause notice. The demand of service tax interest and penalties thereon for the period June 2009 to June 2010 cannot be sustained. The impugned order is modified to the extent of setting aside the demand of service tax along with interest for the period June 2009 to June 2010. The penalty imposed under Section 78 in regard to this is set aside entirely. Appeal allowed.
Issues:
1. Applicability of service tax on construction services provided by the appellant. 2. Interpretation of relevant circulars and case laws regarding service tax liability. 3. Classification of construction contracts as composite in nature. 4. Validity of demand for service tax, interest, and penalties for the period June 2009 to June 2010. Analysis: 1. The appellant, engaged in construction of commercial and residential complexes, faced a show cause notice for not paying service tax for the period from 16.05.2005 to May 2009. The appellant contended that their activity was covered by a Board's Circular and thus not liable to pay service tax. Subsequently, another notice was issued for the period June 2009 to June 2010, proposing to demand service tax under Construction of Complex Services. The original authority confirmed the demand, interest, and penalties, leading to the appellant's appeal before the Tribunal. 2. The appellant argued that their construction services, being composite in nature, involving both supply of materials and services, should not be taxed under Residential Complex Services or Commercial or Industrial Construction Services. They cited relevant case laws, circulars, and tribunal decisions to support their claim that the demand for service tax prior to 01.07.2010 was not sustainable. The Tribunal had previously set aside a similar demand based on Circular No.108/02/2009 and upheld this stance in the current case as well. 3. The Tribunal analyzed the nature of the contracts and reiterated that demands for composite contracts could only be made under Works Contract Services, not under Commercial or Industrial Construction or Construction of Residential Complex Services. Citing precedents like Real Value Promoters Pvt Ltd, the Tribunal concluded that the demand for service tax under these categories could not be upheld for the period prior to 01.07.2010. The Tribunal also referenced the decision in the case of Jain Housing and Construction Ltd, where the demand for service tax on composite contracts was rejected. 4. After considering the facts, relevant circulars, and case laws, the Tribunal found that the demand for service tax, interest, and penalties for the period June 2009 to June 2010 could not be sustained. The impugned order was modified to set aside the demand for service tax and interest, while also entirely setting aside the penalty imposed under Section 78. The appeal was allowed with consequential reliefs, if any, in favor of the appellant.
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