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2024 (7) TMI 927 - AT - Service TaxLiability of appellant to pay service tax on the land owner s share as well as builder s share for the disputed period of 2009 to 2011 - Construction of Residential Complex Services - HELD THAT - The co-ordinate bench of the Tribunal 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 had examined the issue as to whether a promoter/builder/developer is liable to pay service tax on construction of residential complex services prior to 01.07.2010. The Tribunal referred to the CBEC Circular No.108/2/2009 dated 29.01.2009 wherein it has been clarified that the promoter/developer/builder is not liable to pay service tax for the period upto 30.06.2010 - In the case of M/s Krishna Homes the Tribunal set aside the demand for the period prior to 01.07.2010. The Tribunal in the said case held that it was only with effect from 01.07.2010, wherein an explanation was added under Section 65 (105) (zzzh), builder/promoter/developer was brought within the service tax net for construction services provided by them. In the present case part of the demand is prior to 01.07.2010. For the period after 01.07.2010 also, the demand has been made under Construction of Residential Complex Services. Undisputedly the works rendered by the appellant are indivisible contracts which are composite in nature. It involves supply of materials as well as rendition of services. After introduction of definition of Works Contract Services, which sets out the ingredients of composite contracts, the demand of service tax for such composite contract can only be under the category of works contract services. In the present case, the demand is made under residential complex services which has been held to be in the nature of service simpliciter as per the decision of the Hon ble Apex Court in the case of COMMISSIONER, CENTRAL EXCISE CUSTOMS VERSUS M/S LARSEN TOUBRO LTD. AND OTHERS 2015 (8) TMI 749 - SUPREME COURT . On perusal of the Annexure to the show cause notice, it is seen that the department has demanded the service tax on 33% of the value giving 67% abatement to the appellant while quantifying the tax liability. This itself would show that the works are indivisible contract or composite in nature - 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 the Tribunal considered the issue whether the demand of service tax in the case of composite contract can be raised under construction of residential complex services/commercial or industrial construction services / construction of complex services. The issue was answered in negative and in favour of the appellant. The contracts being composite in nature and the demand having been raised under Construction of Residential Complex Services, the demand of service tax cannot sustain for the period after 01.07.2010 also. The impugned order is set aside - Appeal allowed.
Issues:
Whether the appellant is liable to pay service tax under Construction of Residential Complex Services for the period 2009 to 2011. Analysis: The appellant, engaged in providing construction services, entered into a joint development agreement with landowners to construct a residential complex. The appellant paid service tax on their share for flats constructed in phase-I but not on the landowner's share. The jurisdictional officers noted the non-payment of service tax on both builder's share and landowner's share for the period from 2009-10 to 2010-11. The appellant contended that they are not liable to pay service tax based on a Board's Circular. The department issued a show cause notice demanding service tax on both shares along with interest and penalties. The original authority confirmed the demand, leading to the appellant's appeal before the Tribunal. For the period prior to 01.07.2010, the appellant argued that they are not liable to pay service tax based on the Board's Circular. The Tribunal referred to previous cases and held that prior to 01.07.2010, a promoter/builder/developer is not liable to pay service tax for construction services. The Tribunal also mentioned that after 01.07.2010, the liability arises for such services. Regarding the period after 01.07.2010, the appellant argued that the works were composite in nature involving both supply of materials and services. The Tribunal considered previous decisions and concluded that demand for service tax on composite contracts can only be made under Works Contract Services, not under Construction of Residential Complex Services. The Tribunal's decision was supported by a case before the Hon'ble Apex Court, leading to the dismissal of the department's appeal. The Tribunal found that the demand of service tax cannot sustain for the period after 01.07.2010 due to the nature of the contracts being composite. In conclusion, the Tribunal set aside the impugned order, allowing the appeal with consequential reliefs.
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