2013 (8) TMI 418 - AT - Service Tax

Residential Complex u/s 65(91a) Duty demand Interest and Penalty - Revenue was of the view that housing complex constructed would fall within the definition of Residential Complex and service tax had to be paid for such services - Whether the residential units could be considered for personal use Held that - If the property in the residential unit was transferred to another person the residential unit may not be considered to be for personal use even if such transfer is done without any consideration - The contention that the activity was taxable only from 01-06-2007 when the entry for works contract u/s 65 (105) (zzzza) was introduced could not be accepted - This was because the levy under the said entry covers construction of residential complex which was already covered by section 65 (105) (zzzh) with effect from 16-06-05 - The new entry uses the very same expressions defined earlier and subjected to tax but a new composition scheme for discharging liability was introduced - So it cannot be considered that the earlier entries were null and void. Waiver of pre-deposit as the assesse was the NGO only 10lakhs were ordered to be submitted on such submission rest of the duty to be waived Decided partly in favor of assesse.

Summary

Issues:
1. Whether the construction of a housing complex for fishermen by an applicant for a Rural Development Society constitutes a taxable service under the definition of Residential Complex.
2. Whether the demand for service tax for the period July 06 to March 07, along with interest and penalty, is justified.
3. Whether the construction activity falls under the definition of works contract taxable from 01.6.07.
4. Whether the demand is time-barred due to the issuance of the show cause notice on 10.10.2011.

Analysis:

1. The case involves the construction of a housing complex for fishermen by the applicant for a Rural Development Society. The Revenue argues that the complex falls under the definition of Residential Complex at section 65(91a), requiring payment of service tax. The applicant contends that the houses were for personal use of the fishermen, thus not falling within the said definition. Reference is made to precedents where residential complexes for specific groups were deemed not taxable under similar circumstances.

2. The Revenue asserts that the residential units were not for personal use of the applicant or its members but were allotted to fishermen. It is argued that the definition excludes cases where buildings are constructed for personal use or for renting. The Revenue highlights that the applicant failed to disclose crucial information, justifying the invocation of the extended period of limitation for the demand.

3. The applicant argues that the works contract became taxable only from 01.6.07 with the introduction of a specific entry in the Finance Act'94. However, the Tribunal disagrees, stating that the levy under the new entry for works contract covers construction of residential complexes already taxed under a previous entry. The Tribunal finds the argument regarding time bar weak in this context.

4. The Tribunal deliberates on whether the residential units could be considered for personal use, emphasizing that if the property is transferred to another person, it may not be deemed for personal use. Acknowledging the applicant as an NGO, the Tribunal orders a pre-deposit for appeal admission, waiving the balance dues subject to compliance. The decision is pronounced in open court on 17.6.13, with a compliance report due on 30.8.2013.