2013 (1) TMI 271 - AT - Service Tax

Waiver of Pre-deposit - Stay of recovery - Construction of Complex Services - Appellant constructed houses for low-income groups of people under two schemes of Andhra Pradesh State Housing Corporation Ltd. - whether service tax is applicable to construction of such houses for the benefit of low-income group of people - the residential units were constructed as two-storeyed blocks, each consisting of less than 12 units - Held that - The leviability of service tax under the above Head on construction of Residential complex cannot depend on economic status of the ultimate beneficiaries/residents. Following the decision in case of MACRO MARVEL PROJECTS LTD.(2008 (9) TMI 80 - CESTAT, CHENNAI) a residential complex comprising more than 12 dwelling units would attract service tax under the aforesaid Head but individual residential units could not be considered as residential complex hence its construction would not attract the levy. Grant waiver of pre-deposit and stay of recovery.

Issues:
1. Applicability of service tax on construction of residential complexes for low-income groups.
2. Consideration of previous tribunal decisions in determining service tax liability.
3. Interpretation of what constitutes a residential complex for service tax levy.

Issue 1: Applicability of service tax on construction of residential complexes for low-income groups:
The judgment deals with an application seeking waiver and stay of adjudged dues related to service tax and education cesses amounting to Rs. 71,05,017/- for constructing houses for low-income groups. The appellant constructed two-storied blocks for low-income groups under schemes of the Andhra Pradesh State Housing Corporation Ltd. The central issue raised is whether service tax is applicable to such construction. The Tribunal opined that the economic status of beneficiaries does not affect the leviability of service tax on construction of residential complexes. It held that service tax is applicable even for construction of residential complexes for low-income groups. The appellant provided construction services to the Housing Corporation and received consideration, leading to the conclusion that service tax is leviable in this case.

Issue 2: Consideration of previous tribunal decisions in determining service tax liability:
The judgment references two previous decisions of the Tribunal, namely Macro Marvel Projects Ltd. Vs. Commr. of Service Tax, Chennai [2008 (12)S.T.R.603 (Tri-Che)] and Vinod Kumar Goyai Vs. Commr. of Central Excise, Jaipur - [2011(23)S.T.R. 30(Tri-Del.)]. These decisions supported the appellant's argument regarding the levy of service tax on construction activities. In the Macro Marvel Projects Ltd. case, it was held that a residential complex with more than 12 units attracts service tax, while individual units do not. The same principle was reiterated in the Vinod Kumar Goel case. In the present scenario, where the residential units were constructed in two-storied blocks with less than 12 units each, the question arises whether these can be classified as residential complexes for service tax purposes. The Tribunal found that the cited decisions align with the appellant's position, leading to the grant of waiver and stay of recovery for the adjudged dues.

Issue 3: Interpretation of what constitutes a residential complex for service tax levy:
The Tribunal deliberated on the definition of a residential complex for the purpose of service tax levy. It considered the structure of the constructed units and the number of units in each block. While the appellant's construction comprised two-storied blocks with less than 12 units each, the question of whether such units qualify as residential complexes arose. The Tribunal found that the decisions cited by the appellant supported the argument that individual units do not constitute a residential complex for service tax purposes. This interpretation influenced the decision to grant waiver and stay of recovery for the adjudged dues, indicating a nuanced understanding of what constitutes a residential complex under the purview of service tax regulations.

This detailed analysis of the judgment provides insights into the issues surrounding the applicability of service tax on construction activities for low-income groups, the relevance of previous tribunal decisions in determining tax liability, and the interpretation of what qualifies as a residential complex for service tax purposes.

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